The failed World Trade Organization (WTO) ministers' meeting in CancĂșn in September 2003 aggravated tensions between developed and developing country members and did not resolve any major issues, a U.S. congressional report says.

Developed and developing countries had competing visions about the goal of the stalled WTO negotiations, called the Doha Development Agenda, the report says. Developing countries wanted open agriculture markets and special treatment from the developed countries. Developed countries rejected the notion that they should open their markets without reciprocation from developing countries, and they wanted the ability to offer different treatment for wealthier and poorer developing countries.

The report -- "World Trade Organization: Cancun Ministerial Fails to Move Global Trade Negotiations Forward; Next Steps Uncertain" -- was released publicly January 16 by the General Accounting Office (GAO), Congress' investigative agency. GAO prepared the report at the request of the Senate Finance Committee and U.S. House of Representatives Ways and Means Committee. It can be found at http://www.gao.gov/cgi-bin/getrpt?GAO-04-250

In recapitulating the collapse of negotiations at CancĂșn in September, GAO began with the stalemate that prevailed for months before and described the way some participants only began to offer concessions in days just ahead of the meeting, while others never offered concessions at all.

"Hopes for breakthroughs still accompanied their ... meeting, but ministers from WTO members ultimately were unable to bridge the wide substantive differences on key issues that faced them coming into Cancun," the report says, "and as a result these key issues must still be dealt with for the round to continue."

U.S. General Accounting Office
January 16, 2004

"WORLD TRADE ORGANIZATION: CANCUN MINISTERIAL FAILS TO MOVE GLOBAL TRADE NEGOTIATIONS FORWARD; NEXT STEPS UNCERTAIN"

Report to the Chairman, Committee on Finance, U.S. Senate, and to the
Chairman, Committee on Ways and Means, House of Representatives

RESULTS IN BRIEF

On the eve of the World Trade Organization's Cancun Ministerial Conference in September 2003, the Doha Development round negotiations were behind schedule, and their successful completion was in doubt, based on our analysis and interviews with officials participating in the talks. The Cancun ministerial had symbolic and practical importance to the Doha Round of WTO negotiations, which, according to official status reports, had seen limited progress since its launching at the last meeting of trade ministers in November 2001. The Cancun ministerial meeting had two important goals, one symbolic and one practical. Symbolically, the Cancun meeting afforded ministers an opportunity to regain momentum necessary to conclude the Doha Round of negotiations by the scheduled January 2005 deadline. Practically, ministers needed to provide direction to negotiators on key issues that had thus far eluded consensus. With stalemate in the ongoing global trade negotiations looming, by July 2003, it was clear that a long list of required action items faced ministers at Cancun. However, only in the final weeks before the ministerial did countries begin to make concessions and move away from their long-held positions.

Hopes for breakthroughs still accompanied their September 2003 meeting, but ministers from WTO members ultimately were unable to bridge the wide substantive differences on key issues that faced them coming into Cancun, and as a result these key issues must still be dealt with for the round to continue. They recognized that making progress on agriculture was key to achieving progress in other areas. However, agreement on detailed methods to accomplish the goal of achieving significant agricultural reform through cuts in tariffs and subsidies proved impossible. Meanwhile, efforts by the European Union (EU), Japan, and others to add new issues such as investment to the global system of trade rules continued to engender strong resistance, particularly from those developing nations that remained unconvinced that the gains would outweigh the costs. On nonagricultural market access, discussions never resolved the key questions of how deeply developing nations, particularly the more advanced ones, would cut tariffs and what flexibility they would retain to insulate sensitive sectors. Ongoing services negotiations failed to receive a needed boost in participation, and many developing countries remained dissatisfied with proposed responses to their demands for special treatment and for relief from difficulties they were still experiencing in implementing existing WTO obligations.

Several other factors influenced the outcome of and contributed to the impasse at Cancun. The agenda for Cancun itself was large and complex because WTO members had missed earlier deadlines for decisions. As a result, ministers were asked to achieve in 5 days what had proved impossible to accomplish in the prior 22 months -- all without the benefit of agreement to use the text provided as a starting point for discussion. Meanwhile, the sheer number of participating countries and emerging alliances made consensus-building difficult. For example, the assertive approach to agricultural reform by a group of key developing nations led by Brazil put the United States and the EU, traditionally at odds over agriculture, on the defensive together against calls for cuts in their domestic support payments. North-South tensions between developing and developed countries, already latent in the declaration that launched the round, became exacerbated. Noting that the ongoing talks are termed the "Doha Development Agenda," developing countries stressed their vision that the focus should be on addressing their needs and demands. However, developed nations were not prepared to liberalize their policies unilaterally and argued that lowering trade barriers is pro-, not anti-, development. Additionally, an initiative for immediate reform of the cotton sector, an issue of economic importance to several West and Central African nations, was difficult for the United States and others to deal with, in part because it is tied to the broader and more long-term question of agriculture reform. Facing wide substantive divergences and limited decision-making procedures, the WTO proved unable to build the consensus required for attaining agreement at Cancun.