The inability of even the most developed countries to agree because of the complexity and scope of issues, also highlighted the fact that poorer countries had little chance of effectively participating in the talks due to a lack of expertise and capacity.

Finally, the fact that disputes over environmental issues – and especially the regulation of trade in GMOs – remained at the heart of the negotiations even in the final hours shows that the WTO must finally take its environmental responsibilities seriously.

The pressure for reform generated from Seattle must turn into real commitments. The UK-initiated proposal for a reform conference is welcome, but Members should also:

? Halt “new round” negotiations: halt attempts to try and achieve a quick deal on a new round in Geneva and initiate a formal period of reflection and review. Only this clear signal will help build rebuild trust in developing countries in the WTO.

? Institutional reform: the current proposals for a conference to discuss reform should be agreed, and must focus on both the processes of the WTO and the appropriate scope of issues to be included in the institution. Developed countries should immediately enhance funding of existing capacity building programmes.

? Interface with Environmental Treaties: disputes over biotechnology regulation highlighted tension between the WTO and multilateral environmental agreements (MEAs). With the WTO in stasis, the initiative for clarifying this relationship should pass to relevant MEAs, and work begun in the meetings of the Biosafety Protocol, POPs Convention and Kyoto Protocol in 2000.

? Reform of EU Negotiating Processes: the conflicts between Member States and the Commission over environmental issues at Seattle show that reform is needed if non-trade issues such as environment are to be dealt with adequately in the future.

The demonstrations in Seattle show the public attention now falling on the WTO. Governments must engage more actively with both Parliaments and the public to incorporate their concerns and explain the implications of proposed agreements.

This must not be a public relations drive to promote the WTO, but a frank and honest dialogue of the flaws so graphically exposed in Seattle. Including what reforms are needed to make it work in the broader public and global interest.
 1. Background
The Seattle Ministerial conference of the WTO was intended to launch a new round of global trade negotiations. These would go beyond the existing “built-in agenda” to which the WTO is already committed to start in January 2000. The built-in agenda includes on agriculture and services (GATS), and reviews of existing agreements on intellectual property rights (TRIPs) and treatment of foreign investors (TRIMs).

The EU, US, Canada and Japan (the ?Quad?) wanted to expand the scope of negotiations to all product sectors, though there was disagreement over the structure of negotiations. They also proposed negotiations on new issues like investment, government procurement and competition rules. Many developing countries objected to these proposals, and only wanted to discuss the built-in agenda and improvements the implementation of existing agreements, which require improved access to Northern markets and that special account to be taken of their development needs.

2. Official Outcome of Seattle
The Chair of the talks gave three reasons for the failure of the talks: the issues were very “diverse, complex and novel” (e.g. GMOs); the “WTO had outgrown processes relevant to an earlier time” making negotiations “very difficult to manage”; divergences remained because countries were not prepared to take “difficult political decisions”. The negotiations would therefore be suspended for a “time-out”, a process that has happened before in the GATT.

The failure of the Seattle Ministerial means that the built-in agenda will hypothetically move forward in January 2000, but with no deadlines for agreement in reality there will be little real negotiation. The Secretary-General of the WTO will instead concentrate on two tasks: trying to improve the processes of WTO decision making; consulting with members to see it the gaps which remained in Seattle can be bridged.

It is likely that the 4th Ministerial Conference (probably in 2001) will aim to kick start negotiations. The EU – led by the UK – with Brazil and some African Countries will also push for a special conference in 2000 focused on reforming the workings of the WTO in order to increase efficiency, transparency and accountability.

If talks in Geneva stagnate, new substantive trade negotiations will probably be delayed for up to two years. Meanwhile, some smaller initiatives may move forward; e.g. market access for Less-Developed Countries.
 

3. The Real Outcome of Seattle
The complacency of official remarks on the outcome of Seattle do not reflect the fundamental implications of the conference, which marks a watershed in global economic management. The mood of most officials present seemed to favour a far-reaching reform of the institution. Many delegates – especially those from developing countries and environment officials – had favoured a postponement of the process.

Politically the US lost much credibility. From the chaotic US chairing of the substantive talks, the appalling organisation of conference logistics, and the failure of Seattle police to prevent violence and disruption to delegates.

From current available information it seems that the talks collapsed when the US failed to give adequate concessions to the EU in order to balance concessions made on agriculture. Key unresolved issues when talks collapsed were: industrial tariff negotiations; rules on environment and biotechnology; implementation of existing agreements; and the possibility of negotiations on investment and competition. Developing countries were demanding greater concessions on implementation than the US was prepared to grant, and continued to object to EU demands on investment.

However, disagreement in these areas stemmed from more fundamental causes:

WTO negotiating processes were fatally flawed: The negotiations were mainly carried out by in a closed process of only 20-30 countries out of 134 in the so-called “green room”. These countries were usually chosen by the chair  - the US trade representative – and were dominated by EU-US negotiations. Though a set of working groups were also set up these were essentially sidelined throughout the process. The closed nature of negotiations led to unprecedented protests by the Organisation of African Unity and some Latin American and Caribbean countries who issued public statements condemning the lack of transparency in the process and threatening to reject any statement emerging from the talks.

Developing countries were marginalised, bullied and ignored: It was clear that dealing with the breadth and complexity of the planned agenda was well beyond the capacity of many developing countries. Indeed thirty members could not be in Seattle due to resource constraints. This was not just an issue of expertise, the small size of many delegations meant they could not deal with the many issues. Some developing countries also felt pressured – especially by the US – to accept agreements. Strong positions held by groups of countries – e.g. Africans on intellectual property rights, Asian countries on investment – were effectively ignored by developed countries.

Environmental issues entered the heart of the WTO: the EU, Japan and the US continued to be split on environmental issues even at the end of the conference. US/Canada proposals for negotiations on biotechnology regulation in the WTO were rejected forcefully by EU Ministers (after being accepted by the Commission) because they feared they would undermine existing environmentally-focused negotiations on regulating GM trade in the Biosafety Protocol under the Biodiversity Convention. The relevance of these issues was heightened by the protests outside the conference that stopped most negotiating work on Tuesday 30th November.

The WTO culture could not handle issues of global regulation: talks proceeded in the same way as tariff deals; where one country makes “demands” and then others respond with “offers” in return, mainly on a bilateral basis. However, many of the most controversial issues involved decisions on the scope of future global regulations on, for example, the environment or investment, which requires a more considered, inclusive and co-operative approach. As a result whole areas were eventually identified with one group – e.g. the EU and the environment – and were vulnerable to challenge by others.

The European Commission did not reflect its Members’ environmental interests: one of the biggest conflicts of the negotiations occurred inside the EU itself. Commission negotiators – which did not include any senior environmental officials - proposed a deal with the US where some limited environmental reforms of the WTO would be allowed if the EU agreed to a WTO biotechnology regulation working group. This meant that environmental reforms were being traded-off against what was an anti-environment proposal; to most observers it seemed that environmental issues were seen as a bargaining chip to protect other EU interests. This deal went beyond the mandate given to the EC by ministers who had previously rejected the biotechnology proposal. An unprecedented joint protest was made by the five European environment ministers present and fifteen of sixteen European countries objected to the Commission. However, the issue remained on the table at the end of negotiations and the Commission reasserted its right to negotiate such a deal.

Increased public scrutiny changed the character of the talks: the intense public scrutiny of the talks, both through increased access for NGOs and media on the inside, and through the demonstrations outside, greatly changed the character of the talks. Countries received direct independent comment on the implications of proposed deals, which was most marked over the complete rejection of the biotechnology working group by not only environmental NGOs but virtually the whole NGO community present. NGOs were also instrumental in keeping many developing countries on the periphery of negotiations informed of events and voicing these countries’ concerns with more powerful players. NGOs also kept journalists informed of complex moves in the negotiations, and journalists were able to openly observe the skewed power-dominated process of deal-making inside the WTO.

The Seattle ministerial has vindicated critics of the WTO processes and produced an undeniable momentum for urgent reform. Reform must go beyond fundamental process issues of decision-making and transparency, and consider the appropriate scope of the WTO’s mandate given its institutional character.
 

4. Key Lessons from the Seattle Failure
The pressure for reform generated from the Seattle failure must be turned into concrete processes and commitments, and the UK-initiated proposal is a welcome beginning. However, reforms must be carried forward both inside and outside the WTO to stop progress being bogged down in the narrow politics of trade negotiations.

? Halt “new round” negotiations: any attempt to try and achieve a quick deal on a new round in Geneva should be halted and a formal period of reflection and review initiated. This should include initial work on the rule–based issues in the built-in agenda, and real progress on outstanding implementation issues from the Uruguay round. Only this clear signal will help build trust in developing countries that the WTO can actually protect and advance their interests.

? Institutional reform: the current proposals for a conference to discuss reform should immediately be followed up by a timetable for action. This should begin with exploratory research by organisations such as UNCTAD, and must focus on both the processes of the WTO and the appropriate scope of issues to be included in the institution given its negotiating culture, expertise and under-lying principles.

? Capacity building: developed country governments should greatly enhance funding of existing capacity building programmes, ensure this extends to support regional groupings of developing countries, and explore mechanisms for permanently increasing the capacity of least-developed Member States

? Interface with Environmental Treaties: disputes over the biotechnology working group proposal centred around the relationship between the WTO and multilateral environmental agreements (MEAs). This issue is real and must be addressed. With the WTO in stasis the initiative for such clarification should pass to relevant MEAs, and work should begin to ensure this in the meetings of the Biosafety Protocol, Persistent Organic Pollutants (POPs) Convention and Kyoto Protocol in 2000. Broader environmental issues raised at Seattle must be fully discussed at the up-coming trade sessions of the Commission on Sustainable Development in 2000.

? Reform of EU Negotiating Processes: the handling of environmental issues by the European Commission at Seattle shows reform is needed if non-trade issues are to be dealt with adequately in future negotiations. Environmental officials – from both the Commission and the Member states – should be formally incorporated into the negotiating process, in both a supervisory and operational role. Even if the Commission retains ultimate negotiating rights in the WTO.

The demonstrations in Seattle and elsewhere, and the depth of NGO attendance at the talks, showed the public attention now given to WTO issues. Governments must engage more actively with both Parliaments and the public to understand and act on their concerns, and to explain the objectives and implications of proposed agreements.

This must not be a public relations drive to promote the WTO. It should be a frank and honest dialogue of the flaws in the system so graphically exposed in Seattle, the actual and potential benefits of global economic-rules and what reforms are needed to make the system work in the broader public and global interest.