Wto Trade

Introduction

This paper will primarily discuss the breakdown of negotiations at the WTO Fifth Ministerial talks at Cancún. The issues that were negotiated in Cancún were originally introduced at the 1996 Singapore Ministerial. The talks can be broadly broken down into discussions between two main subgroups - the developed countries, represented by the U.S., EU, Canada and Japan, and the developing countries, represented by Brazil, India, China and several others. The Cancún talks started off with high aims as indicated in the statement released by the members, "we reaffirm all our Doha Declarations and Decisions and recommit ourselves to working to implement them fully and faithfully", but ended in failure without any breakthroughs in the important trade deals.

The paper will also outline how different negotiation techniques have been applied by various parties at the talks and whether these techniques have had the desired outcomes. The reasons for the failure of the talks and the opportunities that have been missed by the various parties will also be outlined.

Initially the developed countries pushed for agreements on investment, competition, transparency in government procurement and trade facilitation. Most developing countries were unwilling to discuss all the above issues, hence the developed countries offered several concessions, one of which was to scrap the issues relating to investment and competition from the discussions. The least developed countries (LDC) stated that they would not be able to accept negotiations on any of the issues. Korea stated that it could not accept dropping of any of the issues. This resulted in an impasse on the whole package of issues.

As will be discussed later on in the paper, the practices employed at the WTO so far have caused the negotiations to be undemocratic and non-transparent creating a distributive negotiating environment. This left both sides of the table with a feeling of isolation and discontentment. The developed countries wanted the developing countries to open their markets for their goods, services and companies. However, they were unwilling to open their own markets to the developing countries. This was the major point of contention for the developing countries as excessive liberalization would damage their agriculture and businesses. The following sections will provide a detailed analysis of the discussion at Cancún and highlight the major causes of failure.

Negotiation Analysis

Anchoring

Anchoring in a negotiation is the process of setting a reference point such that all discussions and adjustments are centred on that reference point. Anchoring a negotiation usually takes place at the start when one party sets the tone for the talks. If the other party is unaware of this strategy, then the outcome will usually be more favourable towards the party which sets the anchor.

This practice was evident at the WTO talks as well. As will be further elaborated on in the section on Distributive and Integrative Bargaining, the agenda and the declarations for the talks in Singapore and Seattle were established by the members invited to the Green Room. In Doha and Cancún, the General Council chair established the mandate. This meant that future discussions were centred about the established reference point. As a result, the developing countries did not feel part of the negotiation process and were left unhappy with the talks.

Another example of the use of this technique was when the U.S. offered to "eliminate tariffs on all manufactured and consumer goods by 2015 and to cut agricultural tariffs by 76% over five years if other countries were so bold too" from the very start of the conference . This meant that any further negotiations would be with relation to the year 2015.

Self-Categorization & Group Think

Self-categorization, i.e. the process of identifying oneself with members of a group and in contrast to other groups, is clearly evident in the WTO negotiations. Two main groups can be identified, one of which is formed by the developed countries such as the United States, Canada, Japan as well as the countries within the European Union (EU). The developing countries, such as Brazil, India and China on the other hand define the second group. This group is also known as the G20 and emerged at the Fifth Ministerial WTO conference in Cancún in response to a proposal on agriculture by the United States and the European Communities (EC). The G20 as a group were most interested in agricultural policies and their main goal was to address concerns of the Doha conference of 2001, namely the reduction of tariffs and subsidy cuts.

The G20 became a serious opponent to the so far dominant developed countries within the WTO by forming a group, which helped the developing countries to focus and channel their negotiation powers. Simplifying the pool of countries down to two main groups also helped facilitate the negotiation process, as opposed to having several small groups or single countries each of which had different concerns and requests.

On the other hand self-categorisation tends to make group members and therefore the group as a whole more extreme. Such a situation would hinder the different groups from coming to an agreement. Furthermore the other group perceives itself, due to the status of being 'developed' and holding the economic power, as superior. This illusion of invulnerability as well as the polarised 'ideal' group norm can constitute reasons why negotiations around agricultural concerns have failed so far.

The increased power a group has, as was in the case of the WTO negotiations, led to less flexibility regarding the extent to which the group is willing to agree. There are several examples, during the WTO negotiations, which show how the simple formation of a group led to a feeling of superiority. For example, Brazil was convinced that the developed countries will sooner or later be forced to reform their enormous farm policies, by threatening them with the expiration of the "peace clause".

Related to the notion of groupthink, which is understood as individual members aspiring to preserve group harmony, is the illusion of unanimity . Although the developing countries present a united front from an outside-in perspective, there are strong opposing opinions about which country should finally implement the policies and to what extent.

Regarding the cuts of tariffs and subsidies for example, the G20 as a group demanded more subsidy cuts and tariff reductions from rich countries than from developing ones. However, within the group there was a lack of unanimity among the developing countries. While India was deeply opposed