THE HOLY SEE ON CANCUN: U.S. MISSED CHANCE TO

C O N F I D E N T I A L VATICAN 004299

SIPDIS


DEPT PASS TO WORLD TRADE ORGANIZATION COLLECTIVE

DEPT FOR E, EB, EB/TPP/MTA, AND EUR/WE

E.O. 12958: DECL: 09/22/2013
TAGS: ETRD PREL VT
SUBJECT: THE HOLY SEE ON CANCUN: U.S. MISSED CHANCE TO
LOOK GOOD

REF: STATE 268181

Classified By: Deputy Chief of Mission, D. Brent Hardt.
Reasons 1.5 (b) and (d).

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SUMMARY
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1. (C) Frank Dewane, Head of the Holy See's delegation to the
Cancun WTO ministerial believes the U.S. missed an
opportunity at Cancun to look good in the eyes of the
developing world. It did so, in his opinion, by sticking
with the EU for too long. He told DCM September 19 that the
EU had a bad strategy going in, and that their strategy
backfired. Dewane lamented that the development and
agricultural focus appeared to have fallen out at Cancun, as
everybody became fixated on some big trees, but lost sight of
the forest. Looking ahead, Dewane believes the Doha round
can be salvaged, though not on the current timetable. He
suggested that more work needs to be done in Geneva, and
wondered why more progress had not been made at Geneva to lay
a better foundation for the ministerial -- which was clearly
becoming more unwieldy. The Holy See accepts the U.S. view
that all countries -- including developing countries -- need
to scale back protectionist measures, but the Vatican
nevertheless wants developed countries to demonstrate
flexibility to allow for special cases for sensitive sectors
in developing countries. End Summary.

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U.S: A Missed Chance to Look Good
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2. (C) From their perspective as an observer at the recently
concluded Cancun ministerial, the Holy See believes the U.S.
"missed a chance to look good" in the eyes of the developing
world. Monsignor Frank Dewane, Undersecretary of the Council
for Justice and Peace, who led the Vatican's delegation at
Cancun, told the DCM that he was surprised the U.S. stuck
with the EU for so long. "It was clear to me going in," he
said, "that the U.S. was going to do better by the developing
world on agriculture." "That's why I couldn't understand why
you stuck with the EU for so long," he added. Dewane noted
that some suggested the U.S. -- for domestic reasons -- did
not really want an agreement to cut subsidies, and was thus
content to let the EU take the heat. The DCM affirmed the
U.S. commitment to reducing agricultural subsidies in
coordination with a global reduction, but observed that
developing countries had failed to move beyond rhetoric to
explore the extent of U.S. flexibility.

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Developing Countries: A Missed Chance to Make Progress
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3. (C) Dewane agreed that the developing world had also
missed a chance to make real progress on its agenda. Because
of all the set speeches, he commented, "the conference never
got beyond stating positions." He likened the approach of
many developing countries to "an adolescent who suddenly
realizes he's cool and he's being noticed." This new
sensation, he believed, would from here on out alter the
character of WTO talks, as developing countries band together
in a series of larger and smaller regional groups. Even
though at Cancun this strategy had not gained them anything
but status, he felt that developing country groups would
become an increasingly important feature of future talks. He
observed that the success of the developing groups in staying
together had been one of the big surprises of the meeting,
though, given the buildup and expectations at Doha, it should
not have taken the developed countries by surprise.

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EU: Bad Strategy
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4. (C) Dewane was sharply critical of the EU's strategy at
Cancun. "The EU had a bad strategy going in, and the
strategy backfired." By not demonstrating their flexibility
on the Singapore issues earlier, he elaborated, but holding
out and then accepting what had been on the table two days
earlier, the EU gave the impression of insincerity -- that
they were just toying with the developing countries. By the
time they accepted it, it was too late to complete the
agenda, and the Chairman decided to close the meeting -- a
decision Dewane said he did not fully understand. At the end
of the day, Dewane said he was still unsure what the EU was
hoping to achieve with its focus on the Singapore issues at a
time when the rest of the world was expecting a greater focus
on agriculture and other issues more important to the


developing countries.

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WTO Process: Too Rushed, Too Diffuse
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5. (C) Because of tactical decisions on the part of some
members and a lack of adequate preparation in Geneva, Dewane
felt the Cancun meeting was "too rushed and too forced." He
believed that more issues should have been decided in Geneva;
otherwise the order was too tall for a ministerial meeting
with so many participants to reach agreement. Dewane
suggested that the Conference also failed in losing sight of
its primary objective of addressing development issues --
particularly agriculture. "We lost sight of the forest
(development) and became fixated on some trees -- big trees,
but trees nonetheless." Among the trees he cited was the
African cotton issue. According to Dewane, cotton became the
"belle of the ball" -- the issue that everyone was talking
about and which ended up consuming a disproportionate amount
of time. Dewane regretted that an agreement on this issue
was not reached, and said he believed a bit more flexibility
on the U.S. side on this issue would have sent a positive
signal to the developing world that could have muted some of
their disappointment.

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Road Ahead: To Geneva With Priority to the Poorest
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6. (C) Looking ahead, Dewane believes the WTO should be able
to achieve agreement on the Doha Round, but not on the
current schedule. He did not regard any of the issues as
insurmountable, though he worried that some of the
flexibility that countries might have been prepared to show
at Cancun could now be lost. He now sees the talks returning
to Geneva, where he hopes progress can be achieved. But he
also recognized that the U.S. and others were likely to
pursue bilateral and regional trade pacts in the absence of
progress within the WTO. The Holy See would continue to
advocate for greater attention to the problems of the poorest
of the poor, in particular urging greater flexibility toward
the poor in implementation of lower tariffs and trade
barriers. Dewane said the Holy See agreed that developing
countries needed to "avoid the temptation of protectionism"
and lower their barriers -- and that it was in their own
interest to do so -- but he also called for a "balancing
mechanism" that would allow for exceptions in cases where
small farmers or the preservation of common goods such as
natural and human environments are at risk. For the WTO to
show its human face, he concluded, the Holy See would support
development of country-by-country assessments of how various
WTO agreements are likely to affect development policies of
poorer countries.

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Comment
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7. (C) As an observer at the Cancun WTO talks, the Holy See
is in the unique position of being involved in the
discussions without having to defend parochial trade
interests. As a result, their representatives were able to
sit back and take in the Cancun meeting with a layer of
detachment. Overall, Dewane said the Holy See did not have
any serious criticism of the U.S. approach, except that we
had stuck with the EU for too long and missed an opportunity
to emphasize our desire to reduce agricultural subsidies. He
acknowledged that the U.S. and EU had been placed in a
"damned if you do, damned if you don't" position in reaching
a pre-Cancun framework agreement. After urging such an
accommodation on the U.S. and EU, Dewane noted, many
developing countries failed to understand that the agreement
represented a point of departure and not a take it or leave
it final proposal. Dewane remained perplexed by the EU's
position, saying it was never clear to him what the EU was
trying to achieve. In the end, he believed they thwarted
progress on agriculture by diverting attention to the
Singapore issues, frustrating the developing world in the
process, and then showing flexibility too late to make a
difference. For the long term, the Holy See expects that
Cancun will stimulate the formation of more developing
country groups that could, if not better focused and
prepared, make progress more difficult in the WTO setting --
a development that would not be in the developing countries'
own interests in a rules-based system.

Nicholson


NOTE: NOT PASSED TO ABOVE ADDRESSEE(S)
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2003VATICA04299 - Classification: CONFIDENTIAL