Washington's vendetta

Print edition : November 07, 2003

Venezuelan Minister of Production Ramon Rosales (right), India's Commerce Minister Arun Jaitley (third from right) and Malaysian Minister of Commerce and Industry Rafidah Aziz (fourth from right) at a press conference to announce the refusal of 16 countries to begin negotiations on the "four new themes", including the liberalisation of transnational investments, in Cancun, during the fifth Ministerial Summit of the World Trade Organisation. - JORGE UZON/AFP

By failing to view the Group of 21 as a negotiating partner whose emergence reflects the legitimate interests of the South, the Bush administration is missing out on a historic opportunity to transform North-South relations.

A PROMISING new bloc of countries was born in the run-up to the World Trade Organisation (WTO) ministerial in Cancun: the Group of 21, led by Brazil, India, South Africa and China. It played a major role in preventing the European Union (E.U.) and the United States (U.S.) from extracting greater agricultural tariff reductions from the poor countries while maintaining the massive subsidisation of their agricultural systems, which has promoted the dumping that has driven millions of small agricultural producers in the developing world from the countryside.

The U.S. lost no time in attacking the new formation. At a briefing on September 10, a U.S. official disdainfully branded the formation as the "Group of the Paralysed". The G-21's reasonable proposals to correct the flaws of the world trading system were dismissed as "welfare measures" that had no place in a trade organisation. A concerted campaign was launched to split the group, with "weak links" like Colombia, Mexico, Chile, Costa Rica, Thailand and El Salvador subjected to a full-court press. Appalled by their government's tactics, non-governmental organisations of the U.S. revealed at a press conference on September 13 that the tactics included "backroom coercion, calls from the White House, and threats to terminate other trade benefits and stop on-going negotiations". So intense was the pressure that the Brazilian delegation was compelled to issue a statement asking the delegations "to negotiate and not direct our energies at attacking countries or groups of countries".

Alongside the U.S. government trade team, the U.S. corporate lobby also went to work to split the G-21. Consumer Alert, a business group masking as a consumers organisation, said that "while ostensibly representing the views of developing countries", the G-21 programme "better represents the positions of several powerful exporting countries, who want greater market access, without opening up their own countries' markets to importers".

However, the U.S. was able to detach only one country from the group: El Salvador.

Having failed to split the G-21, U.S. Trade Representative (USTR) Robert Zoellick tried to isolate the alliance in world opinion by pinning the blame for the collapse of the Cancun ministerial on it: "The rhetoric of the `won't do' overwhelmed the concerted efforts of the `can do'. `Won't do' led to the impasse." The Bush administration's blame game failed, with even The New York Times putting the responsibility of the collapse on the E.U. and the U.S.' intransigence on the question of agricultural subsidies.

But, instead of understanding why it was isolated in Cancun, the U.S. intensified its efforts to destroy the G-21. In a recent visit to Colombia, U.S. Senator Norm Coleman warned President Alvaro Uribe that "remaining in that Group will not lead to good relations between Colombia and the United States". He also alleged that he got the commitment of the Colombian President to leave the group eventually.

Similarly, the negotiations around the proposed Central American Free Trade Area (CAFTA) have been used by the U.S. to try to break the G-21. In a visit to the region post-Cancun, Zoellick bluntly warned that the negotiations were endangered by Costa Rica and Guatemala's membership in the G-21. "I told them that the emergence of the G-21 might pose a big problem to this agreement since our Congress resents the fact that members of CAFTA are also in the G-21," he stated. "If we want to construct a common future with them, resistance and protest do not constitute an effective strategy. In my talks with some of these countries, I sense that they are drawing the right conclusions." Moreover, Zoellick urged the Central American governments to begin to look after their own interests since Brazil "is a big country that can defend its interests by itself".

Raising the pressure a notch higher, U.S. Senator Charles Grassley, the Chairman of the U.S. Senate Finance Committee, warned that the U.S. would "take note" of those countries that "torpedoed" the negotiations in Cancun and would look closely at the stand adopted by Costa Rica and Guatemala.

Costa Rica, in particular, has become the object of tremendous U.S. pressure in the past few weeks. The push to get it off the G-21 has been accompanied by a strong demand by Zoellick that it privatise its energy and telecommunications sectors, which are currently under state control. Observers think that also part of Washington's strategy to detach Costa Rica from the G-21 is the move of the energy conglomerate Harken Corporation to sue the country to the tune of $57 billion at the International Centre for the Settlement of Investment Disputes (ICSID) for breach of contract. U.S. President George W. Bush, it must be noted, was a member of the board of Harken from 1986 to 1993.

The fear in the region is that in order to punish Costa Rica and Guatemala, the U.S. will push for a CAFTA that includes only Nicaragua, El Salvador and Honduras - a development that would reduce even further what little leverage the Central American countries would be able to exercise in the projected trade area.

THE corporate community in the U.S. has also begun its post-Cancun effort to neutralise Brazil, Argentina, Venezuela and other Latin American members of the G-21 in the run-up to the Free Trade Area of the Americas (FTAA) negotiations that will take place in Miami in November. On September 23, in a letter addressed to U.S. Commerce Secretary Don Evans and Zoellick, a broad coalition of U.S. business groups declared: "... [W]e strongly urge you and your negotiating team to stay the course and continue to fight for a comprehensive and commercially meaningful FTAA that incorporates high standards, similar to those the United States has achieved in its free trade agreements with Canada, Mexico, Chile, and Singapore. We strongly oppose, therefore, attempts by some U.S. trading partners in the region to forge a more limited trade agreement by leaving several difficult, but highly important issues off the negotiating table entirely or addressing them in a less than commercially meaningful way." This was clearly a reference to the efforts of Brazil and other countries to protect their investment regimes from being gutted by the draconian investment proposals of Washington, which would lead to denationalisation of industry and make any kind of industrial policy impossible.

Among the signatories were the "heavies" of the U.S. business lobby: the Emergency Committee for American Trade, the U.S. Council for International Business, the U.S. Chamber of Commerce, the National Foreign Trade council, the National Association of Manufacturers, the U.S. Coalition of Service Industries, and the Pharmaceutical Research and Manufacturers of America.

These tactics of intimidation and coercion have no place in international economic relations. Instead of bridging the divide between the rich and poor countries, which has become the central issue in global trade, they will only exacerbate it.

Straitjacketed by a perspective that sees the rest of the world as ganging up on the U.S., the Bush administration is missing out on a historic opportunity to transform North-South relations by viewing the G-21 as a negotiating partner whose emergence reflects the legitimate interests of the South rather than an upstart to be destroyed.

Contrary to the hopes of the Jurassic Republicans, the strategy of bulldozing the opposition will not work since developing countries have begun to internalise the bitter lesson of the last 25 years: that unless they hang together, they will hang separately.

Celso Amorim, the Foreign Minister of Brazil, which serves as the coordinator of the Group of 21, was not just engaging in empty rhetoric when he declared in Cancun: "We stand united. We will remain united. We sincerely hope that others will hear our message and, instead of confronting us or trying to divide us, will join forces in our endeavour to inject new life into the multilateral trading system. To bring it closer to the needs and aspirations of those who have been at its margins - indeed the vast majority - those who have not had the chance to reap the fruit of their toils. It is high time to change this reality."

Walden Bello is executive director of Focus on the Global South and Professor of Sociology and Public Administration at the University of the Philippines. His latest book is Deglobalization (Zed Press, London, 2002).

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