Roberto Bisso
The global financial crisis which caused in 2009 the most serious global recession in 80 years, together with the difficult debate that is taking place in Denmark on how to prevent global warming, mitigate its impacts, and adapt to its already inevitable consequences, are the two biggest news stories of the year that is about to end. Both catastrophes, of climate and of finance, are marked by the characteristic of being anthropogenic (meaning that they are not natural phenomena, but instead caused by human activities y decisions). In addition both trace their origin to the most prosperous countries, yet their impacts are felt most dramatically in the least developed countries.
At the beginning of December, in two simultaneous meetings organized in Nairobi and Geneva, the diplomats from what was once called the "Third World" and is now referred to as the "Global South" or simply the "South" finally decided to do something, inaugurating a new phase in their policies of mutual cooperation.
The idea is not new, as in 1978, more than thirty years ago, the first Conference on Technical Cooperation between Developing Countries took place in Buenos Aires. "It should be recognized that the knowledge, abilities, and technologies that can be exchanged through South-South cooperation are in the majority of cases, those most apt to resolve issues related to development in other Southern countries with similar characteristics", said Helen Clark, head of the United Nations Development Program and former Prime Minister of New Zealand.
Although it should be acknowledged that in the meeting in Nairobi the concept of "triangular aid" was approved, in which funds from donors in developed countries finance the technical assistance from one developing country to another, the delegates at the meeting did reject the pressures exerted by the World Bank and the rich countries to submit South-South Cooperation to the principles and indicators that guide the official development aid provided by "traditional" donors from the North.
"The rapid economic growth of some large developing countries has dramatically improved the perspectives of neighbouring countries, through a surge in South-South trade and investment", explained the Sudanese Minister Salih Fidail, in charge of the rotating Presidency of the so-called "Group of 77" which is currently comprised of 130 countries and coordinates its positions with those of China.
Since 1995, South-South trade has grown on average by 13% per year and reached US$ 2.4 trillion, totalling one-fifth of global trade. The surpluses of the so-called "emerging economies", which represent the fastest-growing Southern countries, have converted them into sources of foreign investment, which equalled more than US$ 250 billion in 2009, one-eight of the total world foreign investment.
In order to make this trade work for the mutual benefit of all, on December 2 in Geneva, 22 countries made a commitment to cut tariffs on mutually traded goods, paving the way for a "Global System of Trade Preferences among Developing Countries" in 2010. The tariff cut will be at least 20% and will apply to 70% of traded goods among the members of the group, which include Algeria, Argentina, Brazil, Chile, Cuba, Egypt, India, Indonesia, Iran, Malaysia, Mexico, Nigeria, North Korea, Pakistan, Paraguay, Sri Lanka, Thailand, Uruguay, Vietnam and Zimbabwe. This agreement on what in trade jargon is called "modalities" will be implemented in the upcoming months, when the specific goods to which this will be applied are defined. The 22 countries can also negotiate larger cuts between members, which later can be made available to the entire group.
In this way, the "Sao Paulo Round" came to a conclusion, which was launched in 2004 in the Brazilian metropolis. It is "an important step with respect to trade agreements and South-South cooperation", according to the Argentine Minister of Foreign Relations Jorge Taiana, who chaired the ministerial meeting. Taiana explained that the modalities of tariff cuts applied to South-South trade after this agreement are much more ambitious than those that were negotiated earlier. It is "a clear demonstration that developing countries want to continue to strengthen South-South trade and trade liberalization processes that are compatible with development", said Taiana. Alluding to the frozen Doha Round of global trade negotiations, Taiana stated that the lack of will does not come from the South. "We can reach agreements, we can work together, we can advance our agenda, and we have shown that developing countries have the will and capacity to do so".
The Brazilian Minister of Foreign Relations Celso Amorim said that the numbers "speak for themselves". The 22 Southern countries participating in the agreement represent 13% of the world economy, 38% of the world population, 18% of global trade, 43% of agricultural production, and 16% of agricultural production. "This is not insignificant. It is an important part of world trade and production", he added.
The Ministry of Industry and Commerce of India, Anand Sharma said that "Southern countries are converting their cooperation ideals into concrete and tangible instruments" and that "South-South trade will play a part in solving the global economic crisis". According to Supachai Panitchpakdi, General Secretary of the United Nations Conference on Trade and Development (UNCTAD), "the emergence of this agreement is as significant as the emergence of different groups of developing countries in the negotiations process, such as the G-20, NAMA-11 and G-33," all of which represent the specific interests of subgroups of Southern countries.
According to the declarations of Celso Amorim gathered by the Third World Network´s bulletin SUNS in Geneva, the System of Preferences differs from the formulas that are being debated in the Doha Round in which the tariff reductions for manufactured products from Southern countries are negotiated in return for concessions from the North in areas such as agriculture. "This is a horizontal negotiation between countries on a similar plane and we are agreeing to cut the actually-applied levels of tariffs. This means that these cuts will have real impacts and will immediately increase South-South trade".
UNCTAD estimates that a 20% tariff cut among the 22 participating countries will increase their trade flows by approximately US$ 8 billion.
