 |
 |
 |
 |
 |
|
|
|
|
|
|
Previous Entry | Main | Next Entry September 29, 2003 Exclusive: Advice to G21 Last week Marc of Blogonaut asked us to participate in his weekly world affairs forum by answering this question: "Given the collapse of the WTO talks in Cancun, what do you feel is the most strategic next step for the G21 countries?" Introduction The 5th Ministerial WTO conference was held in Cancun from 10 September to14 September to discuss the Doha Development Agenda. On 13 and 14 September the talks collapsed.
By 14 September the talks were left at an impasse. The essential difficulty of the WTO system is the need for consensus. No rule can be implemented without a total consensus. This is a vital mechanism of the WTO or any global institution - consensus ensures that effective decisions can be made. When such a diversity of interests is arrayed, this becomes increasingly difficult, however previous to the 5th Ministerial Conference large blocs of member states had often been able to drive to smaller states into accord with relative ease. During the Cancun meeting a new bloc appeared - tentatively referred to at the time as the G22 then G21 and now G20 (due to changing membership). The G2X as we'll refer to it, is a strange bloc, with no clearly stated aims. Conversely, if the bloc forms a cohesive agenda it could become a force to shape the next round of talks rather than simply voting no and accomplishing little. The G2X The G2X is comprised of the following countries:
There are three basic groupings we can make based on a preliminary survey of this data. The first is simply geographic; the largest group of nations represented is from Latin America. The second is that for the majority of the nations represented industrial output far outweighs agricultural output as a percentage of GDP. The final is least developed and, opposite of the second, relies heavily upon agriculture. N.B. Some of the countries listed might not be current members of the "G2X" Primary Issues From The 5th Ministerial The two key issues were agricultural subsidies and market access. We will operate under the assumption that each state is trying to maximize economic growth as much as possible within the constraints of the agreements. Agriculture or industry as a percentage of GDP is not directly representative of the percentage of the local work force, production or output of any sector but rather the cash total that it contributes to GDP. Opening up external markets to agriculture could have an incredible (positive or negative?) effect on the contribution of agriculture to GDP especially for nations with low GDP growth. For the larger more developed nations the interest is more likely to be with industrial goods and market access and technical barriers to trade. The Problem of Compromise Because the WTO system is based on consensus any resolution will be based on compromise. This will be an essential problem for any negotiating bloc in the WTO. Because different states have different economic interests and needs they will be forced to take different positions, to refuse to give up on one point and demand another. Diversity of interests represents the chief obstacle to any functioning group. Western states are a beginning to feel the effects of job losses much more than previously expected. With the exuberance of the 90s economic boom over there is no more camouflage left to cover the massive loss of manufacturing job. The gains in employment won through the addition of new IT service jobs are being lost to "offshoring." Any type of pure free trade will not be accepted at this point in time and any system that gives too much preference to developing countries will be rejected as well. The damages could not be afforded economically or politically. The US, EU & Japan will be much more willing to fight excessive liberalization in this round. Possible Doha Round Outcomes The deadline for the end of negotiations for the Doha Agenda is January 1st 2005. Already we are starting to see the erosion of multilateral trade agreements. The EU and the US have both expressed their preference for bilateral trade agreements after the failure of Cancun. The importance of this is that if a successful compromise cannot be made between all blocks by 2005 we will see the WTO system begin to fall apart. For smaller states and "developing nations" a world of one to one treaties would be extremely disadvantageous - large states would posses all the leverage in each negotiation. For majority of the states of the G2X such an outcome would be considered a loss. Our Recommendation: Mandate and Consolidate The essential step for the G2X is to define a concrete agenda, which all states involved are committed to. Without this the group is too nebulous to be effective - in a compromise-based negotiation dissimilar interests will be fatal. Eliminating dissimilar states from the group would be difficult, even more so when they bring added prestige and weight to the group. For example China is a major economic power as it has a massive GDP and impressive growth. However, China's relative economic strength makes it less likely to conform to the interests of the group. Eliminating liability states will also be extremely beneficial. For example, Turkey's desire to join the EU and its markets will overshadow any possible WTO negotiation. We cannot expect states like Turkey who are politically dependant on the EU, US or Japan to stand firm to the end. The attrition or sudden loss of states from the G2X will deprive the bloc of the necessary momentum to make real gains. Charts |
