I’ve been trying to understand exactly what happened at the WTO ministerial conference in Cancun. That they’ve come apart is pretty clear, but there is a certain amount of ambiguity about why and who is to blame. The crux of the matter appears to be the “Singapore issues”, for which you can find a more detailed discussion at Crooked Timber.
What are the “Singapore issues”? In most of the world, national governments get to write the laws regulating investment and taxing economic activity, and usually government contracts are, at least to some degree, offered preferentially to locally controlled or operated businesses. It seems that some combination of countries – the US, the EU and Japan – want to extend the WTO’s mandate to globalising investment and procurement rules. Apparently, the whole business first came up at the WTO ministers’ meeting in Singapore after the death of the Multilateral Agreement on Investment in 1998 – a treaty intended to address exactly these questions of government procurement and investment security.
To what degree each of the big three industrial powers pushed this agenda is what I have not yet managed to determine from press accounts. One newspaper claims that the EU and Japan are responsible, while the US role was minor; another account suggests that the US was about to walk out of the talks over exactly those issues when the third world beat them to it. The Indian business press was reporting “flexibility” in the EU position just before the talks failed. Pascal Lamy, the EU negotiator, was apparently willing to “unbundle” these issues from agricultural subsidies and other matters on the agenda. “Unbundling” usually means that one side is willing to table some issues, but not drop them, in order to get an agreement on something else.
Regardless, the talks are dead and the WTO may be going down with it. The “Group of 21” – Brazil, India, China, Malaysia and a lot of smaller countries – have certainly shown that they can bring multilateral trade negotiations to a halt. Several papers are reporting that the US and the EU intend to start negotiating trade pacts with individual states instead of going to the WTO. My fear is that this will mean a return to a sort of tacit colonialism, where the US ties Latin America to it through trade treaties, and the EU does the same with Russia and Africa.
The EU does not need a colonial empire, nor does America, but the prospect seems almost inevitable to me if bilateral trade accords replace multilateral ones.