Cancun Meltdown Puts Focus on FTAs
US, European Union looking for alternatives to the ''unwieldy'' WTO
CANCUN - Stung by the breakdown of the Cancun trade talks, the US and the European Union likely will emphasize a regional approach and negotiate with individual countries in hopes of avoiding future impasses in large-scale global talks, according to trade analysts quoted recently in the Chicago Tribune.
The negotiating thrust takes place as a feisty new coalition of less-developed countries attempts to vie for power with the trade giants when World Trade Organization talks resume in December.
The US and the EU already are pursuing individual treaties and regional trade pacts that they see as alternatives to the unwieldy, 148-nation World Trade Organization. This
strategy is intended to give leverage to the trade giants by creating an alternative to the WTO, but it risks undermining the WTO and the current round of global trade talks that began in Doha, Qatar, in 2001.
The Cancun session, planned as the midpoint of talks that are set to conclude by 2005, broke down amid a show of power by poor and developing countries, notably a 21-nation coalition led by Brazil, India and China. The talks collapsed when the poorer countries refused European demands to add a batch of new issues to the thorny agricultural issues that were at the heart of the meeting.
Critics of the new US and European approach say the regional and one-on-one negotiations likely will put smaller countries at a disadvantage to the trade powerhouses.
"The big danger is the US is going to use its overwhelming economic power to force decisions on countries that they would be loathe to accept" during WTO talks, Jairam Ramesh, secretary of economic affairs for India's Congress Party told the paper.
The US has negotiated free trade agreements with Jordan, Israel, Chile and Singapore. In addition to the North American Free Trade Agreement with Canada and Mexico, the US has begun regional talks aimed at a free trade deal with Central and South American countries. And in June, President Bush expressed interest in negotiating a similar deal with countries in the Middle East.
Kantathi Suphamongkhon, Thailand's trade representative, said it would be a mistake to underestimate the impact of the US shift toward bilateral and multination deals.
"They can be used to undermine the WTO or used as a threat to get the WTO moving," Suphamongkhon said at a two-day conference on free trade hosted by the Chicago Council on Foreign Relations.
Suphamongkhon and Ramesh were among nearly 50 trade experts and negotiators who were in Chicago on Monday and Tuesday for a postmortem on the Cancun meltdown. Some flew directly from Cancun.
Polish trade negotiator Miroslaw Zielinski delayed his keynote speech for a day while he and a handful of negotiators remained in Cancun trying to salvage some progress from the broken-down talks.
But the lead negotiators had fled Cancun in a fit of recrimination after the collapse. The new negotiating block, dubbed the G-21, refused a request from the Europeans to discuss a package of proposals requiring openness to foreign investment and foreign competition in their markets, a reduction of bureaucratic red tape and more open competition for government contracts.
Leaders of the G-21 also vowed that their demands for agricultural reforms couldn't be ignored because they represented more than half of the world's population.
US and European negotiators seemed stunned by the show of force and solidarity, particularly since some of the countries previously have taken opposing views on basic issues, including agricultural tariffs.
Big-country negotiators also criticized leaders of the G-21 - Brazil in particular - for posing as less-developed countries when their economies are, in fact, relatively advanced. Brazil and other large countries in the coalition are seeking the same breaks in trade talks as poor countries.
"One of the things we've said to Brazil is, `Hey, let's have a definition of what a developing country is,'" Rep. Bob Goodlatte (R-VA), chairman of the House Agriculture Committee, said during the Cancun talks. "And then really treat real developing countries one way and treat you another."
Even so, the G-21 leaders seem to have the support of countries throughout the developing world. And the less-developed countries seem committed to continue working together when trade negotiators meet in December at WTO headquarters in Geneva in an effort to restart negotiations.
They also will draw support from the dozens of less-developed countries that were not invited to join the G-21, vows the trade minister of one such country, Tanzania.
"It was tactical" for the G-21 to work together in Cancun, said Tanzanian trade minister Juma Ngasongwa. "But it was also more strategic. Even as we go further, the situation won't be much different than it was in Cancun. We will support them."
Meanwhile, US trade experts say the G-21 and other less-developed countries must be prepared to make concessions if they want WTO talks to proceed.
"The poor countries must come to the table," former US Trade Representative Carla Hills told the Chicago conference. "Poor countries have spent most of their time seeking preferential concessions from the rich countries rather than proceed with negotiations."
Clyde Prestowitz, president of the Economic Strategy Institute, a Washington-based think tank, said developing countries are engaging in a risky new tack.
"I'm sympathetic to the developing countries," he said. "They sent a message. If their message leads to a halt of global economic integration, then we're all going to suffer--most of all the poor."
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