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Beyond WTO: will South-South cooperation bite?

Although past Southern alliances have failed to pack a punch in North-South discussions, three formed at the Cancun WTO meeting struck a blow by refusing to accept proposals.

Cancun's municipal authorities banned jet-skis and boats used for parasailing when the World Trade Organisation's 5th ministerial meeting was held at the Mexican beach resort.

Parasailing lifts people into the air in a parachute. But if there was no takeoff over Cancun's sea, developing countries got a big lift in the conference hall.

Several new alliances emerged which increased the confidence of developing countries and changed the balance of power in the negotiations. They stood up to the big players, the United States and the European Union, by refusing to accept a draft ministerial text which they felt did not reflect their views. Most significantly, they refused to extend the remit of the WTO, which lays down the rules of world trade, into new areas such as investment. The meeting ended without agreement as a result.

"Better no deal than a bad deal," said Brazil's minister of agrarian development Miguel Rosseto.

When talks on the Doha development agenda, agreed at the WTO's last ministerial meeting in 2001, resume soon at the WTO in Geneva, developing countries sense that their cohesion will give them a new power to bargain for a better deal from world trade.

South-south cooperation has been around for some time, however, but it has so far failed to dent the North's power in international economic affairs.

In the early 1960s the Non-Aligned Movement came onto the scene, the brainchild of Jawaharlal Nehru, former prime minister of India. It attracted over a hundred countries who were not aligned to either the West or the Soviet Union. But the group's potential was never realised.

In the late 1960s came the Group of 77 developing countries which pressed the development case at international conferences. Again, little concrete was achieved.

The success of the Organisation of Petroleum Exporting Countries (OPEC) in raising oil prices in the mid-1970s gave producers of other primary commodities the hope that they could do the same. There was talk of a 'trade union of the Third World'. But the trade union had no teeth.

Will the new alliances fare better? Are we now seeing South-South cooperation with teeth?

The Cancun alliances look impressive. Foremost is the G23 which includes all the big developing countries, notably Brazil, China, India and South Africa. At the start of the Cancun meeting, as the G20, it submitted a key paper on agriculture which calls for an end to export subsidies for farmers that encourage dumping, and for a cap on direct payments, within a specific time frame. The paper shook the complacency of the US and EU.

By the end of the meeting, Egypt, Indonesia and Nigeria had joined the group and the G23 represented well over half the world's population.

Thirtythree developing countries, including six members of the G23, formed an alliance which called on the meeting to agree to a mechanism that would allow developing countries to designate products of special interest – to poorer farmers, for example – that would be exempt from WTO rules. And this could safeguard the livelihoods of millions of people, believes the G33.

The African Union formed an alliance with the African, Caribbean and Pacific group of countries and with the least developed countries – 61 WTO member countries in all. The G61 said they had come together to promote and secure their interests.

These alliances shaped the outcome of Cancun. Ivonne Juez de Baki, the trade and industry minister of Ecuador, a member of the G23, said "We have done something historic. This is the beginning of a better future for everyone."

The three groups complemented each other, but can they hold together? The US and the EU will try to divide them, although the UK's Secretary of State for Trade and Industry Patricia Hewitt said that she "welcomes the emergence of a new, stronger voice for developing countries".

Not so President George W. Bush. Midway through the meeting the US president telephoned the leaders of Brazil, India, Colombia, Pakistan, Thailand and South Africa to ask them to leave the G23. The hint was of improved bilateral trade deals. All said no.

But the pressure will intensify. The G23 countries have different interests which the US will exploit. The US may try to punish them. What might embolden the alliances is public opinion.

If there is a new factor today, which was not present in the 1960s and 70s, it's the strength of social movements in developing countries. There is now a much higher level of awareness and more campaigning on the issues, stimulated by the effects of WTO, World Bank and IMF policies on people's lives. When trade rules lead to Californian rice being dumped in South Korea to sell for a third of the price of local rice, and when US soya imports into Indonesia cause nearly a million farmers to go to the wall, people will back their governments when they make a stand at the WTO.

Like they did in Cancun. The draft ministerial declaration antagonised developing country delegates. There was a little progress on agriculture but nothing worthwhile on helping groups like West African cotton producers, badly hit by falling world prices caused by US farm subsidies.

The alliances suggest that the WTO will in future be linked more closely to the aspirations of the developing world. But does the WTO have a future?

Two of its last three ministerial meetings have failed – in Seattle in 1999 and now Cancun. The Doha meeting may only have succeeded because it was soon after 9/11 and developing countries were arm-twisted into not doing anything that might be seen as negative for the world economy.

The WTO's decision-making processes are weak and hardly lend themselves to democratic negotiations. These procedures were a severe obstacle to progress in Cancun. The WTO sets the rules for trade, but has no rules about procedures for its meetings – about how they should be run and organised. An attempt by developing countries, in early 2002, to press for the establishment of such procedures was blocked by the EU.

While the decision-making processes need changing, there are deeper questions about the WTO. The organisation has played no role in helping countries that rely on primary commodities trade – a serious gap as most of the world's 49 least developed countries fall in this category.

Again the WTO has no role in regulating the traders. Almost 70 per cent of world trade is between transnational corporations. In today's world it is corporations that trade not countries. Through their governments, the TNCs can influence an organisation which has no power to regulate them.

The WTO increasingly looks like the wrong trade organisation for the reality of international trade today. But at least it is, in theory, a democratic organisation, with its 146 countries – soon to be 148 with the addition of Cambodia and Nepal – having an equal say. Members have the power to change the rules. The new alliances have testing times ahead.

John Madeley is the author of Hungry For Trade: How The Poor Pay For Free Trade and the just-published A People's World: Alternatives To Economic Globalization.

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