House of Commons - International Development

Select Committee on International Development First Report

3 LEARNING THE LESSONS OF CANCÚN

15. Picking over the bones of Cancún to apportion blame for its collapse serves little purpose. But "business as usual" will not lead to the successful and timely conclusion of a genuine development round. If the round is to be revived, the lessons of Cancún must be learned. As Hilary Benn put it: "It is very important that we should reflect upon the lessons."[22] We trust that this view is shared across Government and by the European Commission.

Why did Cancún collapse?

16. Many explanations have been put forward for the failure at Cancún. The simplest is that Cancún collapsed because too few countries were persuaded that a deal which would be to their benefit was on the cards. To put it differently, many countries felt they would lose little if Cancún failed. The USA did not want to give concessions on cotton without getting better access to developing country markets. The G20+ was disappointed that no agreement was reached on agriculture, but was pleased to have made its geo-political presence felt. The G90 feared that their losses, due primarily to preference erosion, would outweigh any potential gains.[23] The EU's apparent enthusiasm for the Singapore Issues was perhaps balanced by its lack of enthusiasm on agricultural reform. There may be some truth to such explanations. But they fail to take account of the fact that countries' priorities are translated into positions through negotiating processes, and relationships between countries and country-groups, and within country-groups. Cancún collapsed because on a range of substantive issues, individual countries and country-groups which had formed in part around particular issues, were unable, by the close of the Ministerial, to reach agreement through the usual WTO negotiating processes.

PROCESS MATTERS: TIME, TIMING AND ORGANISATION

17. Issues of time, timing, and the organisation of WTO negotiating processes, at and before the Ministerial, play an important role in explaining the collapse of Cancún. Patricia Hewitt has emphasised that, "as things turned out … there simply was not enough time to get into the serious discussions that were needed on agriculture, on non-agriculture market access and on special and differential treatment."[24] When such discussions did begin, progress was made,[25] but too much time was taken up at the start of the Ministerial with speeches simply re-stating countries' well-known positions.[26] On the Saturday and Sunday morning, countries lacked sufficient time to understand and consider each others' changing positions, to consult within their country-groupings, and to ensure that their views were in turn communicated and understood.[27] For instance, as regards the Singapore Issues, Patricia Hewitt has claimed that India was "very happy" with the concessions offered by Pascal Lamy on the Sunday morning, but that this had not been communicated to the African countries within the G90 grouping. As a result they stuck to their position of insisting that all four issues be removed from the agenda.[28] Regardless of what India's position was—and there are contrasting accounts—there were certainly communication problems, exacerbated by a lack of time, with uncertainty surrounding even something as fundamental as how many and which of the Singapore Issues Pascal Lamy had offered to remove from the agenda.[29] If Ministerials are to work better in future, and there is to be sufficient time for negotiations, then lessons must be learned about the effective use of limited time. There is little point in delegates wasting time rehearsing their well-established positions.

18. With almost two years having elapsed between the Doha Ministerial and Cancún it may seem fanciful to suggest that a more effective use of time early on in the Ministerial, and a little more time for consultations at the end, might have made a difference. Had there been more progress in Geneva, there would have been fewer issues to resolve in Cancún and more chance of success. However, as we noted in our pre-Cancún report, all the deadlines for making progress at Geneva had been missed.[30] This, and the promotion of the Singapore Issues by the EU, Canada and Japan had completely overloaded the agenda.[31] This much was apparent long before Cancún. As the European Commission's Directorate General (DG) for Trade explained in a post-Cancún commentary:

We agree. But the European Commission and EU Member States should have realised the danger of overloading the agenda, prior to Cancún, as well as the risk of its strategy of last-minute brinkmanship failing (see also paragraphs 31-32). If Ministerials are to be successful, the preparatory work must be done. Better progress must be made at Geneva, deadlines must be met, and decisions should not be simply postponed to Ministerials.

19. More progress at Geneva and better preparation for the Ministerial, would have given Cancún a greater chance of success.[33] A slimmer agenda and different negotiating tactics on the part of the EU, the G20+ and others might have helped too. Nevertheless, extra hours can make all the difference. There was a widespread expectation among delegations that the Ministerial Conference would be extended by a day or two in an effort to bridge what many saw as resolvable differences.[34] Such extensions have become standard practice at the WTO. But the Chairman, Mr. Derbez, decided not to extend the Ministerial. As Patricia Hewitt told us; "the stated closing time of Sunday afternoon was the real closing time, even though that was not widely shared or understood."[35]

20. Many delegations, including the UK's, regarded the closure as premature.[36] The Consumers' Association described Mr. Derbez's decision as "bizarre and unexpected".[37] Patricia Hewitt explained to us that: "the Chairman, Minister Derbez, obviously consulted with a few people, including of course Dr. Supachai, but it was his judgment, and it had to be his judgment, as chair of the conference, that the disagreements not only on the Singapore issues but on other issues were so great that they simply could not be bridged in the time available. That was his judgment and his decision."[38] We cannot help but wonder whether Mr. Derbez might have been persuaded to extend the Ministerial if the USA and other powerful countries had so wished. But perhaps of greater concern is the fact that one person could decide to call a halt to negotiations having consulted only a few people and countries. In our view the closure of the Ministerial was premature as well as unexpected. Participants in WTO Ministerials must know when negotiations are set to conclude. Otherwise, negotiations are unlikely to work. Ministerials ought not to be extended as a matter of course, and, there should be clear mechanisms for making decisions about whether, exceptionally, to extend them. The decision to extend a Ministerial must not be in the hands of one person.

21. Mr. Derbez, it seems, along with the WTO Secretariat, was also responsible for the decision to begin Sunday's Green Room discussions by focussing on the highly contentious Singapore Issues. It was a mistake to place them, in preference to agriculture, as the first item on the agenda.[39] Patricia Hewitt suggested to us that "if countries, particularly developing countries, had been able to see real progress, particularly on agriculture but also on non-agriculture market access, where the majority of their exports lie, then everything else could well have fallen into place."[40] This may or may not be the case; we cannot know. But the opportunity of making progress on agriculture was thrown away when discussions on the Singapore Issues were held first, and stalled, before any time was given over to agriculture.[41] In a development round it was a serious mistake to prioritise negotiations on the Singapore Issues over agriculture, because agricultural reform is clearly of greater importance to most developing countries. It was wrong to attempt to make progress on agriculture a "reward" that developing countries would receive if they agreed to include the Singapore Issues on the WTO agenda. Decisions as to the order in which negotiations proceed at Ministerials ought to be taken by the WTO's membership as a whole, rather than being made by the Chairman in consultation with a small number of countries.

22. The organisation of the Ministerial, with five Working Groups discussing five sets of issues in parallel during the first three days, may have also contributed to the collapse of Cancún by undermining the scope for trade-offs between the various issues.[42] There is no perfect way of organising discussions amongst 146 members of the WTO; any structure has drawbacks which must be addressed. So, on the Sunday morning, when discussions were to take place sequentially, it may have been preferable not to start with the most contentious and divisive issues. And earlier in the week, when five Groups were working in parallel, more effort should have been made to maintain communication between the groups. The Government refers somewhat cryptically in its memorandum to the need for "better designed negotiating structures".[43] We invite the Government to clarify what it means by this phrase, and to outline what it is doing to ensure that negotiating structures are better designed in future. For the EU, which uniquely has one negotiator for a number of WTO member states, it is essential that trade ministers of Member States meet the EU trade Commissioner regularly, at least daily, during WTO Ministerial meetings so that the Commissioner can base his negotiating position on policies agreed collectively by the trade ministers.

23. There are also concerns over the ways in which papers were produced, both by Chairs of Working Groups, and by the Chairman of the Ministerial. The status of papers authorised by Chairmen and facilitators—of Committees in Geneva, of Working Groups at Ministerials, or of Ministerials themselves—is unclear, as is the role of the WTO Secretariat in their production. When the Derbez text was released on the Saturday it caused widespread resentment, bitterness and anger. On agriculture, some countries thought it went too far, others thought it didn't go far enough; this is to be expected when a text seeks the middle ground. But on the Singapore Issues and most especially as regards cotton subsidies, many delegations were stunned by what the text said. On cotton the Derbez text simply echoed the USA's line; that the West African cotton producers—pushed to the wall by the USA's cotton subsidies—should diversify out of cotton (see paragraph 39). The Consumers' Association called it a "disaster of a text"[44]; CAFOD reported that developing countries, who had been led to believe that their concerns would be taken seriously were "doubly disillusioned" by the text.[45] The status of papers produced by Chairmen and facilitators of Working Groups, and the role of the WTO Secretariat in such processes, should be clarified.

GEO-POLITICS MATTERS: NEW COUNTRY-GROUPS AND THE FAILURE OF BRINKMANSHIP

24. Perhaps the least-expected aspect of Cancún was the emergence of new country-groups, forming primarily but not exclusively around aspects of the agriculture negotiations. The G20+ brought together many of the largest developing countries including China, India, Brazil and South Africa around a complex and partially-formed set of demands, such as reductions in northern domestic support for agriculture and the elimination of export subsidies. The G90 brought together the African Union, the LDCs and the ACP countries, with a focus on protecting their preferential access to northern markets, as well as resisting the introduction of the Singapore Issues. Led by Indonesia and the Philippines, the G33 was, as its formal name indicates, an Alliance for Strategic Products and a Special Safeguard Mechanism whose members wanted to maintain their ability to protect their own agricultural sectors.[46]

25. Pascal Lamy has described the G20+ as having an agricultural mother and a geo-political father. That is, its rise is explained both by its constituents' concerns about the slow pace of northern agricultural liberalisation, and by the desire of countries such as Brazil to play a larger role on the world stage and to show—particularly in the wake of the perceived sidelining of the UN in the build up to war in Iraq—that it is possible to stand up to the richest and most powerful countries.[47] The importance of geo-politics in this sense to Cancún's collapse is unclear, but the emergence of new country-groups, and especially the powerful G20+ grouping, certainly changed the dynamics of negotiations[48] and may in time come to be seen as a key moment in shaping a new map of international geo-politics and economics. At Cancún, developing countries found their voice.

26. The increased coordination and coherence between developing countries at the WTO, and their stronger voice was perhaps the most positive aspect of Cancún. We are pleased that the Government—in contrast to some of its developed country partners—shares this view.[49] Oxfam's assessment is that: "The new political landscape that this creates offers an opportunity to move the negotiations forward in a more focused and effective manner, and has the potential to overcome some of the difficulties associated with negotiations among 146 member countries."[50] We agree, as does Pascal Lamy.[51] But it is not simply a question of making negotiations more manageable, it is also about making negotiations fair and development-friendly. If multilateralism is to work, as regards trade, and as regards poverty reduction, developing countries must have strong voices which are heard clearly and listened to carefully. As Hilary Benn put it "the more we hear that voice, the better developing countries are able to articulate what they want, the better chance we have in the end of reaching agreements that will make a difference to poverty."[52] The Government can be justly proud of its work in building the capacity of developing countries to enable them to have a more effective voice in international negotiations.[53]This important work should continue—even if countries who receive assistance sometimes take up positions which conflict with the UK's perceived interests—and should apply beyond the trade arena.

27. Collaboration between developing countries is hardly new—Brazil and India have worked together since the Uruguay Round—but the emergence of new powerful country-groups at Cancún, and particularly the involvement of China, added another dimension to negotiations. As the Consumers' Association note, the G20+ was "negotiating its own stance at the same time as negotiating with the US and EU on agriculture."[54] This is not peculiar to the G20+—the EU seemed to be doing the same as regards the Singapore Issues - but it did complicate negotiations and made a successful conclusion to Cancún still more unlikely. And, given the assertiveness of the new country-groups, developed countries were unable to reach a deal behind the scenes and present it to the rest of the world to be rubber-stamped. Patricia Hewitt suggested that what was heard at Cancún was "a very powerful 'no' from countries that previously have felt disempowered."[55] Other commentators have focussed on what they see as the refusal of the G20+ to negotiate or to engage with the joint USA-EU proposal on agriculture.[56] This is one way of putting it. The G20+ were buoyed by their initial success in presenting an alternative agenda for agriculture, and were concerned also to maintain their group identity. But it is simplistic to suggest that theirs was a blocking agenda; one might equally say that the USA-EU had an agenda of blocking the G20+ proposal on agriculture and of maintaining its unity on the Singapore Issues. All participants in negotiations need to be flexible; otherwise agreement is impossible. Country-groups should, as far as possible, work out their positions prior to Ministerials. And, perhaps most importantly, the EU and the USA must realise that the geo-politics of the WTO have changed; they can not expect to set the agenda. Further, given the significant barriers to South-South trade, negotiations and liberalisation between developing countries must form part of a development round.[57] In this regard, we were interested to see the European Commission's somewhat provocative suggestion that the G20+ be invited to give preferential access to the poorest countries.[58]

28. In their responses to the new dynamics and specifically to the G20+, it was apparent that the mindsets of the EU and USA had not evolved to cope with the new environment.[59] Prior to Cancún, Commissioner Franz Fischler dismissed the G20+ proposal on agriculture as "intellectually dishonest", and stated that:

29. Commissioner Fischler's prediction was borne out; whether this was a helpful response to the G20+ proposal is more questionable.[61] Patricia Hewitt suggested to us that it was "a pity" to focus on this statement by Commissioner Fischler.[62] If it were an isolated example we would agree, but it is not. Throughout Cancún, the EU and the USA sought to undermine the G20+ through inducements, threats, denigration and predictions of the group's disintegration.[63] The members of the G20+ are not the very poorest countries, and they do have different interests,[64]but they are a serious grouping—at Cancún the G20+ represented 63% of the world's farmers and 51% of the world's population[65]—and should be treated with respect rather than contempt.

30. Pascal Lamy has acknowledged that the new geo-political dimension, and particularly the impact of the run-up to war in Iraq, may have "partly escaped" the European Commission in its preparations for Cancún.[66] Taking the geo-political temperature should be a fundamental part of preparing for multilateral negotiations. We welcome Pascal Lamy's frank acknowledgement of this omission; this is an important part of learning the lessons and adjusting to the new geo-political realities.[67] If the European Commission had been better prepared for the new dynamics, then it might have acted differently—for instance in its approach to the Singapore Issues—and the outcome of Cancún might have been different.

31. Pascal Lamy's judgment was that the Sunday morning of Cancún was the right time for the EU to offer to unbundle the Singapore Issues and to withdraw its demands for negotiations on Investment and Competition. In offering this concession, Pascal Lamy had the UK's "very strong support".[68] He had not offered this concession at an earlier stage because: a) he was following the formal mandate[69] and, we assume, informal advice, given him by the EU's Member States; and b) he did not feel that other WTO members had shown sufficient flexibility to warrant further EU concessions.[70] Patricia Hewitt explained that: "Pascal Lamy negotiates on behalf of all of us in the European Union and he has to make his judgment about the right point within those Green Room discussions at which to offer a particular concession."[71] The EU's offer to unbundle the Singapore Issues, and to withdraw its demands for a start to negotiations on Investment and Competition, came far too late. The European Commission's strategy of brinkmanship was destined to derail Cancún, particularly given the complications introduced by the emergence of new country-groups.[72] The timing of the Commission's offer to unbundle the issues left countries with little time to consider their positions, consult with their allies and respond constructively.[73] The unexpected closure of the Ministerial reduced the time available still further.

32. We understand the concessions-trading logic of the WTO, but negotiating strategies based on brinkmanship and the with-holding of concessions until the last minute are not the best way of conducting a development round given the emerging geo-political realities. As Mike O'Brien, Minister for Trade and Investment, explained to the Trade and Industry Committee: "maybe we need to find a different way of approaching these issues so that it is not just the traditional 'Let's hold back our cards and not play them until the last possible moment' style."[74] The Government has been loathe to criticize the European Commission, at least in public,[75] but lessons have to be learned. We hope that the UK Government has made its views known to the European Commission in private.

SUBSTANCE MATTERS MOST: SINGAPORE ISSUES, AGRICULTURE AND COTTON SUBSIDIES

33. Process matters, particularly when it is complicated by the emergence of new country-groups, but Cancún collapsed primarily because countries' positions on matters of substance were too far apart. As Claire Melamed of Christian Aid put it, there is no "magic process which will transform what are essentially difficult political issues into technical problems to be overcome."[76] As was apparent in reactions to the Derbez text,[77] substantive differences remained, particularly as regards: the Singapore Issues; agriculture, including the issue of cotton subsidies[78]; and non-agricultural market access.

34. The Singapore Issues were divisive long before the Ministerial collapsed around them. At Doha, the WTO's members agreed to launch negotiations on the Singapore Issues of Investment, Competition, Trade Facilitation and Transparency in Government procurement, subject to a decision to be taken by "explicit consensus" at Cancún on the modalities of negotiations. Developing countries understood this to mean that they retained the right of veto, a view which was shared by the UK.[79] The EU and Commission interpreted the requirement of "explicit consensus" rather differently, taking the view that WTO members had agreed, at Doha, to begin negotiations at Cancún. Prior to Cancún it was obvious that there would be no "explicit consensus" on including the Singapore Issues as part of the WTO's agenda.[80]

35. By mid-July, the UK Government had stated carefully that it did not regard the Singapore Issues as a priority.[81] Nevertheless, in its 7 September response to our pre-Cancún report, the Government made clear that at that time it continued to support the launch of WTO negotiations on investment in this round.[82] Governments (UK, France, Italy, Germany), Parliaments (UK, Germany, Netherlands, European Parliament) and European civil society organisations had all expressed varying degrees of concern about the wisdom of pushing the Singapore Issues.[83]The EU was the primary demandeur, and regarded developing countries' opposition as largely tactical.[84] At Cancún a US Trade Representative spokesperson stated that the EU had "isolated themselves from the rest of the planet" on these issues.[85] The insistence, by the EU and a small number of other countries, on the adoption of the Singapore Issues, in the face of overwhelming opposition from most developing countries, and the linkage made in the Derbez text between progress on agriculture and non-agricultural market access and progress on the Singapore Issues, were key factors in the collapse of Cancún. The EU's decision to pursue negotiations on the Singapore Issues was a major error. The lesson is simple: developing countries' concerns should be listened to carefully and taken seriously.

36. On agriculture too there were major differences between countries and country-groups. The USA and the EU felt that they had revived negotiations on agriculture with their mid-August joint proposal,[86] a proposal which formed the basis for the agriculture section of the WTO's first draft Ministerial text of August 24.[87] The EU in particular was bullish about its progress with reforming the Common Agricultural Policy (CAP) and thought that if only other countries appreciated just how radical its decoupling proposals were, they would surely be willing to shift their positions.[88] The Consumers' Association suggested that there was insufficient time for the EU to take a step back and coolly consider the positions and demands of other countries, between the EU's agreement on reform of the CAP in June and Cancún.[89] We agree. In addition, the timing of the agreement on CAP reform and the EU's failure to agree on an absolute reduction in subsidies may well have made it difficult for the EU to sell its CAP reform plans to other members of the WTO. But the timing and extent of CAP reform was something which the EU's member-states alone could determine. This was an own goal resulting from a lack of coherence between EU policies on trade, development and agriculture.

37. The G20+ felt that the joint USA-EU proposal and hence the first draft of the Ministerial text was unacceptable. They tabled an alternative agriculture proposal on 9 September, insisting that the success of Cancún depended on this proposal being treated on a par with the USA-EU joint proposal.[90] The G20+ paper demanded the elimination of Blue Box domestic support, the capping of a more tightly-disciplined Green Box, ambitious targets and timetables for reducing Amber Box subsidies, and a firm date for the elimination of export subsidies.[91] It also refused to contemplate the extension of the Peace Clause, which is due to expire at end-2003 and prevents legal challenges under the Agreement on Agriculture (see glossary and paragraph 56).

38. Coming together at Cancún, the G90's members were concerned that their interests would be marginalised in negotiations between the G20+ and the USA-EU. Their aim was to protect their preferences, and if this was not possible, to ensure that they were appropriately compensated, and to improve their access to northern markets by tackling issues of high tariffs, tariff peaks and escalation. Countries in the Alliance for Strategic Products and a Special Safeguard Mechanism, which grew from 23 to 33 countries at Cancún, were concerned to maintain their ability to protect their domestic agricultural sectors in a more liberalised system of international agricultural trade. The USA and the EU, along with South Korea and Japan, did not want to be further constrained in their ability to subsidise their agricultural sectors. And the EU was apparently concerned that the G20+ proposal would benefit strong agricultural exporters and do little for the poorest developing countries. Significant progress was made on agriculture at Cancún,[92] including the EU-inspired proposal that members should eliminate export subsidies on all products of interest to developing countries. To some observers there were signs that an agreement might have been possible. But as serious negotiations on agriculture never started, it is impossible to say how close an agreement was (see paragraphs 68-75 on the EU and agriculture).

39. Differences on agriculture were illustrated most clearly in relation to cotton. On 16 May 2003, four West African countries—Benin, Burkina Faso, Chad and Mali - had tabled a paper at the WTO which analysed the impact of cotton subsidies on the competitiveness of their cotton exports. The proposal called for the phased elimination of cotton exports and the establishment in the meantime of a compensatory financing facility. The proposal received considerable support, but—with US cotton subsidies as its main target—faced determined opposition. At Cancún, the West African proposal was widely supported, prompting the WTO's Director-General to play a personal role in working towards a resolution. Expectations were raised; cotton subsidies were elevated to a totemic issue in much the same way as TRIPS and public health had been at Doha. But with elections next year in the USA, and several key states containing major recipients of US cotton subsidies, the USA remained unmoveable. As a result, the solution suggested in the Derbez text to the problem of cotton subsidies was not to reduce their level, but to encourage the West African countries to diversify out of cotton![93]

40. Although trade policy has international repercussions, it is primarily the product of domestic politics.[94] When international trade policy is the by-product of US electoral politics and rising protectionist sentiment, the USA's trading partners, including developing countries, are the losers. In our pre-Cancún report we suggested a general principle: the burden of adjustment should not fall on those countries who are least-equipped to deal with it.[95] The same applies to the burden of non-adjustment. We welcome DFID's ongoing work which aims to understand better the plight of the West African cotton producers, and encourage the UK and its EU partners to emphasise, in their dealings with the USA as well as with their own farmers, that the poor should not have to suffer the impacts of northern subsidies (see paragraph 60 on cotton, and paragraphs 81-83 on the IMF-World Bank adjustment assistance initiative).

41. Non-agricultural market access was a further area of contention at Cancún. In mid-August the EU, USA and Canada had tabled a paper proposing substantial tariff reductions for all countries. Despite this proposal being roundly rejected by developing countries, it formed the basis for the section on non-agricultural market access in the first draft of the Ministerial text. This text outlined a framework of steeper cuts on higher tariffs, something which developing countries objected to, but which was seen as insufficiently radical by some developed countries. In part, the stalling of progress on non-agricultural market access was—in addition to concerns about the erosion of trade preferences, the loss of tariff revenues, and the principle of non-reciprocity in tariff reductions—a result of slow progress on agriculture. Developing countries would not agree to reduce their barriers to trade in non-agricultural goods, unless and until the developed world made substantial concessions on agriculture.

The European Commission and the EU's Member States: Mandate, communication, accountability and transparency

42. Having extracted the lessons of Cancún as regards process, geo-politics and substance, we turn now to examine the role of the European institutions and Member States, and issues around the governance, role and scope of the WTO. The European Commission negotiates on behalf of the European Union and its Member States at the WTO. It is, as Patricia Hewitt put it, very important "to get the balance right between the Commission, who are doing the negotiation on our behalf, and the Member States and the Ministers who of course are responsible for the negotiating mandate."[96] She had few complaints about how such relationships worked at Cancún, at least in public.[97] Others have been more vocal in their criticisms, suggesting that weak lines of accountability and poor information flows between the Commission and EU Member States—on agriculture[98] as well as on the Singapore Issues—may have had a detrimental effect on the strategy and tactics employed by the European Commission.[99]

43. Questions have been raised about the timing of Pascal Lamy's concession on the Singapore Issues. In our view, this offer came too late (see paragraphs 31-32). But it is difficult to know whether this was a failing on the Commission's part or simply the result of the Commission following the mandate given by Member States. The evidence suggests the latter.[100] The minutes of the 21 July meeting of the European Council (External Relations) record that the "Council confirmed the objective of negotiating new WTO rules and disciplines in all four areas, and rejected suggestions that any one of the four Singapore issues might be removed from the scope of the single undertaking."[101] We asked the Government: what position the UK took at this meeting; which countries suggested unbundling; and, which countries rejected such a suggestion? In response, we were told that:

102

44. In July, the then-Secretary of State for International Development, Baroness Amos stated that the UK did not regard the Singapore Issues as a development priority.[103] We welcomed this statement, and urged the Government to persuade its EU partners and the European Commission to stop promoting the Singapore Issues[104] (emphasis added). In its response to our pre-Cancún report, whilst making clear its position on the Singapore Issues (see paragraph 35 of this report), the Government did not respond to this specific recommendation.[105] Rectifying this omission, the Government stated on 27 September that: "we were and continue to be in dialogue with Member States and the Commission regarding our view that any WTO agreement on the Singapore Issues must be development friendly."[106]

45. We appreciate that the UK Government had a difficult job to do in seeking to persuade its European partners and the European Commission that the Singapore Issues were not a priority. Rebutting a suggestion made by CAFOD,[107] the Government states that its line on investment was "in no way driven by tactical considerations relating to CAP reform."[108] Nevertheless, seeking to de-prioritise the Singapore Issues whilst maintaining the momentum of CAP reform, must have involved some delicate balancing. Whilst we would not wish to jeopardise progress towards much-needed CAP reform, in our view the Government should have done more to persuade the EU and the Commission to unbundle the Singapore Issues, and to drop Investment and Competition rather than simply make them less of a priority.[109]The Government should not have left itself open to the charge that it failed to express its views about the Singapore Issues with sufficient force.

46. Such charges would be easier to refute if there were more transparency as regards the formulation and pursuit of European trade policy and objectives, and the respective roles of the Member States, the Council, the Commission and the European Parliament. The Article 133 Committee, with its membership of high-level Member State officials, plays an important role in communication between Member States and the European Commission. But its workings are little known. For instance, it remains unclear whether the Commission sought advice from the Article 133 Committee prior to making its Sunday morning offer to withdraw Investment, Competition and, by some accounts, Transparency in Government Procurement,[110] or whether the Commission simply "reported" after the event, as the Government suggests.[111] A lack of transparency does not make for accountable or, ultimately, effective institutions.[112] Although we welcome the EU's commitment to greater use of Sustainability Impact Assessments as a contribution to enhancing transparency and improving discussion of the impacts of trade policy,[113] the UK Government should do more. They should clarify the legal status of the Article 133 Committee and explain its role in determining the aims of European trade policy and pursuing those aims in multilateral fora. The UK Government should also consider following Denmark's example by publishing the agendas of Article 133 Committee meetings when it next holds the presidency of the European Union in 2005. We share the Government's view that the policies pursued by its developing country partners should be determined through democratic and inclusive processes; the EU should make this case through example.

Governance, role and scope: The WTO and a development round

47. If the WTO's members are to deliver a development round, they must learn several lessons from Cancún. When Ministerials are overloaded with issues to be considered and decisions to be taken, they are likely to fail. More progress needs to be made prior to Ministerials, especially in Geneva, and deadlines must be taken seriously. In addition Ministerials themselves need to be better organised. Cancún was an improvement on Doha or Seattle; there was more transparency, better communication, and more inclusive decision-making processes.[114] But nevertheless, several organisational questions were posed by the collapse of the Ministerial: what is the most effective use of time at Ministerials; how should discussions on a range of issues be organised; what is the status of papers produced by facilitators and chairmen; how should decisions about the sequencing of negotiations be taken; and how should decisions about extending Ministerial meetings be taken? (see paragraphs 17-23).

48. In the immediate aftermath of Cancún, as at Seattle, Pascal Lamy complained about the WTO's "medieval" decision-making structures, pointing particularly to the difficulties of reaching consensus among 146 members, and to the fact that the Director General of the WTO has little power to push negotiations forward.[115] Along with Pascal Lamy,[116]many developing countries[117] and many NGOs,[118] we are also concerned about the governance of the WTO, and specifically about the way in which Ministerials are run. As the World Development Movement put it, "for an organisation that creates so many rules, it is surprising that the WTO does not have any rules to guide its own negotiations and decision-making."[119]The motivation for introducing new rules must be broader than one of efficiency; it must also be to ensure that multilateral negotiations are democratic, accountable and transparent. We were pleased therefore to hear Patricia Hewitt state that: "the fundamental principle of one member one vote must not be tampered with".[120] It seems likely that greater use might be made of mini-Ministerials, to try to reduce the pressure on Ministerials themselves.[121] This, and other organisational improvements are suggested in a reflection paper produced by DG Trade of the European Commission for the consideration of the Article 133 Committee. We would be interested to hear the Government's response to the proposals mooted in this paper. Specifically, we invite the Government's comments: first, on what might be done to improve the effectiveness of Ministerials; and, second, on the likely impact of a greater use of Ministerials on levels of democracy, accountability, transparency and the participation of developing countries at the WTO.

49. Cancún's collapse has also led to questions about the nature of a "Development Round", the role and scope of the WTO, and its relationship with other international organisations.[122] In our pre-Cancún report, we suggested that there was some tension between the notion of a "Development Round" and the hard-bargaining concessions-trading which is the stuff of WTO negotiations.[123] At Cancún, there were certainly differing expectations.[124] Believing the rhetoric of a "Development Round",[125] many developing countries thought that they would receive the benefits of a new round without having to make concessions themselves. Others, including the European Union, took the view that successful trade negotiations require all countries to make concessions. With hindsight, it seems to us that the notion of a development round was always likely to result in differing expectations. The "Development Round" may have been sold to developing countries at Doha, but the use of such language merely postponed the issue of determining just what it might amount to, and—unless its meaning is specified—allows countries to claim too easily that they have kept their Doha promises.

50. For some commentators the solution is for the WTO to pull back from the notion of a development round, and to return to its traditional emphasis on mercantilism and concessions-trading.[126]We have some sympathy with such suggestions, but the reality is that the very poorest countries have little in the way of concessions which they can exchange. They cannot, therefore, be part of a concessions-trading round. For some commentators such as Martin Wolf of the Financial Times, one solution is to have a round which does not include countries which are unwilling or unable to be part of a mercantilist round.[127] But in our view, rather than excuse the developed world from delivering on its promise of a "Development Round" which involves developing countries, the appropriate response is to work harder to deliver a round that really does serve the developmental interests of the WTO's diverse membership. If trade and trade liberalisation is a positive-sum game, then it ought to be possible to ensure that all countries gain; for a development round, the gains for developing countries should be substantial.

51. The European Commission's DG for Trade has, since Cancún, asked some fundamental questions about the scope of the WTO's agenda, and about the ways in which trade agreements are organised.[128] One of their suggestions is that the WTO should have a core of agreements to which all members are signed up, and additional opt-in plurilateral agreements which would be binding only on those members who subscribe to them.[129] This would in effect be a variable geometry WTO, with the principle of the single-undertaking abandoned. Such an approach may seem to offer the flexibility which the WTO needs, particularly if it were limited to allowing non-reciprocal commitments on market access.[130] But if it left developing countries with the choice of participating in negotiations for rules that they don't want, or facing pressure to sign up to rules which they had no part in negotiating, this would not be development-friendly.[131] The European Commission clearly considers plurilateralism, as regards trade negotiations in general, and investment rules specifically, as a way out of the current impasse.[132] Action Aid, CAFOD, Christian Aid, Oxfam and the World Development Movement suggest that there would be very strong opposition to a plurilateral investment agreement[133]; plurilateral agreements on other issues might meet a similar response. We would like to hear the Government's views about the implications for developing countries of a shift to plurilateral trade negotiations and agreements: might such a shift presage the emergence of a more flexible and development-friendly WTO; and, how could the interests of developing countries, and the priority afforded to poverty reduction, be protected?

52. A common maxim for those contemplating institutional reform is, "if it isn't broken, don't fix it." The failure of two out of the last three WTO Ministerials suggests that some repairs are needed.[134] However, with the 2015 deadline for meeting the Millennium Development Goals (MDGs) fast-approaching, now is not the time for fundamental reforms which act as a distraction, and which postpone any progress on making trade work for poverty reduction.[135]The question is whether there are some limited and useful reforms which can be undertaken immediately to restart negotiations in a more transparent and efficient manner without stalling the process completely, whilst discussions about more fundamental reform go on in parallel.[136] We invite the Government to comment on what immediate reforms it would like to see and what it is doing to secure such reforms, and also to tell us what input it is making into debates, including the work of the Sutherland Commission, about longer-term reforms.[137]