Poor nations keep heat on trade

Global trade negotiations may well proceed more slowly in the aftermath of the World Trade Organization's collapsed talks in Cancún, Mexico, earlier this month. But they are also likely to proceed more equitably.

As the WTO's 148 members brace for their next session, now scheduled for December, it is already clear that the sudden emergence of a coalition of 22 developing nations has turned the negotiating landscape between rich and poor countries into one that more closely resembles a level playing field.

For now, the Group of 22 intends to remain focused on the opening of global markets for farm products - the issue that divided rich and poor at Cancún and prompted the group to walk out on Sept. 14. Viewed more broadly, however, the "G-22" reflects the increasing assertiveness of developing nations - not only in the WTO but in other multilateral organizations, including the UN.

"It's too early to tell what the G-22's larger agenda will be, or even if we will have one," says Rubens Barbosa, Brazil's ambassador to Washington and a prime mover behind the group's formation. "But the political, economic, and trade circumstances are different now. There's a new balance of power, and the US and the European Union are finally going to have to face us."

Reflecting this new environment, the World Bank and the International Monetary Fund began considering ways to enhance the influence of developing nations at their annual meeting in Dubai shortly after the WTO talks failed. At the urging of the EU, the WTO itself may now review its procedures in order to save the current round of negotiations, launched in Doha, Qatar, two years ago.

Ironically, the WTO is among the most democratic of the multilateral or- ganizations. It operates on the basis of one country, one vote, and - unlike the UN - no member has the right to a veto. In practice, however, the US, Japan, and the advanced nations of Europe tend to control the agenda and overpower developing nations with skilled trade experts and superior negotiating tactics. While Brazil and China have cultivated expertise of their own, many other developing countries are too poor to afford effective representation at the WTO.

In Cancún, the G-22 coalition sought to keep the meeting focused on import barriers and industry subsidies that distort global trade in agricultural products. Collectively, wealthy nations spend some $300 billion a year to subsidize farmers who would otherwise be unable to compete in world markets.

African cotton growers had a specific complaint. The US now spends $3.6 billion annually on cotton subsidies; with almost a third of US cotton production exported, American farmers claim about 40 percent of the global market. Because they are so heavily subsidized, they also depress world prices by about a quarter.

To deflect the developing countries' position, the rich countries offered only vague commitments on farm subsidies and import barriers. The Europeans and Japanese also insisted that the Cancún talks extend to trade issues covering investment, competition, and government procurement of goods and services - issues many developing countries were either unprepared or unwilling to discuss.

It was on this final point that the G-22 nations abruptly left the table. "It was easy to form a coalition because the frustration level was so high," Mr. Barbosa says. "In one week we gained the support of 60 percent of the world's population and represented more than half of global agricultural production."

The larger members of G-22, which is led by Brazil, China, India, and South Africa, also include Argentina, Mexico, Indonesia, Pakistan, and Nigeria. The chief question facing the diverse group is whether it will hold together as the Doha round proceeds.

For one thing, divide and rule is a favored tactic of the advanced nations. For another, the group's internal differences are many. While, Brazil is a major exporter of farm goods and stands to gain from open markets, for instance, India remains highly protective of its farmers.

"What has emerged for the first time in international trade is a serious negotiating coalition of developing countries," says Richard Newfarmer, a trade expert at the World Bank. "But it hasn't been tested at the bargaining table yet, and whether it succeeds there remains to be seen."

Many observers nonetheless see a key success for developing nations buried in the failure at Cancún. Their ability to form a united front for the first time reflects years of effort by the UN, the World Bank, other multilateral groups, and nations such as Canada and Brazil to improve the trade expertise and negotiating capacity of countries that have typically been overwhelmed in forums such as the WTO.

"The higher level of technical competence among less-developed countries was one of the most positive aspects of Cancún," says Hafiz Pasha, an assistant secretary-general here who was at the talks.

Another question now facing the G-22 is whether it will attempt to extend its influence beyond the issue that led to its creation. Even some diplomats instrumental in forming the group say that for now, it is "a marriage of convenience," as one put it.

At the same time, it is widely acknowledged that the Group of 22 is symptomatic of a newfound self-confidence among developing nations. As a measure of this, Brazil, India, and South Africa announced here last week that they would form a "trilateral commission" to encourage cooperation on issues such as hunger, health, and poverty eradication. "These countries are the core of the G-22," says Pasha. "Their intent is to show solidarity among the larger developing countries - and ultimately to introduce some balance on a wide range of international questions."