US embassy cable - 03VATICAN4299

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 
--------------------------------- 
 
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 
--------------------------------------------- --------- 
 
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 
------------------------------------- 
 
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