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Cancún's failure threatens end to Machiavellian games
By Guy de Jonquieres
Financial Times; Sep 19, 2003

When the history of the World Trade Organisation's failed talks in Cancún last weekend is written, it may well trace the origins of the collapse back to a series of meetings in Brussels in the mid-1990s.

Sir Leon (now Lord) Brittan, European Union trade commissioner at the time, badly wanted to launch a new world trade round. But to do so, he had to overcome expected objections from France and other EU member states that feared trade liberalisation would undermine Europe's common agricultural policy.

Sir Leon's advisers hit on a Machiavellian solution. As one explained later: "The trick was to come up with a negotiating agenda that the French thought other WTO members would reject. Then we would get our agenda accepted [by the rest of the WTO members] and call France's bluff."

The upshot was proposals for investment rules, competition, trade facilitation and transparency in government procurement. European business never strongly supported the proposals, and poor countries opposed them. In spite of this, the Doha round got launched.

But on Sunday the Commission's strategy blew up - and with it the Cancún talks. African and Asian states walked out over the EU's demands, even though it had just ditched the most contentious of them.

Many trade diplomats view the failure at Cancún as a turning point in the way global trade negotiations are conducted. They say tactical game-playing and stratagems, typified by the manner in which Brussels concocted its agenda, are no longer useful in securing agreement on trade liberalisation.

Such tactics succeeded when big trade deals hinged on hard bargaining between the US and EU. But on Sunday, Brussels faced African states so poor some have no proper WTO representation. Determined to assert themselves, but lacking negotiating firepower, they reached for their right of veto.

"The most important lesson of Cancún is that brinkmanship no longer works in a WTO of 146, mostly developing, countries," a trade official said. "To change position at the last moment and expect everyone to jump on board is not realistic."

He believes the Doha round can only progress if wealthy countries work harder to woo poor ones by offering better deals sooner. But the official admits the idea faces resistance. "Many negotiators fear that if they show their cards too early, others will just pocket offers and ask for more," he said.

Some negotiators believe the Cancún debacle highlights a deeper emerging fault line in the WTO. "We encouraged the third world to participate actively," said a WTO ambassador from a rich country. "But now it is doing so, an increasingly sharp north-south divide is opening. It is not just over trade, but over rhetoric, dogma and geopolitics."

The battle has been intensified by many poor countries' reliance on advice from activist groups openly hostile to the WTO and free markets. When the Cancún talks collapsed, activists and African delegates whooped for joy - even though poor countries lost most.

Some trade experts hope programmes to strengthen poor countries' negotiating capacity can close the gap. But such measures will take time to bear fruit, and then only if these countries also improve their ability to develop and implement sound economic policies.

Others pin their hopes on reform of the WTO's cumbersome structure and arthritic procedures. An advisory panel headed by Peter Sutherland, the WTO's first head, has been asked to recommend institutional changes. It is expected to look closely at decision-making, which depends on all the WTO's members reaching a consensus.

But making effective reforms stick may prove a struggle. Many ideas - such as appointing a select group of countries to manage the organisation's affairs - have been floated or tried. Most have foundered, not least because there was no consensus for their adoption.

"Ultimately, everything comes down to political will," says one seasoned trade negotiator. "This organisation will work, and the Doha round will make progress, only if that is what its members, both rich and poor, really want."


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