World Trade Organisation Fifth Ministerial Conference, Cancun, Mexico, 10-14 September 2003

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The Fifth Ministerial Conference of the World Trade Organisation, which took place in Cancún, Mexico, drew to a close on 14 September 2003 without agreement on the Ministerial text.

The failure of delegates to reach agreement on the Cancun text has raised questions about the future of the global trading system and has prompted some commentators to compare the effect of the Cancun Ministerial on the World Trade Organisation to the damage done to the United Nations by the Iraq crisis. It is the second time in four years that WTO talks have broken down (following Seattle in 1999) and although trade ministers now plan to meet again in Geneva in December 2003 it is unlikely that the Doha round of negoitations will finish on schedule by 1 January 2005.

The episode has prompted countries around the world to reconsider their use of the multialteral trading system. The United States has said that it will now press ahead with bilateral negoitations while European Commissioner for Trade, Pascal Lamy, said that the EU should reconsider whether it wishes to make multilateralim its trade policy priority and whether the current working method of the WTO should be kept as it is in the future.

But while the United States and the European union may be moving away from the WTO because of the lack of progress, both along with Japan were blamed for the collapse of the ministerial talks. All three parties were keen to press on with the so-called Singapore issues (investment, competition, transparency in government procurement and trade facilitation) but the developing countries said they not ready to negotiate on these issues leaving the 146 member body in stalemate.


The main aim of the Cancun Ministerial Conference was to assess the progress in the negotiations and efforts under the Doha Development Agenda, adopted at the last WTO ministerial conference held in the capital of Qatar in November 2001.

At the 4th WTO Ministerial Conference in Doha, delegates from 146 countries agreed to launch a new round of WTO negotiations comprising both further trade liberalisation and new rule making, underpinned by commitments to strengthen assistance to the world's less developed countries. A target deadline of 1 January 2005 was set for the completion of negotiations. (See European Sources Online's In Focus on the Doha Ministerial Conference for more background).

The key areas of negotiations are:

Agriculture: At Cancún, a framework needs to be adopted establishing further commitments and related disciplines on market access, export competition and domestic support.
Trade in goods: Cancun should establish the "modalities" and set the remainder of the timetable governing negotiations on customs duties and tariff peaks.
Services: Those WTO members that have not already done so need to be encouraged to make progress on the opening of their services markets, including the temporary movement of professional service providers. Initial offers should be submitted, improvements to existing offers negotiated and a clear roadmap for the completion of negotiations established.
Medicines: The TRIPS agreement, which should enable developing countries to import generic drugs on a cost-effective base, should be finally approved in Cancún after the United States has agreed to the plan tabled in December 2002.
International Trade Rules: WTO members need to take decisions on the negotiating modules for establishing a minimum set of rules in four key areas: investment; competition; trade facilitation and transparency in government procurement.
Environment: Agreement in Cancún could be reached on the observership of the United Nations Environmental Programme (UNEP) and of the Secretariats of Multilateral Environment Agreements (MEAs). Discussions on environment labelling could also take place.
Geographical Indications: Cancún should confirm the outcome of negotiations on the establishment of a multilateral register to protect the geographical indications of certain wines and spirits and should extend negotiations on a number of agricultural products.

The EU's position on Cancún negotiations

Following on from the agreements reached at Doha in November 2001, the EU has remained committed to the Doha Development Agenda and it approached the Cancún Ministerial Conference with a desire to complete negoitations in certain sectors - such as agriculture - while launching dicussions on new areas such as investment, competition and trade facilitation.

After a WTO deal on generic medecines was finally agreed on 1 September 2003 , which will those countries without the capacity to produce their own medicines to import generics, the European Commission suggested that the general mood going into the conference should be fairly upbeat with all WTO members aware of the importance of the meeting.

In a press release [IP/03/1198] issued ahead of the Cancún conference, the European Commission stated its determination for success, saying:

"The DDA is crucial for bolstering international economic growth, and helping developing countries integrate into the global economy. So it is critical that Cancún is a success, and the EU has pushed hard for progress on the outstanding issues".

Pascal Lamy, the European Commissioner for Trade, added:

"Europe is willing to take its responsibilities but we cannot do it alone. If we want this round to be successful, we will all have to shoulder the burden, and to show a willingness to compromise, a determination to succeed".

The European Union agreed on its negoitating position for the Cancún ministerial at a Council meeting of the EU's foreign mnisters on 21 July 2003

One of the priority areas for the EU in Cancún concerned the agricultural negoitations. The European Union believes that the proposed reforms of the Common Agricultural Policy demonstrate the EU's important contribution to the Doha negoitations but the Agriculture Council has also stressed that the margin of manoeuvre offered by this CAP reform could only be used in the DDA on condition of equivalent agricultural concessions from the EU's WTO partners. The EU aslo hopes that the Cancún meeting will provide an opportunity to find a balance between market opening and the protection of the countryside. In further effort, the European Union and the United States produced a joint initiative on agriculture for the WTO negoitations on 14 August 2003 [See IP/03/1160].

With regards to trade in goods, the EU offered to keep customs duties within a narrow bracket and to prevent tariff peaks for some products. In addition, it has proposed the abolition of export restrictions on raw materials and the provision of zero rating for textile sand clothing for all WTO partners, a move it believes would particularly benefit developing countries since these are their main exports.

On services, the EU was particularly keen to establish a clear roadmap for negotiations in order to make the Doha deadline in January 2005. Similarly, it was keen to press its WTO members to agree on the negoitating modalities for issues related to international trade rules, the so-called Singapore issues. The EU believes that these discussions must get underwya immediately after Cancún in order to make the 2005 deadline.

The EU also agreed to press certain environment issues in Cancún as well as the protection of geographical indications. The latter is an area where the EU is increasinlgy active and it is keen to establish a multilateral register of wines and spritis whilst dicussing the prospects of extending protection to other agricultural products.

Overall, the European Union approached Cancún in an ambitous and determined way. While it argued that the a revised draft Cancun Ministerial text, tabled on 24 August by the Chairman of the General Council of the WTO, Mr. Perez de Castillo, indicated the substantial differences remaining between WTO members that must be resolved by Ministers in Cancun it also commented on the number of areas of agreement.

Generally the EU stated that the text was "not balanced in some areas (notably in agriculture), insufficiently ambitious in others (for example in industrial tariffs and geographical indications or presents a step down in ambition (e.g. on Environment)".It also criticised the text for failing to provide an unequivocal decision on the launch of the negotiations on the Singapore issues.

Cancún - From Early Successes to Failure

The Cancún Ministerial got off to a good start. The membership agreements of Cambodia and Nepal were approved on 11 September 2003, paving the way for them become the WTO's 147th and 148th members, and first least-developed countries to join the WTO through a full working party negotiation. They still have to ratify their agreements and inform the WTO, and 30 days after that they will become WTO members. There was also a productive debate on a proposal concerning the trade in cotton preapred by four African countries (Benin, Bukina Faso, Chad and Mali).

However by the mid-point of the conference tensions were beginning to show as the "faciliatators" for each issue began work on a new draft Ministerial declaration. In particular, the group responsible for the "Singapore issues" were divided about the way forward. On 12 September 2003 facilitator Pierre Pettigrew reported three distinct positions in the group:

  • A substantial number of countries said that there was no explicit consensus on any of the four issues and that they should be referred back to the Working Groups in Geneva.
  • A second group wants to launch negotiations on all four issues in Cancún. Some in this group say that the Doha Declaration already mandates the launch of negotiations here in Cancún.
  • A number of countries are prepared to explore possible solutions between these two options.

The EU and US argued for the launch of negotiations in Cancún but the developing countries said they were not prepared to do so. While in the past, the "effective power" of the EU and US has often helped them to successively defend their position against the small developing countries, this time they faced more organised opposition. A group of twenty countries, including Brazil, Argentina, Egypt, China, India and South Africa joined forces in a group, now known as the G20+, to defend the interests of developing countries in the multilateral trade negoitations.

By day four of the conference, Chairperson Luis Ernesto Derbez, Meixco's foreign minister, expressed concerns about the effects that the failure of the conference would have on the global economy and the international trading system. Describing the ministerial meeting as a once-in-a-generation opportunity, he warned that if Cancún failed, the negotiations may take a long time to recover.

Generally, a large number of ministers suggested that their particular concerns had not been included in the draft ministerial text. For example, they found the agriculture section either too ambitious or not ambitious enough. They differed over whether to launch negotiations on the Singapore issues or whether there is no consensus to do so. They had comments on the non-agricultural market access text, including the description of the tariff cutting formula and whether sectoral deals (zero tariffs for all products within specified sectors) should be compulsory for all members. Others said the text on the cotton initiative did not reflect the proposal to phase out subsidies and for subsidizing countries to compensate the African producers in the interim. Moreover, a number of African and Caribbean countries criticised the draft for doing too little on special and differential treatment for developing countries.

Amidst the negative atmoshpere, a few countries, both developed and developing, expressed concern that the negative sentiments would wipe out what they described as possible significant results in areas such as agriculture, which are particularly important for developing countries.

Ultimately, Chairperson Derbez ended the conference on 14 September 2003 after concluding that despite considerable movement in consultations, members remained entrenched, particularly on the "Singapore" issues . With negotiations on the Singpaore issues continuing through the night but without a breakthrough, time had run out for agreement on the Ministerial text and so a Ministerial statement was prepared instead.

The text noted the considerbale progress made at Cancún and said that this would be used in the progress of the negotiations. It called upon officials to continue working on outstanding issues and asked the Chairman of the General Council, working in close co-operation with the Director-General, to coordinate this work and to convene a meeting of the General Council at Senior Officials level in Geneva no later than 15 December 2003 to take the action necessary at that stage to enable the WTO members to move towards a successful and timely conclusion of the negotiations.

It concluded:

"Notwithstanding this setback, we reaffirm all our Doha Declarations and Decisions and recommit ourselves to working to implement them fully and faithfully".

Reaction to the failure of the Cancún Ministerial Conference

Many countries participating expressed their surpise at the chairperson's decision to end the conference without agreement on the ministerial text since many believed that this could have been achieved in some form or other.

Franz Fischler, the European Commissioner responsible for the EU's agriculture negotiations at the meeting, said:

"I regret that it was impossible to reach consensus on the Singapore issues. This is the more regrettable because the gaps on farm trade liberalisation have finally started to narrow down. A deal on agriculture would have been possible".

However, from the perspective of the European Trade Commissioner, Pascal Lamy, Cancún highlighted the failures of the WTO system:

"I do not want to beat about the bush: Cancun has failed. This is not only a severe blow for the World Trade Organisation but also a lost opportunity for all of us, developed and developing countries alike. We would all have gained. We all loose. We will not play the blame game and we will remain open to reviving this process.
We came here to reach 50% of the negotiation and we are back to 30%....
Despite the commitment of many able people, the WTO remains a medieval organisation. I said this in Seattle, got a lot of flak and I have to repeat it here. The procedures and rules of this organisation have not supported the weight of the task. There is no way to structure and steer discussions amongst 146 members in a manner conducive to consensus. The decision-making needs to be revamped".

His view has been echoed by many commentators from developed countries who believe that a fundamental reform of the WTO is now necessary. They argue that the decision-making system, based on reaching consensus, makes failure near enough inevitable when there 146 countries represented. In future, many have said that they will focus on bilateral trade relations as opoosed to the multilateral system. Even the EU is reconsidering its position.

However, for the less developed countries Cancún is being heralded as a limited success. While agreement may not have been reached on a number of important issues, they claim that their increased power to represent their views through the G20+ group is a significant step forward, providing them with more punchweight against the "big boys". Ironically, it was this success with led to the divisions over the Singapore issues and ultimately the failure of Cancún. But in the long run, the developing countries could be the biggest losers as they fail to benefit from more favourable trading conditions.

Clearly, the WTO's Director -General General Supachai Panitchpakdi needs to ensure that the momentum behind the Doha Development Agenda is maintained and that officials meet in Geneva in December 2003 preapred to make progress. He is all too aware of the importance of the Doha round of negotiations. After Cancún failed, he said:

"It is important to ensure the negotiations are put back on track. If the Doha Development Agenda fails, the losers will be the poor of the world".

But with the world's richer countries moving more towards bilateral relations and further away from the multtilateral trading system, officials at the WTO may find themselves facing as much of an uphill challenge as those at the United Nations in the months ahead.

Further information within European Sources Online:

European Sources Online: Topic Guides
The external trade policy of the European Union
European Sources Online: In Focus
The Millennium Round, December 1999
World Trade Organisation Fourth Ministerial Conference, Doha, Qatar, 9-13 November 2001
European Sources Online: Financial Times:
10.06.03: Geneva battle resumes on WTO accord
25.06.03: Ho-hum over Doha
22.07.03: Cancún deadline injects sense of urgency into WTO
01.08.03: Trade negotiatiors find it's time to talk
04.08.03: Poor countries put demands to trade ministers
04.08.03: A short hot Summer for global trade
05.08.03: The rich wreckers of the world trade round
06.08.03: Experts not hopeful of WTO farm deal
14.08.03: US and EU unveil plan to cut farm subsidies
14.08.03: The challenge for trade in Cancún
15.08.03: US-EU farm proposals leave WTO members in a dilemma
18.08.03: WTO's yard a mess
22.08.03: Rifts over farm trade add to delay on Cancún plans
26.08.03: WTO battles over framework for Cancún
29.08.03: Drugs accord fails to heal rifts in WTO
30.08.03: Flurry of litigation ahead of Cancún
01.09.03: Send farmers off to the markets
15.07.03: WTO seeks to revive stalled trade talks in Doha round
15.07.03: UK urged to spurn EU's Doha demand on non-trade rules
04.09.03: With the priorities of member nations conflicting sharply, agreement may prove elusive at next week's ministerial meeting. Some fear a period of stagnation for trade reform
05.09.03: Cancun must keep Doha on track
08.09.03: A good "pro-poor" Cancun could help rich countries as well
08.09.03: Brazil to lead farm trade reform hard line
09.09.03: Keeping the trade bicycle moving
09.09.03: Ministers racing to make up lost time
09.09.03: US farm ministers warn over trade tariffs
10.09.03: Cancun should cultivate fairness
10.09.03: Ministers limber up for WTO subsidies battle
12.09.03: Trade powers seek to avert clash with G21 poorer nations
15.09.03: Last-ditch bid to get trade talks on track
16.09.03: US points finger over trade talks collapse
16.09.03: Lamy returns home to face anger and disappointment
16.09.03: Brazilians claim progress towards farm subsidy draft
16.09.03: Poorer countries are likely to be the biggest losers from the unexpected breakdown in the Doha round
16.09.03: Talks unravel over cotton
16.09.03: Road from Cancun leads to Brussels
17.09.03: EU may rethink multilateral trade role
18.09.03: Hewitt admits failure of Cancun talks was 'serious setback'
18.09.03: Cancun was a setback but not a tragedy
19.09.03: Cancun's failure threatens end to Machiavellian games
20.09.03: Collapse of WTO talks haunts Dubai
European Sources Online: European Voice:
06.06.02: Keeping disputes away from Doha
10.04.03: EU-US relations set to stifle world trade talks
22.05.03: Future of EU culture safe in trade talks, promises Lamy
28.05.03: Safeguards on trade
05.06.03: Cancún or bust: delivery firms keep close watch on trade talks
26.06.03: EU and US must get Doha show on the road, warn industry chiefs

Further information can be seen in these external links:
(long-term access cannot be guaranteed)

EU Institutions

European Commission

DG Press and Communication
Press Releases:
  26.06.03: Partnership of a Great Purpose: The European Union, the United States and the WTO [SPEECH/03/328]
  22.07.03: EU-WTO: Pascal Lamy welcomes Council conclusions on the Road to Cancun [IP/03/1055]
  22.07.03: WTO negotiations - EU and Japan determined to cut the costs of anti-dumping investigations for companies [IP/03/1065]
  28.07.03: WTO Farm Talks/Cancun: EU's Fischler calls for renewed effort to bridge differences [IP/03/1127]
  01.08.03: EU-ACP: Working together on the Road to Cancun [IP/03/1145]
  13.08.03: EU, US and Canada submit paper on WTO negotiations on non-agricultural market access [IP/03/1158]
  14.08.03: EC and US propose a framework for a joint approach on agricultural questions in WTO [IP/03/1160]
  28.08.03: WTO talks: EU steps up bid for better protection of regional quality products [IP/03/1178]
  28.08.03: WTO farm talks: Commission presents info pack for Cancún [IP/03/1180]
  01.09.03: EU strongly welcomes WTO deal on generic medecines [IP/03/1189]
  04.09.03: WTO Cancun: EU determined to make trade work for all a stronger multilateral trading system at hand [IP/03/1198]
  09.09.03: EU aspirations and the Doha Agricultural Negotiations [SPEECH/03/393]
  12.09.03: EU welcomes WTO accession of Cambodia and Nepal [IP/03/1239]
  15.09.03: Statement of Romano Prodi following the Cancún ministerial meeting [IP/03/1252]
  04.09.03: Ten ingredients to make Cancun success [SPEECH/03/384]
  09.09.03: From Johannesburg to Cancun: Making Trade Sustainable [SPEECH/03/394]
  10.09.03: Can the Doha Development Agenda live up to his name? [SPEECH/03/399]
  15.09.03: State of play of Agriculture Negotiations [SPEECH/03/406]
  15.09.03: Reaction to the chair's draft [SPEECH/03/407]
  15.09.03: The breakdown of the Cancun Ministerial Meeting [SPEECH/03/408]
  15.09.03: Press Conference closing the World Trade Organisation 5th Ministerial Conference [SPEECH/03/409]
  17.09.03: From Cancun: The road ahead for the trade and agriculture negotiations [SPEECH/03/413]
  04.09.03: Frequently-asked questions The WTO and EU agriculture [MEMO/03/169]
DG Trade
The EU and the WTO
All about the EU and Cancun
  The Doha Development Agenda
  How the Commission will negotiate
  EU submissions
  What Cancun is about
  Key areas for decision in Cancun
  Pascal Lamy's letter from Cancun
DG Agriculture
Trade and Agriculture
Info pack: EU Agriculture and the WTO - Doha Development Agenda
Newsletter: CAP reforms streghten the EU's position in WTO talks

International Organisations

World Trade Organisation
  Fifth WTO Ministerial Conference
  Negotiations, implementation and development: the Doha agenda
  The Doha Declaration explained
  Draft Cancun Ministerial text
  Cover letter of the Cancun Ministerial Text
  Cancun Ministerial: Briefing Notes
  Press releases:
    14.09.03: Conference ends without consensus
    18.09.03: Cancun: the real losers are the poor
    19.09.03: The multilateral trading system: Why East Africa must remain engaged
Miscellaneous Organisations
Choike: A Portal on Southern Civil Societies
  In depth report on the Cancun ministerial
Third World Network
  Press Releases:
    01.09.03: TWN's comments on draft Cancun ministerial text
    05.09.03: Forty developing countries submit formal WTO Ministerial Conference Paper on Singapore issues
    15.09.03: Fate of ministerial hangs on a thread
    16.09.03: Analysis of the collapse of the Cancun ministerial
    16.09.03: TWN statement on collapse of Cancun ministerial
Christian Aid
  Trade Justice Campaign: the basics
  Press Releases:
    05.09.03: Last chance for WTO to deliver for poor says Christian Aid
    12.09.03: WTO text sounds death knell for "development round" of trade talks
    15.09.03: Developing countries walk away from Mexico trade talks
    16.09.03: WTO talks collapse
    16.09.03: Cancun collapse: Christian Aid's initial response
Oxfam UK
  The good, the bad and the uncertain
  Trade report
  Opinion: A threat to the rich
Centre for European Policy Studies
  The World Trading system: In dire need of reform [August 2002]
The European Policy Centre
  The Doha Development Agenda and Prospects for the Cancun Trade Ministerial [May 2003]
  Propspects for the Cancun trade ministerial [July 2003]
After Cancun: Should the WTO be reformed? [September 2003]
The Doha Development Agenda - Perpsectives for Cancun [September 2003]

News Organisations

BBC News Online:
Timeline: World Trade Organisation
Quick Guide: World Trade Organisation
01.09.02: New boss for WTO
06.11.02: Who needs the WTO?
16.12.02: EU offers WTO farm subsidy cuts
18.02.03: No WTO deal on cheap drugs
24.02.03: Chaos at WTO farm talks
22.06.03: Trade deadlock persists
25.08.03: Cool reception for WTO plan
28.08.03: World cheap drugs deal in sight
02.09.03: WTO protesters: Where are they now?
07.09.03: Is the WTO drugs deal flawed?
09.09.03: Paying the price in Cancun
10.09.03: What I expect from WTO
10.09.03: Cancun trade talks begin amid protests
11.09.03: Poverty lobby attacks Cancun draft
11.09.03: S Korean kills himself over WTO
12.09.03: Can free trade benefit Africa?
12.09.03: WTO chief leads cotton review
12.09.03: Cambodia and Nepa win WTO entry
15.09.03: Blame game over WTO failure

Helen Bower

22 September 2003

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