As the diplomatic impasse crystallised at Cancun recedes into memory, the World Trade Organisation is facing what may be the sternest test of its eight year existence: can a body of 146 members actually agree comprehensive trade deals by consensus?

This is a crucial point, because if it cannot, the WTO will lose its relevance for the rich and powerful countries of the world and they may be tempted to bypass its multilateral system in favour of bilateral agreements that enable them to exercise their leverage, particularly with food-exporting poor countries.

This would be a disaster for the developing world, which effectively scuppered Cancun by refusing to talk about writing rules on protecting investment rights into a new WTO agreement, proposals aggressively pushed by the European Union. Poor countries – especially those from Africa – refused to negotiate on these so-called ‘Singapore issues’ until the developed world had agreed to concessions on the Doha round’s agricultural talks.

We need a shift away from rhetoric

Developing countries have over the past four years discovered that the WTO may be their best tool for escaping poverty, notably by pressurising rich countries to scrap food import tariffs, controls and production subsidies. This hope was at the heart of the deal launching the Doha Development Round – note Development – but the poor south world risks overplaying its hand.

At Cancun, on the last day, speech after speech lambasted the idea of protecting foreign investment rights in a WTO deal, leading the summit chairman Luis Ernesto Derbez (Mexico’s foreign minister) to despair of the lack of constructive dialogue. He blamed part of the deadlock on a failure to move away from rhetoric – “no one can live off rhetoric,” he said.

Progress on agriculture

So where does this leave the agricultural talks, which are of key importance to the world’s food industry? On one level, it is just as well that WTO negotiations are moveable feasts. There was significant progress at Cancun on agriculture. Although the failure to agree a detailed ministerial communiqué means that draft deals paving the way to an agreement on the goals of the talks (the so-called modalities) means that none of these models will have any legal clout, they will be collected together and used as a basis for further discussions.

These will take place in Geneva by December 15 within the WTO general council, with senior officials of member countries taking part. This has been tasked with “taking the action necessary…to enable us to move towards a successful and timely conclusion of the negotiations.”

Its success may depend on decoupling the Singapore issues from the whole process, (their name comes from their being proposed at a WTO summit in Singapore). That these proposals particularly riled developing countries is maybe not surprising, given that much of the political talk and preparations prior to the Cancun summit were focused on striking a deal on the agricultural agreement.

EU has been blamed for Cancun failure

The proposals on protecting foreign companies from actions taken by home governments are similar to those framed in a controversial Multilateral Investment Agreement – abandoned by the Organisation for Economic Cooperation and Development three years ago – which the EU is keen to see revived in the Doha round. These ideas angered developing countries before and they still do and their controversial promotion at Cancun will doubtless raise suspicions about the good intentions of the EU over the agricultural talks. Indeed, the World Development Movement group has explicitly blamed the EU for Cancun’s failure.

However, before conspiracy theorists start getting too excited, the fact remains that there has been increasing common ground on agriculture, with Washington and Brussels moving closer and releasing a common position paper. Given that these two players usually attract a lot of fellow travellers, there are grounds for optimism that the WTO will find its way out of the current logjam.

South will have to tread carefully to keep US at the table

But the developing world will have to compromise for this to happen. It was noteworthy that a negative critique from Kenya was the only published paper on the last draft agricultural deal written by food talks ‘facilitator’ George Yeo, of Singapore, (no relation to the ‘issues’). The Kenyans especially attacked “the absence of any commitment to eliminate all forms of export subsidies,” and the extension to rich countries of a special ‘strategic products’ right to maintain tariffs on products of particular importance to developing nations.

These proposals may well be unfair considering the great disparities in wealth between rich and poor countries, but the WTO’s raison d’être is trade and realpolitik, even if its negotiations are calls the Doha Development Round. So the south had better watch its step, or the rich north, led by a unilateralist US president may decide to do a Kyoto and hold its trade talks secretly and bilaterally, to the developing world’s great disadvantage.