Can G22 Bloc of WTO Developing Nations Survive?

TRADE-LATIN AMERICA: Can G22 Bloc of Developing Nations Survive?
Diego Cevallos - IPS 9/23/03

MEXICO CITY, Sep 22 (IPS) - The 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 a short life expectancy, say experts in Latin America.

The tension that marked the four-day conference in the Mexican resort of Cancun, which ended on Sep. 14 with no agreement between the 146 World Trade Organisation (WTO) member nations, left rifts within the new grouping, 13 of whose member countries are Latin American.

Government officials and observers consulted by IPS in several countries of Latin America -- Colombia, Costa Rica, Chile, Guatemala, Mexico and Peru -- said their nations might decide to pull out of the informal grouping and seek bilateral trade deals with the United States.

El Salvador has already done so, withdrawing from the 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 Germán 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 U.S. Senate, to carefully scrutinise 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 industrialised countries begin to phase out protectionist measures in agriculture, while setting forth other demands that also ran into resistance by 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 300 billion dollars a year in farm subsidies shelled out by the governments of industrialised 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 in Latin America 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 Ramón 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 will 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.

Venezuela's populist left-leaning President Hugo Chávez said ''the FTAA has been dealt a harsh blow by what occurred in Cancun, and for that reason we are going to push even harder for the creation of ALBA'' -- the acronym that stands for Bolivarian (for South American independence hero Simon Bolivar) Alternative for the Americas.

ALBA is an expression of somewhat hazy ideas that Chávez has proposed as an alternative to the FTAA, to which he is opposed.

World Bank President James Wolfensohn said the emergence of the G22, led by big agricultural exporters like 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.

Antonio Romero at the Latin American Economic System (SELA), which links 28 countries in the region, told IPS that ''this is the first time in many years that the countries of the South have shown such capacity for working together and forging alliances.''

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 industrialised 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.

Chávez 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 Héctor Moncayo at the Latin American Institute of Alternative Legal Services in Bogota told IPS that 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 Pérez insinuated that his country could pull out at any time.

IPS heard similar views in other countries as well.

''We are allied with the G22 only with respect to the liberalisation 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 all of the governments of Latin America do agree on 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 Martín 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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* Humberto Márquez in Venezuela, María Isabel García in Colombia, Gustavo González in Chile, Marcela Valente in Argentina, Alberto Sciscioli in Paraguay and José Eduardo Mora in Costa Rica contributed to this report.