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Blow to world economy as trade talks collapse

(Monday, Sept. 15, 20003 -- CropChoice news) -- Larry Elliot, Charlotte Denny, David Munk of The Guardian: The fragile global economy received a damaging blow last night when trade talks in Cancun collapsed after a walkout by African countries protesting at the west's failure to open its markets to the poor.

In scenes reminiscent of the World Trade Organisation's disastrous Seattle meeting four years ago, a day of acrimonious wrangling ended as the chairman, the Mexican foreign secretary, Luis Ernesto Derbez, was unable to get talks restarted after African countries lost patience and left the negotiating table.

The breakdown came despite a last-minute concession from the European Union over its previous insistence that poor countries should pay for a better deal on agriculture by agreeing to new global deal on foreign investment.

The Kenyan delegate, George Oduor, came out of the closed meeting saying: "It means that the conference is ended now."

WTO ministers issued a terse statement admitting that the negotiations had broken down and that trade officials would have to try to bridge the gulf between rich and poor countries back at the organisation's Geneva headquarters over the coming months.

Cancun was intended to bring fresh political impetus to the talks, which have made little progress since they were launched in Doha in November 2001. Last night's breakdown virtually rules out the prospect of the Doha round finishing on schedule by January 1 2005, and raises the possibility of the talks dragging on for years.

Robert Zoellick, the US trade representative, said: "Whether developed or developing, there were 'can do' and 'can't do' countries here. The rhetoric of the 'won't do' over whelmed the concerted efforts of the 'can do'. 'Won't do' led to impasse."

Mr Zoellick said that after the setback in Cancun, the US would redouble its efforts to reach bilateral trade deals with favoured nations.

Five days of brinkmanship in Cancun had been dominated by a struggle between the WTO's traditional powerbrokers, the EU and the US, and a new group of militant developing countries, flexing their negotiating muscles for the first time. Led by Brazil, India and China, they are counting on yesterday's breakdown to put them in a stronger position when negotiations eventually restart.

"This is the first time we have experienced a situation where, by combining our technical expertise, we can sit as equals at the table," said Alec Erwin, South Africa's trade minister. "This is a change in the quality of negotiations between developing and developed countries."

The failure of the talks is a particularly hard blow to Britain. The trade secretary, Patricia Hewitt, had been talking up the chances of a deal hours earlier after the EU agreed to tone down its demands.

Ms Hewitt said: "There was a deal to be done, and it is a bitter disappointment that we haven't reached agreement."

With the world economy already fragile, analysts fear the collapse could further damage business confidence. Chances of real progress are seen as slim for at least the next year, given approaching elections in the US, India and France, three of the WTO's key members.

Development campaigners said no deal was better than a bad one for poor countries. "The blame game will start right away, but as far we are concerned, Pascal Lamy [Europe's chief trade negotiator] is chief suspect number one and two," said Duncan Green, policy analyst at the Catholic Agency for Development, Cafod. "He opposed the interests of developing countries right to the end and this is the price we have to pay."

Oxfam said the refusal of the EU and US to cede any ground to developing countries on agriculture - and Europe's attempt to force a global investment and competition treaty on to the table - had forced poor countries to walk out.

A small group of countries - the EU, US, China, South Africa, Brazil, India, Malaysia and Kenya - had been locked in tense discussions for most of the day in the hope that a deal which they agreed to could be rubber-stamped by other members.

Countries from Africa and the Caribbean were infuriated by this tactic, arguing it went against assurances they had received after Seattle that they would not be excluded from the real decisions.

Under pressure from other African countries, the Kenyan delegation left the talks at midday, blaming the EU for insisting on talks on the so-called Singapore issues, four new negotiating areas including investment and competition which poor countries say they are not ready to discuss.

When Mr Derbez reconvened the meeting after lunch, Europe's offer to withdraw investment and competition, the most contentious issues, was rejected by Botswana, speak ing for the poorest countries. "Lamy, the great negotiator, pushed the talks over the brink," said Matthew Lockwood, of Action Aid.

"You ask me who is to blame," said Kenya's Mr Oduor. "I would say it is those who have been trying to manipulate the process. Those who have been trying to manufacture consensus. The EU and the US, we believe ourselves, are to blame. The Singapore issues were at the centre of the deadlock, all of them. The developing countries say that they are not ready for any of them."

Talks in Cancun had centred on five areas: agricultural sub sidies, industrial tariffs, market access, investment and competition rules, and special help for the poorest countries. Sources said progress was minimal in many areas, and Mr Derbez ran out of time to bring the opposing camps together.

In the final hours it was the African countries' refusal to accept talks on the Singapore issues which proved the deal-breaker, but the Cairns group of agricultural exporting countries was also reported to be refusing to reopen talks on agriculture, believing the deal on the table was too favourable for the protected markets of the EU and the US.