GATT and WTO Ministerial meetings have the tradition of collapsing when developing countries stand up for their legitimate rights and interests. This has been the situation since the Uruguay Round, during which two ministerials collapsed -- in Montreal (1988) and Brussels (1990). The sticking point was agriculture and the refusal of developing countries to accept the double standards of protectionism practiced by the North, whilst at the same time imposing market opening on the South. Similarly, the collapse of the Seattle Ministerial in 1999 was in large part due to the refusal of developing countries to be ignored in the process and to be forced to accept a package agreed by the major powers amongst themselves. Cancun - four years on - is little different. The US, EU and their allies, while brandishing rhetoric and appearing to be benevolent, were merely trying, yet again, to extract the highest price from the developing world without giving anything in return. Developing countries did not back down in their fight for more balance in the package. The G-20 coalition continued to fight for less distortions in agriculture trade, and the G-70 (or Alliance as they are now called), composed of the African Union, ACP (Africa, Caribbean and Pacific) and LDCs (least developed countries), refused to accept new negotiations in the 'Singapore issues'. The US was unwilling to budge in agriculture, nor to give anything on the cotton issue where four West African countries – Benin, Burkino Faso, Mali and Chad -- had made a powerful call for the elimination of cotton subsidies. The cotton lobby in the US is too powerful, and the Bush administration, heading into elections in 2004, was not interested in antagonizing them. Post-Cancun, man in Geneva speculate that the US, angered by developing countries' refusal to back down, and their inability to force their agenda onto the developing world, engineered for the meeting to end when it did. However, if the not-so-distant Seattle, post-Seattle and the 2001 Doha Ministerial negotiations are indicative, talks will restart, and in response to the Cancun show of strength from the South, the counter-offensive from US and EU will be all the more aggressive. THE US AND EU HIT BACK: THE BLAME GAME Already, the counter-offensive is in full swing. The blame game, which EU trade commissioner Pascal Lamy promised in Cancun he would not play, is underway. Both the US and EU are spinning the story that the Cancun collapse was the fault of developing countries, blaming them for being rhetorical rather than serious in the negotiations. Should they want any movement now, the EU and US insist, the developing countries will have to come up with a better offer. US trade representative Robert Zoellick, right after the collapse of Cancun, also said that "The harsh rhetoric of the `won't do' overwhelmed the concerted efforts of the `can do'." More recently, the US Commerce under-secretary, Grant Aldonas said that there was "not a lot of incentive" for the US and the EU to "lower politically sensitive trade barriers if poor countries refused to lower theirs." Commissioner Lamy has been quoted as saying that the EC and the US "will be waiting for a number of positive signals coming from other parts of the trade community," such as the G-20 and the G- 70. Developing country ministers and ambassadors have also come under fire. The US, for instance, called a meeting of Washington- based developing country negotiators to complain about the unreasonable positions of their Geneva counterparts. This led to the Nigerian Washington based ambassador writing to his president Obasanjo, questioning the position that the Nigerian Geneva-based ambassador was taking. One LDC African delegate, whose minister was prominent in Cancun, said that his minister is now being called by "everyone, including the US", and made to answer the question of how the Cancun talks can be put back on track. The World Bank and IMF have also written to many developing country heads of state instructing them to restart talks, obviously with the implication that funds could be given or withdrawn. On November 13 and 14 an exclusive, informal ministerial meeting was held in Cairo between a small group of African ministers. The meeting was convened by the WTO's director general Supachai Panitchpakdi, and his chef de cabinet, Stuart Harbinson. Ministers from Benin, Botswana, Burkina Faso, Chad, Kenya, Lesotho, Mali, Mauritius, Nigeria, Senegal, South Africa and the host, Egypt, were present. The topic under discussion was how African ministers can take steps to move the talks forward. It is clear that the DG Supachai is attempting to do all in his power to call ministers to be more flexible. A key area of discussion in the Cairo meeting was the Singapore issues. In addition, the US has exerted considerable pressure on the G-20 to break the coalition. Six countries have pulled out of the grouping so far – El Salvador, Guatemala, Peru, Ecuador, Columbia and Costa Rica -- as a result of threats that their FTAs and other trading arrangements with the US would be jeopardised. Brazil, the leader of the G-20, both in Cancun and post-Cancun has been demonized by the US as trying to create a North-South split in the WTO membership. CURRENT US/EU ATTEMPTS TO WRESTLE GROUND FROM DEVELOPING COUNTRIES In Geneva, the US and EU have found, in the Uruguay ambassador Perez del Castillo, an appropriate spokesperson for their interests. Del Castillo is the current chair of the general council and has set himself the task of attempting to complete the work that ministers did not finish in Cancun by the 15 December senior official meeting in Geneva. He has chosen four of the most contentious issues to begin consultations as a way to unlock the negotiations: agriculture, cotton, Singapore issues and non-agriculture market access (NAMA). The main negotiations are held in non-transparent consultations of only about 30 members (or 'green room' meetings). In agriculture and NAMA, del Castillo has been pushing hard for the developing countries to accept the Cancun-produced Derbez text (named after the Mexican minister presiding at Cancun). In agriculture, the Derbez text is very similar to the joint US/EU paper that was submitted to the WTO membership in August, which took into account only the US and EU agricultural interests. It calls for drastic market access openings in such a way that it would hit the developing countries hard, but not the developed countries, and does not deal effectively with subsidies that contribute directly or indirectly to export dumping. Similarly, in the non-agriculture market access negotiations, the Derbez text does not reflect developing country concerns. It does not include commitments made in the Doha Declaration (such as the concept of less than full reciprocity) but enhances developed countries' interests, for instance by calling for a non-linear formula, as well as a sectoral liberalization approach. (See following article for full discussions of this point.) The majority of developing countries have been vehemently opposed to both these liberalization strategies since their industries are more vulnerable, and they will be celled to liberalize more than the developed countries. Neither does the text call on the developed world to reduce their protection in any meaningful way, since it glosses over the issue of non-tariff barriers - the most common way the developed world protects their industrial products. UNCTAD has already predicted that if the current liberalization agenda is adopted there will be serious destruction to many countries' already fragile industrial base, leading to deindustrialization. There is no doubt that, if these texts are accepted as the basis of negotiations, developing countries will fight very hard to ensure that they are improved. However, as one negotiator commented, recognizing the political constraints of the South in any negotiations with the major powers, "The US/EC framework is biased against us from the beginning. We can try to improve them, but they cannot be entirely improved upon." African and other developing countries' negotiators, now blamed for Cancun's collapse, are being told by the major powers that their agreement to use this biased Derbez text as the basis of negotiations is one way to demonstrate their willingness to be constructive. Similarly, despite over 90 countries insisting on not commencing negotiations on the Singapore issues in Cancun, del Castillo is ignoring their public statements. In Geneva, he is now proposing that the clarification process continues for investment and competition, with a view to eventual negotiations, and that negotiations take place in transparency in government procurement and trade facilitation. CIVIL SOCIETY STRATEGIES: KEEPING THE TRAIN OFF THE TRACKS From the outset, it should be noted that the WTO is beyond reform. This is not an ideological argument, but an empirical observation. If there is doubt, one need only ask if any changes have been made since its formation which have benefited the developing world. Developing country negotiators, trade unions, social movements and NGOs have worked very hard since the WTO's inception to improve upon its inequitable rules. However, the rules have not been changed to their benefit in even minuscule ways. This is true in all areas – agriculture, TRIPS and Public Health, implementation issues, the Framework agreement on Special and Differential Treatment, GATS. Even in institutional reform (democracy and transparency issues) where developing countries made a concerted effort post-Doha, nothing has changed. If anything, the anti- democratic processes have merely become more sophisticated. In not a single set of negotiations within this WTO multilateral system, have developing countries come out as the beneficiaries. Instead, the developing countries are forced into the corner of damage limitation. We should have no illusions about the current negotiations either. Even though developing country coalitions are now able to pull some weight and are set to become significant and permanent partners at the negotiating table, they will remain politically less powerful and their ability to chart the institution's agenda and direction will be limited. SEVEN STRATEGIES FOR KEEPING THE TRAIN OFF THE TRACK What then should our strategies be? In the short term, the next WTO ministerial in Hong Kong (end 2004 or early 2005) will be a crunch point. Either the train remains derailed or, given the aggressive US-EU counter-attack, arm-twisting, and bullying, it gets back on track and charges ahead with a renewed force. The following are some suggestions on how to keep the train off- track: 1) Keep the EU Member States Split on the Singapore Issues, Developing Countries Should Insist on Dropping them from the Doha Mandate and WTO European civil society groups did a signal service before Cancun by lobbying the various member states to drop the 'new issues'. As a result, EU member states are now split. Such splits should be reinforced, so as to make the European Commission's position as negotiator on behalf of the member states as difficult as possible. Developing countries should insist on dropping the Singapore issues from the Doha Development Agenda and from the WTO since there was no explicit consensus to launch any of the negotiations at the Fifth Ministerial, as instructed in the Doha Declaration. Legally, it can be argued that the Doha mandate is now over. (See South Centre Informal Background note, 'The Post- Cancun Legal Status of Singapore Issues in the WTO', draft, 4 November 2003.) The working groups on the new issues - Investment, Competition, Transparency in Government Procurement, as well as the Special Session of the Good Council dealing with Trade Facilitation- should cease to exist. 2) Insist on Halting Agriculture Negotiations Until there is an End to Export Dumping Civil society groups, particularly in the EU and US should insist that their governments halt agriculture negotiations until such time direct or indirect subsidies contributing to export dumping have been eliminated. Whilst small farmers in the North also require support, it is important that this support does not contribute to dumping. The Common Agricultural Policy (CAP) for instance, should delineate between products for domestic production vs. export production. Subsidies must not be allowed for those products aimed at the export market. 3) Cotton Initiative It is important that this initiative is continued, and on a separate track from the more general agriculture negotiations. This issue was a likely cause of the Cancun collapse. The two areas where the US and the EC do not want to tread, and therefore where pressure should be exerted, are: i) ensuring the elimination of subsidies in cotton and ii) providing financial compensation for the injuries caused. Both Brussels and Washington are fearful that compensating the West Africans would set a precedent in the WTO for financial compensation in other sectors. 4) Non-agriculture Market Access Negotiations (NAMA) Support developing countries in their resistance to drastic liberalization of the industrial sector. More studies on the impact of liberalization and deindustrialization in the South should be carried out before negotiations recommence. 5) Oppose Strengthening the Secretariat and Director General's Powers, Insist on Democracy and Transparency Whilst the European trade commission Lamy had said that the WTO is "medieval", his real intention is to make it Stone Age so that the process of decision-making is one where the positions of developed countries will carry the day. Amongst other reforms, the EC is proposing looking into increasing funding for the Secretariat and strengthening the powers of the Director General (DG). Both these items are highly dangerous. The 500-strong WTO secretariat staff has a track record of pushing the agenda of the major powers. The secretariat, rather than chairpersons, is responsible for drafting language for negotiating texts which invariably emerge counter to the interests of developing countries. Similarly, the suggestion to strengthen the role of the director general should not be taken up. The director general's position must remain one of neutrality and the DG should not be engaged in the negotiations. A strengthened role may legitimize the DG taking positions in the negotiations, which should not be the case. Even though the current DG is chair of the Trade Negotiations Committee, his position should be confined to facilitating negotiations between members, not directing negotiations at his discretion. 6) Keep the Developing Country Coalitions Together Civil society groups should rally behind the coalitions that exist as a political counter-weight to the US-EU alliance. The bullying of individual countries should be made public. At the national level, groups on the ground should support and even put pressure on their governments to play an active role in these coalitions. This is necessary given the concerted and explicit maneuvers by the US and EU to break the G-20 as well as the Alliance/G-70 (ACP, African Union and LDCs). In Brazil for example, splits have been detected between the Ministry of Agriculture and the Ministry of Foreign Affairs, with the Agriculture Minister accusing Foreign Minister Celso Amorin, who led the G-20 in Cancun, of lining up with countries like India which is perceived as wanting to protect its agricultural sector. How strongly the G-20 and Alliance hold together will be the determining factor of the outcome of the Hong Kong Ministerial. 7) Medium to Long Term: Towards More Equitable Trading Arrangements In the long term, civil society groups should look toward alternatives beyond the WTO and the current bilateral free trade agreements, both of which are based on putting corporate interests before people or development. The trading arrangements of the future - perhaps built more upon South-South cooperation and partnerships with others of more equal political standing -- should put people and ecology as the central concerns. * Aileen Kwa is a trade analyst with Focus on the Global South. She is based in Geneva. FOCUS ON TRADE NUMBER 95, NOVEMBER 2003