TRADE: Brazil Calls for Free Trade Within G20

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Dec 12 2003 (IPS) - Brazilian President Luiz Inácio Lula da Silva proposed Friday that the members of the Group of 20 developing countries that are allied in World Trade Organisation (WTO) negotiations should implement free trade amongst themselves.

There are already trade blocs in operation within South America, Africa and Asia, in addition to ongoing inter-regional negotiations, such as South America’s Mercosur (Argentina, Brazil, Paraguay and Uruguay) with South Africa and India.

Now it is a matter of expanding the sphere of such initiatives in order to build a greater free trade zone in the developing South, said Lula.

An accord amongst the members of what has been dubbed the G20, the original number of countries in the group that now comprises 18 countries, would be open to include additional members of the developing world.

The Brazilian president called on the ministerial delegations of the G20, gathered Thursday and Friday in Brasilia, “to carefully reflect” on his proposal with the aim of discussing it during the 11th meeting of the United Nations Conference on Trade and Development (UNCTAD), slated to take place in June in Sao Paulo.

The G20, with Brazil, China, India and South Africa at the helm, met this week with guests Supachai Panatchpakdi, WTO director-general, and Pascal Lamy, the European Union’s trade commissioner.

The objective was to re-establish dialogue between the developing world bloc and the EU in order to kick-start the WTO negotiations that had largely screeched to a halt after the ministerial conference in Cancún, Mexico in September.

“Dialogue was productive and positive,” stated a joint communiqué from the G20 and Lamy, adding that both sides laid out their positions in “pragmatic ways” and agreed on the necessity to intensify trade talks in early 2004.

Lamy said that any initiative for free trade amongst countries and blocs is positive, but that the EU will give priority to multilateral negotiations, in other words, those within the WTO.

The G20 emerged in late August to oppose the proposal put forth by the United States and the EU that would limit the debate on liberalisation of farm trade at the Cancún meet. The WTO ministerial conference was a resounding failure as there was no consensus on any major issues and it produced no new agreements.

Lula commented that the G20 “is changing the dynamic of multilateral trade diplomacy” by pressing to ensure that the agricultural trade question at the WTO will not be limited to “parameters imposed by the protectionist interests of a handful of actors.”

The G20 represents 60 percent of the global population, some 70 percent of the world’s farmers and more than 22 percent of farm production. That is why Lula said he wants “an end to distortions in agricultural trade,” with the elimination of domestic supports and export subsidies for the sector.

Lula’s suggestion, a jump forwards for the bloc’s objectives, may come off as utopian, considering the disparities between many of its members and the diversity of their situations at home.

The G20 is made up of eight Latin American countries (Bolivia, Brazil, Chile, Cuba, Mexico, Paraguay and Venezuela), five African (Egypt, Nigeria, South Africa, Tanzania and Zimbabwe) and five Asian (China, India, Indonesia, Pakistan and the Philippines).

Uruguay, the fourth partner in Mercosur (Southern Common Market) remains outside the group.

Brazil’s foreign minister, Celso Amorim, attempted to clarify the context of Lula’s proposal, saying that a free trade agreement is just one of the options to be studied by the group, which is still known as the G20 despite the fluctuations in its membership.

But before the Lula initiative, which entails lifting tariffs on nearly all trade amongst the bloc’s members, the global system of trade preferences is up for discussion, in the context of UNCTAD, said Amorim. This mechanism calls for the concession of tariff preferences in commerce within the developing world.

Argentina and Brazil are already promoting talks to put the system into operations. It was created in the 1980s with the aim of intensifying South-South trade.

It is a mechanism that did not produce satisfactory results because there were WTO negotiations going on, known as the Uruguay Round, which encompassed the trade interests of all, according to UNCTAD chief Rubens Ricupero.

With the failure of the latest round of WTO talks the trade preferences could gain ground and turn into a good alternative for breathing life into trade between developing countries, which has seen strong growth recently, Ricupero said.

For example, Brazil’s trade with India and China has more than doubled in the past few years.

The statement issued by the G20 ministers in Brasilia urges all WTO members to open the way for effective liberalisation of farm trade in order to ensure the success of the broader negotiations.

Agricultural trade as it is today maintains barriers and distortions, say the ministers, who say these must be eliminated in order to fight poverty and promote political and social stability in the developing world.