WTO WATCH, December 3 1999
WTO Seattle Ministerial Fails;
Talks to Resume at a Later Date
By Daniel Pruzin, Gary G. Yerkey & Mark Felsenthal
SEATTLE--The World Trade Organization's Seattle ministerial meeting ended in an embarrassing failure late Dec. 3 after the WTO's 135 members were unable to agree on the framework for a future round of global trade talks.
The four-day ministerial, which started inauspiciously with violent street demonstrations against the WTO and its free trade agenda, wrapped up ignominiously with a decision to suspend the discussions and to restart them again at WTO headquarters in Geneva at date to be determined.
U.S. Trade Representative Charlene Barshefsky, who chaired the Seattle meeting, defended the United States from accusations that it had allowed the ministerial to fail with its hard-line negotiating position. "The United States came with a very flexible attitude," she declared. "Our goal will continue to be the launch of a new round."
Barshefsky instead charged that delegations which came to Seattle were "not quite willing to make the political decisions" needed to reach a compromise. The meeting could have continued beyond the scheduled December 3 close but "it wouldn't matter," she declared. "Governments weren't ready to take the leap.... I think the time out was absolutely necessary."
European Trade Commissioner Pascal Lamy blamed the failure of the talks on the "complexity of the negotiations... that couldn't be tackled." He also said that developing countries were now playing a greater role than ever before in the process, which he said has "created a new complexity which we were not able to cope with."
"The process itself has to be reassessed and maybe rebuilt," he said.
The Seattle meeting was expected to end with a ringing endorsement by members for a further push to liberalize global trade in agriculture, services, and other areas as well as decisions on immediate initiatives in areas such as electronic commerce and duty-free treatment for exports from the world's poorest countries.
Complexity, Preparation Blamed
Instead, recriminations flew over the reasons behind the failure of governments to achieve consensus on the agenda for the new round and the Seattle "deliverables," with many trade diplomats agreeing that ministers were asked to make decisions on too many issues in too little time.
Others blamed trade diplomats in Geneva for their inability to adequately prepare for the ministerial and suggested that the bitter battle over the selection of the WTO's new director-general and the subsequent delay in engaging in substantive preparations negatively impacted the Seattle discussions.
President Clinton's chief economic advisor, National Economic Council chair Gene Sperling, said the WTO had been overwhelmed by the complexity of issues and the difficulty of juggling competing nations' domestic needs.
"I think what happened was that over a period of many months there proved to be a high degree of intractability among a diversity of many countries who had very legitimate domestic demands, and there was perhaps a faith that somehow that intractability might melt away under the pressure of seeking a launch over a four day period," Sperling said on the way out of the convention center. "Many of the delegates stated that there just never seemed to be the click, the willingness to move on all parties that was necessary."
The organization is likely to have to evolve to cope with new issues, the aide said. "People will look at this period as a time at which the breadth and diversity and complexity of issues hitting the trade arena broadened substantially and did in many ways stretch the capacity of an organization of the WTO to gain consensus of over 100 countries over a few days," he said.
"And that's one of the things that Mike Moore and all of us will have to think about in seeking what the best process is going forward."
The sheer volume of difficult issues was daunting, according to the vice chair of the ministerial conference, Pakistani Minister of Commerce Abdul Razak Dawood. "I don't think it failed on account of major differences," Dawood said as ministers drifted out of the final session. "There were differences. But to me, the agenda was just too heavy, and we still had so many issues to discuss which just didn't get the time."
The lengthy discussions on agriculture, implementation, market access left no time for other topics, he said. "It's just too much to discuss," he said.
Barshefsky Urges WTO Reform.
Still others put the blame squarely with the ministerial's U.S. hosts, accusing Barshefsky of failing to make a distinction between her role as ministerial conference chairperson and Washington's chief trade negotiator. President Clinton also came under fire for his remarks earlier in the week regarding the need for trade sanctions against countries which violate core labor standards, a statement which some say torpedoed U.S. hopes for a new WTO working group on labor issues and soured the mood for a new round among developing countries, which account for more than three-quarters of the WTO's membership.
Barshefsky, who earlier declared that failure was "not an option" in Seattle, told ministers in her concluding remarks that the breakdown of talks highlighted the need for reform of the WTO's decision-making process.
"(W)e found that the WTO has outgrown the processes appropriate to an earlier time," she declared. "An increasing and necessary view, generally shared among the members, was that we needed a process which had a greater degree of internal transparency, and inclusion to accommodate a larger and more diverse membership."
"This is a very difficult combination to manage," she added. "It stretches both the substantive and procedural capacity of the ministerial, and we found as time passed that divergencies of opinion remained that would not be overcome rapidly. Our collective judgment...was that it would be best to take a time out, consult with one another, and find creative means to finish the job."
Next Steps
"Therefore, ministers have agreed to suspend the work of the ministerial. During this time, the (WTO) director-general can consult with delegations and discuss creative ways in which we might bridge the remaining areas in which consensus does not yet exist, develop an improved process which is both efficient and fully inclusive, and prepare the way for successful conclusion. The ministerial will then resume its work."
The U.S. Trade Representative said that new negotiations on agriculture and services trade would still begin as scheduled in January 2000 despite the breakdown of the talks. WTO members already agreed at the end of the Uruguay Round in 1994 to commence new talks in these sectors by 2000, but trade officials said that the lack of any agreement in Seattle on a framework for talks in these sectors would delay any real bargaining until an agenda is established.
"This was a remarkable meeting," WTO Director-General Mike Moore declared afterwards to an audience of unconvinced ministers. "Much was done. This work will not be lost....We've got a built-in agenda, we've got a mandate to continue the work." Moore noted that this was not the first time that a global trade round has been suspended. Members of the General Agreement on Tariffs and Trade (GATT), the predecessor of the WTO, failed in their attempts to launch a new round at a 1982 ministerial meeting in Geneva. An agreement was eventually reached four years later in Punta del Este, Uruguay to commence negotiations which were then suspended in Brussels, Belgium in 1990 but eventually resulted in the 1994 Uruguay Round agreements creating the WTO.
Ag Talks, Near, Far
Barshefsky said that differences over the framework for the agriculture talks remained "intractable." Meeting participants spent five hours on the morning of the last day of the conference unsuccessfully trying to resolve differences over agriculture, according to the Swiss Minister of Economic Affairs, Pascal Couchepin. Couchepin blamed the Cairns Group of agricultural producers for "exaggerated" demands for agricultural liberalization for the downfall of the agenda-setting talks.
"After that there was no more possibility to discuss the other problems and the other texts," he said.
But others claimed that agriculture, which officials had flagged as the most difficult item on the Seattle ministerial agenda, did not prove to be the undoing of the talks. Differences on whether the new talks should aim for the complete elimination of export subsidies and recognize certain non-trade concerns such as environmental protection and rural development had stalled discussions, but trade diplomats said that a deal was within their grasp towards the end of the ministerial. "Agriculture was almost agreed," claimed Han Duck-Soo, South Korea's minister for foreign affairs and trade. "There were one or two sticking points, but it was really nothing."
European Union agriculture commissioner Franz Fischler said that [there had been] "substantial progress in agriculture, but clearly some key questions remained unresolved." Fischler indicated that even if an agreement on agriculture was clinched, the EU would not have accepted the deal unless it received further concessions on its demand for a more comprehensive "Millennium Round" covering issues beyond the mandated agriculture and services talks.
WTO Processes Blamed
A European ambassador to the WTO said the failure of diplomats in Geneva to significantly narrow negotiating positions prior to Seattle made it almost impossible for ministers to wade through all the outstanding issues on the table. "The problem was trying to deal with too much, too late," he declared, admitting the EU had to share part of the blame for insisting on a comprehensive round of negotiations.
An Asian WTO ambassador argued that the ministerial was "jinxed from the start," partially because of the bitter divisions among the WTO membership which delayed the selection of both Moore as well as his deputies. Moore took over as WTO director-general on September 1, with his four deputies appointed more than a month later.
"My experience is that the key to success in a meeting like this is a very experienced and skilled deputy who can pull the sectors together," the ambassador argued. "We're unlucky this time around because we had no director-general nor deputy director-generals at a very crucial time."
Another factor was heightened participation and influence on the part of developing countries, Pakistan's Dawood said. "We had about 30 countries in the green room process," he said. "A hundred were waiting outside. We can't conclude that without talking to the hundred outside."
Federico Camilo, WTO ambassador from the Dominican Republic, said the breakdown of the Seattle talks "will serve as an important lesson in humility for the small group of countries who think this (the WTO) is their club."
Ministers from Caribbean and African countries complained that the Seattle discussions were conducted without transparency and with a determination to produce a ministerial text "at any cost."
We "wish to express our disappointment and disagreement with the way in which the negotiations are being conducted" at the ministerial, the Organization of African Unity/African Economic Community said in a statement. The proceedings lack transparency and African countries ``are being marginalised and generally excluded on issues of vital importance for our peoples and their future."
But Colombia's ambassador to the WTO, Nestor Osorio, said those outside factors, as well as poor organization of the negotiations, hurt chances of success. In addition, many developing countries were unprepared to make a new round of liberalization commitments only five years after the Uruguay Round was concluded. "Conditions were not ripe," he said.
Progress Seen Nonetheless
Commerce Secretary William M. Daley said he was disappointed with the failure of the talks but added that significant progress had been made during the week on many issues. "The negotiations have been extremely hard and the issues very complex," he said. "In the end, there were just too many differences on too many issues." Daley said he was confident that consensus will eventually be reached. But he said: "These matters are too important to rush to conclusion."
Pierre S. Pettigrew, international trade minister for Canada, agreed that there were still many outstanding differences among the countries, notably over agriculture, which, while much "good work" was accomplished, no consensus was reached. He said that antidumping remains a "very big problem," adding that developing countries as well as the United States, which, he said, had difficulties with the issue "in this particular year." Some less-developed countries, he said, also wanted to reopen past agreements, which was resisted by the United States. Trade and labor was a problem as well, he said.
Pettigrew, who chaired the working group on implementation and rules, said that time was too short to reach a deal in Seattle given the long and complicated text, with some 300 brackets, that had been sent to ministers by negotiators in Geneva. "It just proved impossible to eliminate all these brackets in these short few days." But he said that the work that was done during the week would be useful in [following] weeks. "There is still a strong commitment--and I felt it around the table--to further strengthen the WTO."
Moving On
Pettigrew said that the commitments made in Seattle would be "frozen." The EU's Fischler, however, [said] the agricultural proposals offered in Seattle would no longer be on the table when WTO negotiations begin. "There are no commitments at all," he said. "There's nothing on the table. We have to start from the beginning." He also said that the talks will be based on Article 20 of the Uruguay Round agreement, which, he said, requires that non-trade concerns be taken into account, including environmental protection, food security, and rural development.
The United States has strongly rejected that approach, saying that agriculture must be dealt with like other industries.
Critics Celebrate Result
WTO critics celebrated the outcome. "Ding dong the round is dead," was the headline on the press release from Public Citizen's Global Trade Watch, whose director Lori Wallach said, "History has been made in Seattle as the allegedly irresistable forces of corporate economic globalization were stopped in their tracks by the immovable object of grassroots democracy."
Martin Khor, director of the Third World Network, said the protests demanding "no new round" will continue with the aim of making the body "democratically accountable and aimed at meeting the needs of people, not simply the world's largest corporations."
Oxfam's Penny Fowler said the WTO "requires radical institutional reform if it is to remain credible as a multilateral organization, rather than a club of rich countries." Malina Mehra, director of the People's Decade for Human Rights Education, said, "the collapse of the talks is a great opportunity for the WTO to return to basics."
The International Confederation of Free Trade Unions, based in Brussels, said the failure "reflects the growing imbalance in globalization," particularly "the failure to recognize the link between trade and core labor standards." "If the lack of consensus in Seattle leads to a reassessment of the links between trade, social issues and the environment, the ministerial will not be a failure but rather the beginning of a search for a more responsive and responsible global economy," according to Bill Jordan, ICFTU General Secretary.
The Friends of the Earth said, "The ambitious trade plans of the U.S., EU, Japan and Canada were beaten back by dynamic inside and outside pressure in Seattle. The group particularly was pleased that no new investment negotiations would begin, that tariffs on wood products would not be cut, and that no working group on biotechnology would be established.
Dan Seigelman, director of the Sierra Club's Responsible Trade Program, said, "Relentless pressure from demonstrators outside the Seattle convention center exposed the WTO's anti-environmental and anti-labor agenda to an audience of millions worldwide."
The World Wildlife Fund statement said the need for WTO institutional reform [was established] and that "trade talks that are neither nor directly address public concerns such as the protection of the environment can no longer succeed."
U.S. Industry Reaction
Some business representatives said that, while the ministerial meeting was a setback, trade liberalization will proceed. Scott Miller, director of government affairs at Procter & Gamble, said that the failure of the Seattle talks reflected well on the state of democracy in the 135 WTO member countries. "What you have here is a very healthy democracy," he said. "You have essentially sovereign nations who have chosen not to move forward at this time. That to me is healthy. Democracy is messy." Miller, who is also director of the private-sector U.S. Alliance for Trade Expansion (USTrade), said he was not disappointed because the negotiations would eventually move forward. "I'm not disappointed," he said.
By Daniel Pruzin, Gary G. Yerkey & Mark Felsenthal
Copyright © 1999 by The Bureau of National Affairs, Inc., Washington D.C.
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