NGOs and representatives of social movements in the North and South see the failure as a success. Government representatives, especially from industrial countries, saw it as a wasted opportunity for the expansion of free trade. Yet the collapse of the Cancún negotiations is an unmistakable sign that there are conflicts, contradictions and imbalances within the international trade regime. Its most important organization, the WTO, is experiencing a real crisis. The current system of world trade is in need of radical reform. The people who do not understand this signal from Cancún are responsible for economic, social and political injustice and block formation, and for increasing rather than decreasing protectionism.

The resumption of the negotiations in mid-December 2003 in Geneva, however, did not indicate a move towards serious reforms. But business as usual will not be enough to overcome the WTO crisis. The various trade blocks have become even more wary of each other. The EU and the USA are gradually familiarizing themselves with the new post-Cancún realities and have indicated that they can do without the inclusion of the Singapore topics (investments, competition, public procurement), if liberalization progresses in other areas (agriculture, goods and services). But a far reaching reform entails genuine concessions on the part of industrial countries, above all a decrease in subsidies and better market access for products from the South.

In addition, procedural problems must be solved, including the lack of transparency and the imbalance of power in the decision-making structures. And finally, the industrial nations must act on the justified demands of the developing countries who have been fighting for more room for maneuver and special and differential treatment for their economies beyond the tight corset of one size fits all. Radical Reform for the WTO The present state of the multilateral world trade system is nothing to be proud of: it deepens economic imbalance. Even though formally its members are equals, its structure is hierarchical and opaque. It favors the industrial countries, mainly the EU, whose export of goods (40%) is far beyond that of the USA (13%) and Japan (7%).

The industrial countries pursue liberalization and the opening up of markets or use the protectionist elements to their advantage, according to where their interests lie. Until now, the World Trade Organization has massively supported these interests with its basic principles and rules and regulations. Whether it be trade, goods and services or intellectual property rights, the industrial countries continue to dominate world trade. In all of these areas they have global advantages and interests worth billions. On the other hand, emerging economies are beginning to catch up. Since Cancún, at the very latest, they have understood that the WTO may not be perfect but that it at least gives them a multilateral framework within which they can demonstrate their increased political and economic clout.

Those who support the removal of the WTO after the failure of Cancún seem not to have noticed that it was a historic turning-point; or they are simply naïve and careless in their dealings with the (power) political and economic complexities of the multilateral trade regime. Was the failure of Cancún a reason to celebrate, because everything is to stay the way it was? Cancún should be seen as a stage-win, a point of departure to increase the pressure to reform on industrial countries. They must not only make massive concessions in their agricultural policy. What is apparent is that the WTO opponents have no realistic alternative to offer on just how the present world trade order is to be structured.

What follows after the ”derailing of the WTO“?

What regulations, standards and procedures should a world trade order follow if it is to benefit developing countries and their people? Are bilateral negotiations, as they are being expanded under the present economicpolitical status quo, a viable alternative? A WTO which not only deals with a dramatically increased range of tasks but also has delusions of omnipotence and expands the logic of free trade into all walks of life is certainly not desirable. It should return to concentrating on its original tasks, such as the regulation of tariffs and trade-distorting subsidies. An almighty super agency that deals with environmental, social, consumer and human rights policies solely according to economic perspectives cannot be the objective for people who are fighting for social, ecological and human progress.

So far, the developing countries, acting as one block, have managed to prevent the WTO from extending its area of responsibility to investments and competition. They should follow this path consistently. But at the same time they have to ask themselves whether they don’t carry partial responsibility for the fact that the UN continues to lose influence in social and environmental matters, as desired mainly by the USA. The relationship between international trade laws and international human and social standards and environmental law must finally be clarified. Thus it is imperative that the WTO recognize global conventions and agreements for the protection of human rights, work and social rights of ILO and confirm it as binding under international law.

Hitherto, most developing countries have not taken a stand on this issue at all, and if they have, it was mostly negative, because they consider environmental and social standards a trade barrier. Real Multilateralism Industrial countries are also gradually beginning to comprehend that the WTO will not fulfill the monopoly position that it was once invested with. It has become infected by the classic problems of multilateralism: politically unpredictable, prone to disruptions, inefficient, too slow. Particularly after Cancún, this accusation was brought forward by Northern protagonists of the WTO. So it is no wonder that the interest of the industrial countries in the WTO has waned considerably. Industrial countries, first and foremost the USA, thus have seen the WTO as one instrument among many and pursue their most aggressive trade strategy outside of the WTO. But many important developing countries, mainly regional subhegemonies such as Brazil, India and South Africa or the emerging economies of Southeast Asian are looking for trade-political advantages of biregional and regional trade agreements, even if those agreements are meant to merely complement or concrete the multilateral WTO framework.

The negotiating power that particularly Latin American countries such as Brazil enjoy was demonstrated in Cancún and the USA are starting to feel it in the framework of the FTAA negotiations. “Different speeds“ for the negotiations were agreed on during the summit in Miami and sensitive topics such as investments, services and intellectual property are only negotiated among “interested countries“ and ”when necessary“. The US American time frame to conclude FTAA negotiations rapidly has begun to falter. Additionally, political and economic cooperation and integration zones for all regions which are also to form the backbone of a world trade order - should be promoted, while extending the South-South cooperations. These positive dynamics of international trade policy should not veil two facts: Firstly: Purely bilateral trade agreements between an industrial country and a developing country usually force the developing country to relinquish independent (economic) policies in individual sectors.

Case in point: in the free trade Agreement between the USA and Chile, Chile was forced to relinquish limitations on the inflow of foreign capital when certain signals for a financial crisis appear. Singapore on the other hand was forced to relinquish a ten-year-old restriction on gum chewing in its free trade agreement with the USA. Whatever one’s opinion on gum chewing or its ban, it shows that the governments of developing countries usually accept what the stronger industrial country dictates, if they want to benefit from the ”pleasures“ of more useful aspects of free trade agreements. Secondly: The poorest developing countries - already victims of protectionist measures, even by emerging economies - could fail when regional trade blocks are extended. They would become the victims of exclusively regional trade blocks, internally liberalized, sealed off from the outside world. Not necessarily a vision for the “different“ and just world that the globalization critics demand! Developing countries would be able to demonstrate their political clout best within a multilateral trade framework, whereas economically weaker countries are more dependent in bilateral negotiations and thus will remain easier to blackmail.

This becomes even more probable the more emerging economies and developing countries close ranks on a long-term basis, like in Cancún, in order to form a political and economic counterbalance within the WTO against the industrialized nations. The closer diplomatic and economic coordination between Brazil, China and India during the last few months thus leaves room for hope. The free trade doctrine of the WTO is also no vision for the future. The compulsion to liberalize and privatize at any cost undermines the political space for different development strategies. The industrial countries must finally acknowledge the diversity of national development policies. That is why it is so important to reform the rules and regulations.

Even though 80% of the WTO members are developing countries and formally enjoy the same rights, they have undoubtedly been excluded from the preparation of important decisions and their clearly formulated majority positions have not been considered. Exclusive decision-making circles must be replaced by transparent procedures. How this can be done while maintaining efficient decision making processes has not been answered satisfactorily yet, but there are a number of concrete suggestions such as increasing the authority of developing countries and publishing all negotiation texts. More than ever, international and fair trade policies require democratic, social and ecological rules. A WTO that has been reformed this way has the best prerequisites for their implementation. Because no other multilateral organization in the world has dispute resolution mechanisms that impede unilateral claims to power and the potential to blackmail by implementing trade policies. And unlike the IMF and the World Bank it is the only economic-political organization in the world that guarantees developing countries the same voting rights.

It is imperative to use this to the advantage of developing countries. Neither the condemnation of the WTO - no doubt, the organization still deserves strong criticism - nor its removal will improve the situation. Otherwise, according to neoliberal theory, the stronger one will prevail. Until now, the existing rules and regulations of the WTO haven’t really enabled a balance of interests between developing, emerging and industrialized nations. The cooperative negotiation of compromises by equal partners, in which everybody must make concessions, is not in sight yet. For all those who strive for this kind of balance of interests and for a development that is socially and ecologically sustainable and peaceful (governments, parliaments, social movements, NGOs) there is no alternative to a multilateral trade regime. To achieve such a just and democratic design is a long and hard struggle. For developing countries, Cancún was an important stage in that struggle.

The text is the foreword to a Global Issue Paper that gives authors from around the world a platform to introduce their regional perspectives for a reform of the world trade system and the WTO. The point of departure for most of the contributions is the immediate reaction of government, business and NGOs in each country and region to the break-down of the Cancún Conference. For Mark Weisbrot and Todd Tucker (USA) the crisis of the WTO is lastly also an expression of the growing scepticism in the South towards the neoliberal offers that politics are making; the importance of the liberalization of the agricultural markets is usually exaggerated in this context. Rainer Falk (Luxembourg/Germany) deals with the postCancún debate in Europe and analyzes the results of the “pause for reflexion”, which the European Union had prescribed for itself after Cancún. Prishani Naidoo (South Africa), Gichinga Ndirangu (Kenia) and Yakubu Zakira (Nigeria) provide a detailed look at the continuing debate on the African continent.

For Fátima V. Mello (Brazil) it is mainly Lula‘s new foreign policy that is reflected in Brazil‘s active role in the WTO process, while Geroldt Schmidt (Mexico) detects increasing scepticism towards the trend of free trade agreements in the host country of the Fifth Ministerial. And finally, two contributions from Asia focus on the development of new alliances in the South. Biswajit Dhar (India) clarifies why the negotiations on agriculture have become the catalyst for the founding of the G20, while a text from the  Asia-Pacific Network on Food Sovereignty (APFS) points out opportunities that the failure of Cancún may possibly contain for trade regionalization and South-South solidarity.

Barbara Unmüßig is a member of the executive board of the Heinrich Böll Stiftung.
Translation from German to English by Elizabeth Mayer.
The whole Paper can be downloaded here.