Failure in Cancun Haunts WTO

In return, the United States and the European Union demand that the developing countries cut tariffs and scrap quotas on agricultural and industrial goods, which would help U.S. and European exporters because products could be shipped more freely and at lower costs across national borders. About 32 of the poorest nations would be exempt from such requirements under the current draft accord.

Zoellick drove home the point in a written statement issued Monday before leaving for Geneva: "We will not accept a deal to put the round back on track simply for the sake of a deal. . . . There must be substantial new openings for trade in agriculture, goods and services."

At a news conference here, Kamal Nath, India's minister of commerce and industry, took a hard line against the idea that countries like his should cut tariffs simply because rich countries reduce their domestic subsidies. "To say, 'I'll do the right thing provided you give me market access' I think is very ill-conceived," he said.

In some areas, general accord has been reached, raising hope that posturing will give way to compromise by the end of the week. The current draft would mandate the elimination of all subsidies that go directly for exported farm products "by a credible end date," leaving open the precise time. Similarly, in response to pressure from developing countries, the E.U. and Japan have abandoned their demand that this round of talks produce new WTO rules concerning issues such as international investment.

Yet other major disagreements remain. France is adamant that European concessions on agriculture have gone too far, and haven't been repaid with adequate compromises from other countries. Since the European Union represents its 25 member nations on trade, Paris can't veto a deal single-handedly, but it has substantial influence.

Another significant issue involves farm subsidies that don't go directly for exported products. "Developing countries feel there is an escape clause [in the current draft], allowing the U.S. in particular to continue with certain types of subsidies" that support crop exports indirectly, said Martin Khor, director of the Third World Network, a group critical of rich-country trade policies.

Accordingly, no one here discounts the possibility that this week's meeting will end in discord. If it does, the WTO's existing rules will stay in effect, "and the talks will just drift," said Jeffrey J. Schott, a trade expert at the Institute for International Economics in Washington. "But what won't just drift is the perception of whether it's better to do business in the WTO or in bilateral or regional negotiations," such as the recently approved free-trade agreements that the United States reached with Australia and Morocco. "I think you would then call into question the viability of the WTO as a negotiating forum. That's a real risk."

That, in turn, could adversely affect the WTO's "crown jewel" -- its system for arbitrating trade disputes among nations, according to Peter D. Sutherland, a former director-general of the organization. In a Financial Times column this month, Sutherland asked whether the global trade system can continue to function well "if the institution within which it is embedded -- and on whose rules its judgments are based -- ceases to command the respect of governments and businesses."