The Observer | By Nick Mathiason | September 14, 2003
A growing band of militant Third World states threatens US-EU control of the world trade system.
Routinely shown the rough end of the world trading stick, the beaten hit back last week at the Cancun talks. 'No more are we sitting outside in the corridors being given sweeteners,' said Malaysian Trade and Industry Secretary Rafidah Aziz. 'No more.'
A new alliance emerged last week in the drippingly humid Caribbean beach resort. It has the potential to alter radically the way trade is weighted in favour of mature, post-industrialised econ-omies. Known as the G23, and growing by the day, this new band of countries, led by Brazil, India and China, represents more than 63 per cent of world farmers. It has shattered the power imbalance at what has been dubbed the rich man's club. Suddenly the World Trade Organisation - and in particular the dominant European Union and United States axis - does not look quite so cosy any more.
The WTO is the organisation that sets in stone international trade rules. But to many it reinforces a deep-rooted injustice at the heart of international trade. For years, powerful rich trading nations have had their industries protected while many poor nations have been told by international financial institutions to reduce barriers to western business.
Frustration at the lack of progress in the wake of 11 September, when the US and the EU promised to redress economic imbalances, has given birth to a new cohesive militancy. Brazilian Foreign Affairs Minister Celso Amorim said: 'This meeting can be a historic turning point. We now have the opportunity to bring social demands from the streets into the conference hall. The countries that have presented the proposal represent 63 per cent of the world's farmers... it cannot be ignored. Already we see a new dynamic which hopefully can lead to real negotiations.'
The US and EU are fighting tooth and nail to dilute the alliance. US Trade Representative Robert Zoellick has tried to 'bribe' Costa Rica, Guatemala and El Salvador, telling them they would get guaranteed increased production quotas if they left the G23 but that quotas would fall if they did not.
Meanwhile, President Bush last week telephoned Brazil's President Lula and the leaders of India, Pakistan and South Africa to persuade them to soften their line. The EU has also pressed countries to abandon the group. But there appears little chance of that this weekend. In fact what is the G23 is soon - incredibly - to become the G60, G70 or G80.
Zambian Trade Minister Dipak Patel told The Observer that a huge number of new countries was set to join. 'We're working hard to find a convergence with G23. We're trying to make it G80.'
But the differing priorities of the least developed countries and middle income states are potential stumbling blocks. Critics single out India's own high tariff rates. Many African countries believe that the G23 is primarily concerned with access to western markets while small countries like Malawi, which has torn down all barriers to outside trade, are more preoccupied with protecting their own fragile businesses.
US trade representatives point out that countries within the alliance have been at each other's throats over trade issues, particularly India and Argentina.
Deputy US Trade Secretary Peter Allgeier said: 'We are perplexed at this group... It's interesting to look back at your notes and see where they've been in the last few years. Some have been most ambivalent about reform. It's unclear what is the unifying factor.' He added that the G23 still did not represent the majority of developing countries.
The G23 started as a rejection by China, Brazil and India, along with others including South Africa and Kenya, of what they considered to be the snail's pace of European reform of the Common Agricultural Policy as well as huge US production subsidies paid to its farmers.
But it has now become a lightning rod for other frustrations. This weekend, 10 countries within the African Union are exploring whether policy differences can be overcome to allow a greater number of African countries to join the group.
Phil Bloomer, head of Oxfam International, said: 'A group of countries representing over half the population of the world is now talking about social justice within the WTO. It's just unprecedented. West Africa hasn't crumbled in the face of being offered money by the US.'
The situation has been inflamed by EU Trade Commissioner Pascal Lamy's offer to scrap European export subsidies in return for new investment rules allowing greater access for western businesses into developing world markets. A group of 70 nations is against introducing these issues at this stage of a new trade round, when agricultural reform is seen as the number one priority.
Disillusionment with the WTO among poor nations was spelled out this weekend by a War on Want survey that polled 112 developing country delegates. It found that 82 per cent of them felt that the WTO was monopolised by rich countries, and 83 per cent said the WTO was undemocratic.
The true test is whether the G23 can survive. What inducements will be offered to buy up countries and what arm-twisting might take place?
Also, there is still caution among many of the poorest nations. A Ugandan negotiator said: 'There has been a radical shift but the African Group is still watching because our interests are not catered for. But talks are beginning.'The Observer:
