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Politics

New Gang in Town

17 September 2003

New Gang in Town

By Gwynne Dyer

Something very important happened in Mexico last week. You could tell, because the European and American trade negotiators were so cross as they left the 146-nation trade talks at Cancun that they were practically spitting.

The European Union’s trade commissioner, Pascal Lamy, damned the World Trade Organisation as a medieval structure in urgent need of reform, and US trade representative Robert Zoellick bluntly threatened to take his business elsewhere: “We are going to keep opening markets one way or another….We are not waiting forever. We are moving elsewhere.”

‘Elsewhere’, as Zoellick’s European counterpart made clear, could mean the abandonment of the whole multilateral WTO process in favour of bilateral trade deals where the sheer size of the rich countries’ economies would let them steamroller poorer trading partners. “We will have to have a good, hard think among ourselves,” said Lamy. “Should we maintain multilateralism as our priority?…Circumstances are such that when you get a bit of a shock we have to make sure that we still all agree on this (approach).”

The shock was the fact that the Europeans and Americans did not get their way at Cancun. The WTO, like the International Monetary Fund, the World Bank, and even the United Nations, began life as a developed-world institution to regulate relations among the rich countries. All these organisations gradually expanded to include the world’s developing countries as well, but in every case control remained in the hands of the rich. Until Cancun, when the usual divide-and-rule tactics of the rich suddenly failed.

The Group of 21 which made its first appearance at Cancun is as important for the future of international trade as the creation of the first trade unions were for the future of industrial relations. Suddenly, the economically weak begin to have some real negotiating power — so long as they stay united. It was the remarkable solidarity of this new G21 grouping, led by China, India and Brazil but including other important middle-income countries like South Africa, Argentina, and Egypt, that broke the negotiating strategies of the rich countries.

There was a danger implicit in the process of expanding the WTO to include practically everybody in the world from the very start. It enabled the industrialised countries to impose a set of trading rules on the world that opened up rich new markets for them, but it also carried the risk that the more numerous poor countries might gang up to resist the rich world’s self-serving version of the rules.

In practice, they never did, even though the West was getting away with disgraceful abuses likes the high tariffs on food imports and the huge subsidies for food exports that are strangling agriculture in the developing countries. The rich countries were always able to bully or seduce vulnerable poor countries into making separate deals, and the idea of a common front of the poor never got off the ground. Until China joined the WTO two years ago.

India and Brazil had tried to make this strategy of a common front work several times before, but it was the presence this time of China, with an economy too big to let it be bullied or bluffed, that gave the G21 a new and unshakable unity. “This is the first time we have experienced a situation where…we can sit at the table as equals,” said South Africa’s trade minister Alec Erwin. “This is a change in the quality of negotiations between developing and developed countries.”

The first consequence of this new balance of power, inevitably, was that the talks at Cancun collapsed. The European and American negotiators were wholly unprepared for the level of resistance encountered by their more brazen proposals (like an EU demand that the Third World accept a revived version of the Multilateral Agreement on Investment, killed off by massive popular protests in 1998, as the price for a mere 45 percent cut in EU export subsidies on food). They blustered, they tried to pick off the weaker members of the G21, they threatened to abandon the whole WTO process — and none of it worked.

The Mexican chairman finally pulled the plug on the Cancun summit when a group of African countries walked out, but it was not a failure. Brazilian Foreign Minister Celso Amorim, the unofficial spokesman of the G21, said that “we are quite optimistic for the medium and the long term. We will have an increased capacity to negotiate and if a deal comes it will..service the global system as a whole.” Rather than just serving the special interests of French and American farmers and of Western-based multinational corporations, he presumably meant, though he must realise that any deal will have to respect their interests too.

Just as trade unions were not really about overthrowing capitalism but about redistributing power within the system, so the G21 is not about destroying global trade but about redistributing its benefits. After they have got over their initial shock, the rich countries’ negotiators will go back to the table and start looking for common ground, and doubtless they will find lots of it. But the one-sided reign of the rich at the WTO is over — and any moderately imaginative person will be starting to wonder when this approach might also be applied to other rich-world institutions like the World Bank, the IMF and the UN.

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To shorten to 725 words, omit paragraphs 9 and 10. (“The first…too”)