Some cheered in the hallways. Others pointed fingers. But when
word came down that a World Trade Organization conference had
collapsed Sunday, attendees and observers agreed on one thing: The
push for international freetrade had been dealt a significant blow.
Formed in 1995 as a organization to negotiate and adjudicate
trade agreements, the WTO's relevance has been challenged by the
inability of rich and poor nations to compromise and find consensus
on issues ranging from farm subsidies to foreign investment.
The Cancun debacle may spur nations initially to shun the WTO's
146- nation forum and pour greater efforts into developing bilateral
or regional trade agreements. Longer term, analysts say, that shift
may undermine the WTO, or may hold the key to streamlining future
global trade talks.
"Failure at Cancun could do to the WTO what the Iraq war did to
the UN: Undermine its influence and marginalize it," says Justin
Forsyth, Oxfam's director of policy. A new hardball tenor at the
talks, accentuated by the emergence of a 21-member bloc of
developing nations determining to fight farm subsidies, echoed the
tough talk over Iraq that has hobbled the United Nations Security
And just as the US ultimately abandoned the UN over Iraq to form
a "coalition of the willing," individual nations may simply strike
up new trade deals bilaterally and regionally, bypassing the
contentious global talks.
"I predict more bilateral trade deals, more NAFTAs," says Daniel
J. Ikenson, a trade-policy analyst at the Washington-based Cato
Institute, referring to the North American Free Trade Agreement.
"They are easier to negotiate since there are [fewer] arms to
However, the WTO's director general, Supachai Panitchpakdi,
denies that such a shift would spell disaster for his organization.
"I could understand that other countries will want to get on with
things and use bilateral agreements. Overall, I don't think this
will undercut the relevance of the WTO," he says.
In the long term, he argues, a reemphasis on regional trade blocs
like South America's MERCUSOR and Southeast Asia's ASEAN is a
"normal and healthy thing" that could reduce the current
unwieldiness of global trade negotiations. This development was
already on display at Cancun, with the formation of the G-21 and the
representation of Europeans nations by EU trade commissioner Pascal
The Cancun talks were considered the make-or-break moment for
trade negotiations launched two years ago in Doha, Qatar. There, WTO
delegates launched the Doha Round, agreeing to phase out most
agricultural export subsidies, and eliminate most tariffs, but
failed to set a deadline, or specify which goods would be affected.
Japan, for example, levies 600 percent tariffs on rice imports,
effectively barring other countries from entering their market. The
US, meanwhile, spends $5.6 billion a year to subsidize its cotton
farmers, a figure higher than the entire US foreign aid package to
West Africa, where the cotton industry has been decimated by cheaper
And European nations protect their farmers perhaps more than
anywhere else, with many countries arguing that domestic food
production is a national security issue, in case a massive war
blocks food imports.
The industrialized world pays out $1 billion a day in subsidies
to farmers who represent less than 1 percent of its population. The
G-21, meanwhile, includes 63 percent of the world's farmers.
Japan and the European Union put discussion of farm subsidies on
hold, however, pushing instead four topics referred to as the
"Singapore issues." The goal was to give more market access to
multinational companies, regulate competition, improve transparency
in government contracts, and simplify procedures for cross-border
The Group of 21 (G-21), including economic powerhouses like
Brazil, China, and India, balked at the sidelining of the farm-
subsidy issue, and flexed its newfound muscle to end the talks. …