The collapse of negotiations at the World Trade Organization meeting here Friday night stunned political and business leaders who had argued they were so crucial to expanding trade and boosting living standards around the world that they were simply too important to fail.
Although several officials said they expected to try again early next year, the high-profile failure of delegates to set an agenda for another multi-year round of negotiations underscored how difficult it will be to make progress in further eliminating barriers to freer global trade.
"The complexity and novelty of the issues strained the collective capacity of delegations to make decisions," said U.S. Trade Representative Charlene Barshefsky. "Governments were just not willing to take the leap."
The collapse also was an embarrassment to President Clinton, who had pushed for the week-long meeting to be held in Seattle and hoped that it would usher in a new era of trade liberalization more attuned to the interests and values of ordinary citizens.
The meeting of trade ministers broke up after key negotiators determined their positions on central issues, such as eliminating agricultural subsidies, were too far apart to find common ground.
"It would be best to take a timeout," Barshefsky told the thousands of visibly disappointed and bleary-eyed delegates as she officially adjourned the meeting at 10:30 p.m. Friday. She said talks would continue among lower-level officials in Geneva in an effort to salvage some sort of negotiating framework.
Even without a new round of talks, companies around the world will continue to sell their goods and services across borders under the rules established by the trade ministers under the rubric of the Geneva-based WTO. But without them, American farmers will continue to face what they consider unfair competition from heavily subsidized farmers in Europe, financial services and telecommunications firms will continue to be shut out of many markets and tariffs on everything from chemicals to medical equipment will remain high in much of the developing world.
"Clearly, it's a setback for the free trade agenda," said Jerry Jasinowski, president of the National Association of Manufacturers.
Leaders of labor, environmental and human rights groups whose protests had disrupted the meeting were quick to claim victory in the Battle for Seattle. They said they had turned public opinion against the WTO and its push toward more cross-border trade and investment. Their aim was to force the WTO to rewrite its rules to strike a better balance between corporate interests and the interests of workers, consumers and the environment.
But trade ministers said it was the sheer complexity of the negotiations--and the unwillingness of countries to compromise on politically charged issues--that ultimately doomed the talks. Pascal Lamy, the European Union's top negotiator, told reporters that the WTO's membership had grown so large, and the range of issues it dealt with so broad, that it will have to be "reassessed and maybe rebuilt."
"The WTO does not have the institutional strength or the culture or the procedures to do this right," Lamy said.
By all accounts, this was the first WTO meeting in which the developing countries played a major role. But while they were able to sidetrack deals cooked up between Europe and the United States, the failure to launch a new round means they left Seattle without winning the things they most desired, including an end to farm subsidies and extra tariff reductions for the poorest countries.
At the White House today, President Clinton issued a statement saying, "We made progress at the Seattle WTO trade meetings, although significant differences remain. I remain optimistic that we can use the coming months to narrow our differences and launch a successful new round of global trade talks."
Clinton spent two days this week in Seattle, pushing the U.S. trade agenda, including a call for adoption of minimum labor standards around the world that was fiercely resisted by poorer countries, which saw it as a backdoor way of retarding their economic development.
The administration's push for the WTO to embrace a set of labor standards--a ban on child and prison labor, the right to organize--was strongly pushed by organized labor. But in Washington today, AFL-CIO President John Sweeney made it clear he was happy to have no deal rather than a bad one, saying the week's events represented "a stunning breakthrough in the public debate over globalization."
In Berlin, Chancellor Gerhard Schroeder said the ministers should reconvene "as soon as possible," chiding them to come next time "better prepared."
Although the addition of untraditional issues such as labor and environmental standards no doubt complicated this week's negotiations, officials said it was the failure to resolve differences on old-fashioned trade issues that was primarily responsible.
The biggest sticking point was the refusal by the European Union to agree to talks aimed at eliminating its generous subsidies for farmers and their exports. Earlier in the week, EU negotiators had agreed to talks aimed at "substantial and progressive" reductions in farm support in return for U.S. acknowledgment that some aid could be justified to preserve the environment and a rural way of life. But the compromise collapsed after protests from French farmers caused a split within the 15-member European delegation.
In order to salvage the talks, U.S. negotiators had offered to buck the wishes of U.S. business and labor and agree to limited negotiations over dumping--the practice of selling goods at below cost. Japan and several developing countries charge that the U.S. unfairly uses its anti-dumping laws to keep out low-cost imports.
Leaving Seattle particularly disappointed were U.S. high-tech industries that had hoped to win broader tariff reductions on computers and medical equipment and an extension of an existing moratorium on tariffs for electronic commerce.
With the conclusion of the talks, a shell-shocked Seattle began to return to some semblance of normalcy. Workers were out at dawn to remove plywood from the front of downtown stores as merchants tried to lure shoppers back with discounts, free coffee and free parking. For the first time since Sunday, there were lines of parents and kids waiting to consult with the Santa Claus sitting in the window of the original Nordstrom store. The sun even came out after a week of nearly solid clouds and rain.
Up the street, the ugly yellow tape and concrete barriers that had been used to hold back the protesters were removed from around the convention center. Street sweepers had replaced armored riot control vehicles. Inside the convention center, WTO officials were rushing to clear out to make way for a convention of optometrists.
Staff writer John Burgess contributed to this report.
CAPTION: After calling timeout in Seattle, Director General Michael Moore and WTO seek to resolve differences.