Talks on freer global trade collapsed yesterday when poor countries flexed their muscle and refused to compromise on demands for steep cuts in the subsidies rich countries pay their farmers.
Negotiators played down the importance of the failure, less than 24 hours after the chairperson of the World Trade Organization meeting said a setback would hurt the world economy and be difficult to overcome.
But delegates from many poor countries celebrated what they called a victory against the West, and anti-globalization activists and some trade experts said the collapse would force the WTO, traditionally dominated by the United States and the European Union, to change the way it works.
It is now considered impossible for the WTO to conclude a pact by the December 2004 deadline agreed to in Doha, Qatar, two years ago. The Doha Round was meant to get freer trade back on the rails after the debacle of Seattle in 1999. A similar rich-poor split doomed that effort.
Talks will continue and senior negotiators will meet again to consider the way forward in December, the WTO said, but few expect a breakthrough then.
Many countries, including the United States, are expected to more actively pursue country-to-country trade deals rather than wait for the multilateral system to improve.
"Canada is disappointed," said International Trade Minister Pierre Pettigrew. "But we will continue to work on getting this agenda back on track and on keeping our eyes on the prize we all seek - a balanced and equitable global trading system that will benefit Canada's economy as well as the developing countries."
Many poor countries accused the United States and Europe of trying to bully poor countries into accepting trade rules they did not want.
"Trade ministers have been pressured, blackmailed," said Irene Ovonji Odida, a delegate from Uganda.
The failure is welcome news for Canadian poultry, egg and dairy farmers who faced the possible collapse of their sheltered industries if reforms in a draft text had proceeded. But mostly Western farmers in other sectors, who do not have high tariffs protecting them and depend on exports, will see no gains in market access.
Companies in the goods and services sectors will also have to wait for any improvement in foreign-market access.
Despite five days of intense meetings, the 146 member countries of the WTO were unable to bridge big differences over how quickly rich countries should bring down the $300 billion U.S. in farm subsidies they pay out every year.
Developing countries, unhappy with the meagre concessions the U.S. and the European Union were prepared to make, rejected demands to include negotiation on new rules for foreign investment and other issues, leading to the stalemate.
Last-ditch talks yesterday found no room for compromise, leading anti-WTO groups to declare the drive for freer trade dead.
"It killed the Doha Round. They're going to have to start over," said Maude Barlow, chairperson of the nationalist Council of Canadians. "I don't think it's just a setback. What happened here was the breakdown of a model."
Pettigrew disagreed, saying, "We remain fully engaged in the Doha Round."
Sergio Marchi, Canada's WTO ambassador, said there is no cause for celebration. Poor countries are better off with a new WTO deal than if richer countries do one-off trade deals, mostly with each other, he said.
"We have all collectively failed and I would say that developing countries even face a greater marginalization in the future. They're not going to be invited to the regional (trade bloc) dance."
The United States blamed other countries it didn't name, saying some were more interested in flowery speeches than negotiations.
"Useful compromise among 148 countries requires a serious willingness to focus on work, not rhetoric," U.S. trade representative Robert Zoellick said in a statement.
The comment appeared to be directed at a group of poor countries - often known as the Group of 20-plus - that emerged as the major opposition to the U.S. and European positions. Leaders of that group said they had brought concrete issues to the table that would be the basis for future trade talks.
"We emerge from this process stronger than we came into it," Brazilian Foreign Minister Celso Amorim said.
Ecuador's foreign trade minister, Ivonne Baki, added: "It's not the end, it's the beginning."
It was the second time WTO talks have collapsed in four years, and a major blow to efforts to regulate the world's trade. EU trade commissioner Pascal Lamy said the round of talks is not dead "but it certainly needs intensive care."
"We could have gained - all of us," he said.
"We lost - all of us."
The Cancun meeting, against the now-usual backdrop of protest, was meant as a midpoint stocktaking between Doha and the end of the round. As such, no one expected a final agreement, but trade ministers were supposed to agree on a road map.
Instead, said trade consultant Peter Clark, the effort is stuck in a deep ditch. The U.S. and the EU are going to have to reconsider their methods, he said.
A focus of anger for poor countries was the billion-dollar-plus U.S. cotton subsidy, which they wanted to end but which the U.S. sidetracked by saying it had to be addressed with textiles and clothing, two highly sensitive and protected areas.
Financial Post and AP contributed to this report
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