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By
Prabhash Ranjan
Research Officer, Centad
Since its emergence before the Cancun Ministerial in September 2003,
the Group of 20 developing countries (which includes South Africa, India, China,
Indonesia, Thailand and Pakistan) has become an important voice in WTO negotiations,
particularly in the area of agriculture. This paper explains why it is important
for the G20 to remain united, and also looks at the pitfalls that could derail
this unity (click here to read the full text of the paper).
The G20 represents 57% of the world's total population, 70% of the total
farmers in the world, and 26% of total exports in agriculture. As such, it is
too important to the world trading system to be ignored.
The trigger for the
formation of the G20 was the joint EU-US text on agriculture, presented before
the Cancun Ministerial, which was patently unfair to developing countries. The
rules had to be challenged since agriculture is of vital importance to the economies
of developing countries. But no developing country had the strength to individually
tackle the powerful EU-US combine. Hence the formation of a coalition of developing
countries that could bargain collectively. This is a strong reason for the coalition
to stand together. There
are, however, internal differences between member countries that could jeopardise
this unity. They could play out in four scenarios:
- Differences in
the position of individual members of the G20.
- Differences in the position
of an individual member country and the position of the G20.
- Differences
due to overlapping membership.
- Attempts to break the G20 by developed
countries.
Conflict between countries could arise, for instance,
on the contentious issue of subsidies. If rich countries agreed to cut their export
subsidies, it would increase the price of their products in the international
market. This would be welcomed by big exporters like Brazil and Argentina. However,
in return, the developed countries would want to see a reduction in the huge tariff
rates of countries such as India and Pakistan. Both countries are likely to resist
this as it could lead to a surge in imports. Differences in the position
of an individual member country and the position of the G20 could also surface.
For instance, India supports the G33 proposal of availability of a safeguard mechanism
for all agricultural products, while the G20 position is that of a special safeguard
mechanism for all developing countries; it is silent on whether it should be available
for all products or not. Differences could crop up due to overlapping membership,
as some G20 countries are also members of other groups such as the Cairns Group.
These two groups have divergent views on issues like the tariff cutting formula,
the special safeguard mechanism, and special and differential treatment. The Cairns
Group, of which Brazil is a member, advocates deep cuts in all tariffs using the
formula approach, and greater cuts in high tariffs, tariff peaks and tariff escalation.
While the Cairns Group and the G20 both support special and differential treatment
in achieving better access to the markets of the developed world, the G20 also
wants special and differential treatment in protecting their own markets from
cheap imports. An important external threat that the G20 might have to
counter is the attempt by developed countries to break the group by offering sops,
or even arm-twisting. Immediately after the G20 was formed, several small South
American countries deserted it in response to threats that continuing in the coalition
would jeopardise their trading arrangements with the US.
All coalitions are vulnerable to internal pulls and
pressures that could lead to a split. Though the G20 countries have common interests,
vis-à-vis the developed countries, their agricultural systems and domestic compulsions
are not all alike. There are differences between member countries on market access,
tariff reduction and the special safeguard mechanism, to name a few. Then, some
countries like Brazil or Argentina want more liberalisation, while others such
as India, Pakistan and Zimbabwe are more protective.
However, G20 members
have shown that they can make internal deals with each other and put up a united
front. The submission on market access that was made at Cancun, favouring a blended
formula, clearly revealed that compromises had been made by countries belonging
to the Cairns Group, which has always advocated the Swiss formula. As the
WTO negotiations become more specific leading up to the Hong Kong Ministerial
and beyond, there will be greater challenges ahead for the G20. The paper argues
that knowing this and preparing for it will lead to amicable settlements between
members and ensure that they put up a united front.
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