The WTO - faltering on its way to success?

This time the headlines are the same, but the storyline is different. WTO Director-General Pascal Lamy brought a list of 20 disputed issues to the meeting. Members found tentative solutions to 17. One was rich-country farm subsidies - the US subsidy limit, for example, would drop from $20 billion to $14.5 billion. Another, if a bit less firmly, was manufacturing tariffs, with formulas for tariff cuts generally and progress toward specific industrial “sectoral” agreements. Some smaller issues were settled as well. At his generally gloomy closing press conference, Lamy could accurately say that “across a wide range of problems which had remained intractable for years we have found solutions,” with the round 80 per cent complete.

Even on issues where they could not agree, the delegates’ disagreements at least clarified a path forward.

The 18th issue, which broke up the talks, is known as a “Special Safeguard Mechanism” for developing countries, or SSM. In concept, it’s a device to let low-income countries with large rural populations limit food imports when the volume suddenly rises. India’s Commerce Minister Kamal Nath is the most enthusiastic advocate of the concept, backed by China. Here, though the loudest arguments were between India and the US, the fissures are not between rich and poor countries alone, but also among different types of low-income and middle-income states.

India’s trade patterns illustrate the point. Though Nath’s arguments target rich-world subsidies, only about 5 per cent of India’s $8 billion worth of foreign food in 2006 - less than the $8.5 billion for Malaysia, with its population of 25 million - comes from the US in the form of non-subsidised almonds and peas; another 15 per cent comes from Europe, Canada and Australia. Most Indian imports are goods from other poor or middle-income countries - palm oil from Indonesia and Malaysia, soybean oil from Brazil, nuts and grains from Africa. Trade ministers from other developing countries are well aware of the implication of such facts: Uruguay and Paraguay argued, probably correctly, that the SSM “would be used by big and stronger developing countries against smaller and vulnerable” developing-country agricultural exporters, leaving them “worse off than 15 years ago”.

Such gaps aren’t easy to close, but pose questions of judgment and careful compromise rather than ideological divides suited to North-South polemic. After the breakdown, most members expressed a realisation of how much they achieved and reacted accordingly. Downcast Brazilian president Lula, seeing Brazil’s hopes of farm-subsidy reform recede, embarked on a round of calls to Washington, Delhi and Beijing, hoping to revive the talks. Burkina Faso’s Commerce Minister Sansanou Amadou, irate over the failure to finish the agreement - “we cannot control our anger” over the delay in cotton reform - called for quick resumption. Uhuru Kenyatta, Kenya's trade minister, suggests the delay "gravely undermines" the fight against poverty.

The Geneva talks, therefore, ended in failure - but one that disguised broadening areas of consensus and growing demands for a speedy conclusion to the talks. At a time of generalised worry - high energy prices, food spikes, inflation and slowing growth - this is a rare good omen for the future.