Politics or Substance?

It is argued here that, in Cancun at the WTO Ministerial Meeting, developing countries refused to agree to negotiations on competition policy because of a range of issues that were politically based, rather than because of technical objections to a multilateral framework for competition policy in the WTO. While most developing countries’ governments do have arguments to support a view that there could be harmful effects to their economies resulting from a WTO regime on competition policy, it is my view that this analysis was not pivotal in informing the decision-making process, and in some cases, may not have been taken into account at all. There were three fundamental reasons why developing countries refused to agree to negotiations on competition policy. The first, and most obvious, is because it was linked to the so-called Singapore issues, that is, Competition Policy, Investment, Government Procurement, and Trade Facilitation, as a single undertaking. Investment and Government Procurement triggered even more adverse reactions than Competition Policy.

The Singapore issues were just not acceptable to developing countries as a single undertaking. Yet, the negotiators on the European side were uncompromising until the eleventh hour, and in the process, read the mood on the other side incorrectly. The second reason why developing countries were so opposed to undertaking negotiations on the Singapore issues, and by extension, to competition policy, was because they were determined not to increase the burden of trade negotiations more than they had undertaken already. In addition to WTO negotiations, Caribbean, African and Pacific (ACP) countries are negotiating the Cotonou Agreement agenda currently, and Caribbean and Latin American countries are in the final stages of negotiating the Free Trade Area of the Americas (FTAA) Agreement, which has a very ambitious scope and nine negotiating groups.
There simply is not the capacity in these countries to undertake further negotiations in completely new areas where there is little technical expertise.
A third reason why developing countries refused to agree to negotiations on the Singapore issues was because of the hard line taken by the Europeans and Americans on agricultural export subsidies and domestic support that affects trade. In the view of many developing countries, the tactic employed in the last session at Cancun was a deliberate manoeuvre to cause the negotiations to collapse over the Singapore issues rather than agricultural subsidies. In their view, the understanding was that when the plenary re-convened, the item on the agenda was agriculture. However, to their surprise the Singapore issues were put on the table, de-coupled and limited to only Trade Facilitation as a concession, without any linkages to concessions in agriculture.

This, despite the insistence by the Group of 21, supported by other developing countries, that they were not entertaining the Singapore issues under any conditions. Then, to the even greater surprise of all delegations, the chair closed the meeting on the basis that consensus was not possible. Most delegations viewed this as a premature decision. The fact that the EU and the US refused to negotiate on agricultural subsidies did not make the headlines. It was the sub-script. It was developing countries’ refusal to negotiate the Singapore issues that did, leaving the intransigence of the developed world relatively free from initial critical analysis. While, presumably, the intention was to lay the blame on developing countries for failure, it worked in quite the opposite way, since it gave a boost to the confidence of developing countries because for the first time since the 1970s a level of unity emerged amongst them that allowed them to flex their muscles. No one wanted the collapse of negotiations in Cancun. The Europeans and Americans are amongst the most informed and skilful of negotiators in the international arena. In negotiations, there has to be a level of understanding of the opponent’s bottom line, beyond which the negotiations would inevitably collapse.

In my view, the Europeans and the US did not expect the unity and resolution of the Group of 21 (developing countries), with support by all other developing countries. They expected collapse in the eleventh hour, and held out on concessions, thinking that they could outwit the developing countries as the pressure built up towards the end of the negotiations. Why not? This strategy has been successful over the last two decades.
Returning to the table with only Trade Facilitation, and before discussion of agricultural subsidies, seemed to the developed countries to be a great concession, and may have worked in prior times. However, they did not anticipate two things: firstly, the capacity of developing countries to withstand the pressure to break ranks and accept crumbs, because of a supposed fear of the consequences for them of a failure of the Cancun negotiations; and secondly, the loss of the critical last hours of the negotiations when many a giant has crumpled in the face of the pressures of negotiations. In fact, by calling off the negotiations, the Mexican Chair deprived the EU and their supporters of the most critical negotiating time when they would have turned up the pressure on the developing countries. Small wonder, then, that they were furious with the Chair for closing the meeting so abruptly.