However, at their fifth ministerial conference held  in Cancun, Mexico, from September 10 to 14, 2003, WTO ministers were  neither able to achieve these goals nor bridge wide differences on  individual negotiating issues. The Doha Round promised to be the most comprehensive  round of global trade negotiations yet, involving a commitment to further  liberalize trade, update trade rules, and further integrate developing  countries into the world economy. For example, many developing nations consider agriculture their  number one priority and have been unwilling to make offers to open up  their services markets until they see more progress on agricultural reform. Differences on Key Issues Remain Unresolved after the Cancun Ministerial

The Cancun Ministerial Conference failed to resolve substantive  differences on key issues: agriculture (including cotton), the “Singapore  issues,” market access for nonagricultural goods, services, and  development issues that included special and differential treatment for  developing countries. However, several WTO  members indicated that the reforms were not ambitious enough. The United States and other developed countries were pushing for  substantial cuts in tariffs and wanted the high overall tariffs of key  developing countries like India and Brazil to come down. The failure to make progress in  resolving the major substantive issues at Cancun left the Doha Round in  limbo and resulted in a major setback that will make attaining an overall  world trade agreement by January 1, 2005, more difficult, according to  WTO Director General Supachai and key WTO member country  representatives. Several Factors Cited in the Talks’ Collapse

According to government officials, trade negotiations observers,  authoritative reports, and GAO observations and analysis, several other  factors contributed to the Cancun meeting’s collapse. Competing visions and goals for the  Doha Round, particularly between developed and developing countries,  and a high-profile initiative on cotton, fueled North-South tensions. Meanwhile, the WTO’s cumbersome decision-making process did not lend  itself to building consensus. No Agreed Starting Point for Discussion

Adding to the complexity of the task, the Cancun ministerial began without  an agreed-upon text as a starting point for discussion. The Chairman’s text did not mention the elimination of  subsidies but instead suggested that West African countries diversify out of  cotton. Additional GAO contacts and staff acknowledgments are  listed in appendix V.

Objectives, Scope, and Methodology

The Chairman of the Senate Committee on Finance and the Chairman of  the House Committee on Ways and Means asked us to analyze (1) the  overall status of the World Trade Organization’s (WTO) negotiations on the  eve of the WTO’s ministerial conference at Cancun, Mexico, in September  2003; (2) the key issues for the Cancun Ministerial Conference and how  they were dealt with at Cancun; and (3) the factors that influenced the  outcome of the Cancun Ministerial Conference. It includes frameworks for modalities in agriculture and nonagricultural market access as well as  proposed modalities on each of the Singapore issues.
Why GAO Did This Study

Trade ministers from 146 members of the World Trade Organization (WTO), representing 93 percent of global commerce, convened in Cancun, Mexico, in September 2003. Their goal was to provide direction for ongoing trade negotiations involving a broad set of issues that included agriculture, nonagricultural market access, services, and special treatment for developing countries. These negotiations, part of the global round of trade liberalizing talks launched in November 2001 at Doha, Qatar, are an important means of providing impetus to the world's economy. The round was supposed to be completed by January 1, 2005. However, the Cancun Ministerial Conference ultimately collapsed without ministers reaching agreement on any of the key issues. GAO was asked to analyze (1) the divisions on key issues for the Cancun Ministerial Conference and how they were dealt with at Cancun and (2) the factors that influenced the outcome of the Cancun Ministerial Conference.

What GAO Found

Ministers attending the September 2003 Cancun Ministerial Conference remained sharply divided on handling key issues: agricultural reform, adding new subjects for WTO commitments, nonagricultural market access, services (such as financial and telecommunications services), and special and differential treatment for developing countries. Many participants agreed that attaining agricultural reform was essential to making progress on other issues. However, ministers disagreed on how each nation would cut tariffs and subsidies. Key countries rejected as inadequate proposed U.S. and European Union reductions in subsidies, but the U.S. and EU felt key developing nations were not contributing to reform by agreeing to open their markets. Ministers did not assuage West African nations' concerns about disruption in world cotton markets: The United States and others saw requests for compensation as inappropriate and tied subsidy cuts to attaining longer-term agricultural reform. Unconvinced of the benefits, many developing countries resisted new subjects--particularly investment and competition (antitrust) policy. Lowering tariffs to nonagricultural goods offered promise of increasing trade for both developed and developing countries, but still divided them. Services and special treatment engendered less confrontation, but still did not progress in the absence of the compromises that were required to achieve a satisfactory balance among the WTO's large and increasingly diverse membership. Several other factors contributed to the impasse at Cancun. Among them were a complex conference agenda; no agreed-upon starting point for the talks; a large number of participants, with shifting alliances; competing visions of the talks' goals; and North-South tensions that made it difficult to bridge wide divergences on issues. WTO decision-making procedures proved unable to build the consensus required to attain agreement. Thus, completing the Doha Round by the January 2005 deadline is in jeopardy.