Global Policy Forum

By Diego Cevallos

The triumphant group of developing countries that emerged as the G22 or G20+ to defend their interests in the face of the world's rich nations at this month's WTO ministerial meeting may have an ominously short life expectancy, say trade analysts. The tension that marked the four-day conference in the Mexican resort of Cancun, which ended on September 14 with no agreement among the 146 World Trade Organization (WTO) member nations, left rifts within the new grouping, which was led by India and China. Thirteen of the member countries are Latin American.

Government officials and observers consulted by Inter Press Service in several Latin American countries said their nations might decide to pull out of the informal grouping and seek bilateral trade deals with the United States, a concern voiced by many economists in the wake of the failed talks. Without the imprimatur of the global trade forum, the concern is that the developed nations could pick off the poorer countries one by one as the developing world economies beggar their neighbors, as Asia Times Online reported on September 20. El Salvador had already withdrawn from the Group of 22 (G22) just before the WTO meeting came to an end. Representatives of that nation in Central America - a region that is currently negotiating a free-trade agreement with the United States - said the G22, one of whose leaders is Brazil, did not represent its interests. "The G22 - or G21 without El Salvador - is barely hanging together, and the most likely scenario is that it will soon start breaking up," predicted German de la Reza, a professor of integration issues in several Mexican universities.

The only members that would stick together, at least in negotiations of a regional nature, would be Argentina, Brazil, Cuba and Venezuela, which see eye to eye on a number of political issues and share similar commercial interests, he said. Bolivia, Ecuador and Paraguay have expressed doubts as to whether to remain in the G22, as well as interest in signing trade agreements with the United States. Washington has implied that those who form part of the bloc will not be considered for future bilateral trade negotiations. Republican Senator Charles Grassley said: "I will use my position as chairman of the Senate Finance Committee, which has jurisdiction over international trade policy in the US Senate, to carefully scrutinize the positions taken by many WTO members during this ministerial. I will take note of those nations that played a constructive role in Cancun, and those nations that did not." Based on that analysis, Washington will decide which countries it continues to see as potential partners for trade agreements, he added.

In Cancun, the G22 demanded in bloc that the industrialized countries begin to phase out protectionist measures in agriculture, while setting forth other demands that also ran into resistance from the rich nations. The meeting was unable to overcome the largely North-South deadlock, and failed to reach an agreement. The end of 2004 is the deadline for the 146 WTO member countries to begin to implement a series of pending accords that would benefit developing nations. The agreements include slashing the more than US$300 billion a year in farm subsidies shelled out by the governments of industrialized countries, which the WTO admits have a negative impact on poor countries.

Observers say the failure in Cancun has also cast doubt on the possibility of meeting WTO timetables and targets, and that many countries will put new - or renewed - efforts into seeking regional and bilateral trade agreements, especially with the United States, the region's biggest importer. Another consequence of the fiasco is the possible delay of the Free Trade Area of the Americas (FTAA), which is to be created by January 2005. "The outcome of the meeting will have an impact on all regional negotiations, including the FTAA talks and timetable," said Venezuelan Minister of Production and Trade Ramon Rosales. "One of the predictions, which has also been referred to by the United States, is that countries will turn more and more to a search for bilateral accords." In the negotiations for the creation of the FTAA, which would create a free trade zone stretching from Alaska in the north to Tierra del Fuego in the south, encompassing all countries in the hemisphere except Cuba, conflicts over farm subsidies and the dismantling of anti-dumping (the export of products at prices deemed artificially low) measures were transferred to the WTO, where no progress has been made.

World Bank president James Wolfensohn said the emergence of the G22, led by big agricultural exporters such as Brazil, India and China, has given rise to a new paradigm of global financial relations for the 21st century, and has demonstrated that poor countries can act as an effective counterweight to the rich. The failure to reach an agreement in Cancun, where the WTO hoped to move forward on the Doha Development Agenda, which arose from the last ministerial meeting, was wildly celebrated by the activists who had flocked to Mexico from all over the world. The activists gave the G22 the credit for standing up, with determination and unity, to the might of the industrialized nations and transnational corporations, and foresaw a promising future for the new grouping.

But that unity, and the new paradigm of which Wolfensohn spoke, may not last, according to observers in Latin America. Venezuela's populist left-leaning President Hugo Chavez said the G22 "is merely a possibility that is emerging, that is just now being born, and one that is not free of contradictions. It would be desirable to work towards its consolidation, to take it beyond the question of agriculture, and into other issues like that of intellectual property, for example." Colombian Trade Minister Jorge Botero said his country would remain in the G22 "only as long as the group does not become a factor of political confrontation with the United States." Researcher Hector Moncayo at the Latin American Institute of Alternative Legal Services in Bogota said Colombia's participation in the G22 "is very strange, and contradictory". - "If you think about it in a cynical manner, you might say Colombia entered the G22 because it was interested in hurting the [WTO] meeting, because by harming the conference, and the FTAA project along with it, the possibility of achieving the bilateral trade agreement it is seeking with the United States would be strengthened. But that would be too Machiavellian," he said.

Chilean Foreign Minister Soledad Alvear, whose country has already signed a free trade deal with the United States, said that in Cancun "some poor countries failed to understand that flexibility is essential in trade negotiations in order to achieve accords". Mexico, which along with Canada and the United States is a member of the North American Free Trade Agreement (NAFTA), joined the G22 for merely pragmatic purposes, and trade negotiator Eduardo Perez insinuated that his country could pull out at any time. IPS correspondents heard similar views in other countries as well. "We are allied with the G22 only with respect to the liberalization of trade in farm products with the developed countries," said the director of the Paraguayan Foreign Ministry's Office on Multilateral Economic Bodies, Igor Pangrazio.

What virtually everyone agrees is that the multilateral negotiations must now be shored up to prevent the collapse of the Doha Round of talks. However, each country has a different take on the consequences of what occurred in Cancun. Chilean Agriculture Minister Jaime Campos agreed with the National Agriculture Association that the failure to reach an agreement in Cancun was unfortunate, but irrelevant to Chile. "Chile has already resolved the questions of market access and farm export subsidies, due to the free trade treaties we recently signed with the European Union, the United States, the European Free Trade Association and South Korea," said Campos. Argentine Deputy Foreign Minister Martin Redrado said that in the end, something positive emerged from Cancun, where his country found "a coalition of interests which in the future will give greater political strength" to the common demands set forth by developing countries.

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