The global South needs a multilateral approach

Business Standard, November 06, 2011

By Faisal Ahmed

The real challenge that the world faces today is to develop modalities of strengthening international cooperation and build common minimum commitments.

Hovering between the hope of implementation and the fear of closure on the one hand, and the alternative choices of Plan A and Plan B on the other, the Doha Round has definitely lost its sheen, if not the mandate, to strengthen multilateralism. Complete negotiation and implementation of the Doha Agenda does not seem to be possible in the near future. But its closure at this juncture would also be unworthy and undemocratic, as it would force disadvantages on the countries of the global South. The global South, comprising more than 150 developing and Least Developed Countries (LDCs) of the world, suffers from some of the most rudimentary development challenges.

The World Trade Organisation (WTO) essentially promotes a rule-based multilateral trading system. However, amidst such critical anomalies associated with the negotiations on the Doha work programmes, the real challenge that the world faces today is to develop modalities of strengthening multilateralism. This in turn will also help countries inculcate preparedness for the Doha Agenda.

In a recent address to CUTS International in September, Pascal Lamy, the director general of the WTO, chose not to speak on “the future of the multilateral trading system”, but preferred to voice his views on “the multilateral trading system of the future”. He argued that political leadership, pragmatism and the spirit of compromise, and the spirit of realism, were the three factors that needed urgent attention.

It is now for the international community to realise that these are not mere arguments or determinants. They are, in fact, major philosophical propositions which have the potential to enhance global co-existence, and are capable of creating sustainable livelihoods.

Throughout its various ministerial conferences, WTO has provided a sound platform for members to liberalise and enhance their global outreach. This obviously calls for a realisation that countries too, have their existing country systems and that they face a strenuous task of aligning their pursuits of economic diplomacy — carved out of their national interests — with that of their trading partners. Even trade costs like non-tariff barriers and those associated with logistics and trade facilitation generally become latent precursors of a country’s negotiating stance at the WTO. Consensus-building at a multilateral forum thus becomes a complex web of mutually exclusive assertions.

The real task ahead is not to predict the future of the Doha Round, but to explore modalities which can empower country systems to cooperate internationally and build common minimum commitments. This is because even if the round ends in a fiasco, such compelling issues like duty-free and quota-free market access for LDCs will continue to remain pertinent.

Such cooperation may be explored within the framework of south-south cooperation. Statistics reveal that the global South has gained from multilateralism in terms of its international trading position. The total exports of the LDCs have increased substantially from $20.1 billion in 2001 to an estimated $144.3 billion in 2010. The developing economies have also seen a remarkable surge in their exports, which currently stand at $6,302.9 billion, as compared to $1,985.5 billion in 2001.

Also, the trade between the regions within the global South has been on a trajectory of growth. For instance, the total trade between Africa and Latin America & the Caribbean increased from $7.2 billion in 2001 to $22.1 billion in 2010. Interestingly, as per the International Monetary Fund’s World Economic Outlook 2011, the emerging and developing economies are projected to grow at 6.5 per cent in 2012, as compared to 4.5 per cent for the advanced economies.

The onus thus lies in the hands of the developing economies themselves, which are gradually becoming the new locus of international trade and development. Some of the geo-strategically positioned congregations in the developing world that need to take a lead in strengthening multilateralism through south-south cooperation include Brazil-Russia-India-China-South Africa (BRICS), the League of Arab States (LAS), and the Economic Cooperation Organisation Trade Agreement (ECOTA).

BRICS represent 43 per cent of the world’s population, has a trans-continental outreach and represent the developing world’s most significant example of multilateral integration. These countries also engage deeply with the LDCs of Africa and contribute to trade, region-building and capacity-building initiatives.

The contribution of such multilateral initiatives to the global South can be seen from the fact that the BRICS countries’ total exports to the developing world crossed $1,000 billion in 2010, which is around five times what they were in 2001. Also, their exports to LDCs increased from $9.23 billion in 2001 to $46.6 billion in 2010. Interestingly, exports from LDCs to BRICS also increased almost three-fold in the last decade and currently amount to $5.7 billion, thus reflecting better market access for LDCs as well.

Also, a significant step toward strengthening multilateralism can well be undertaken by the LAS, which comprises 22 countries in West Asia and North Africa, most of whom are LDCs and dependent on official development assistance (ODA) from countries like India, China and Saudi Arabia, among others. The heterogeneity factor attached to this League — from hydrocarbon-rich Saudi Arabia to a beautiful but poor Comoros — positions it as a lead candidate to be entrusted with the task of developing institutional mechanisms through south-south cooperation. Interestingly, multilateral initiatives in the global South have also helped the LDCs gain from oil-rich Gulf Cooperation Council (GCC) economies. The exports from LDCs to the GCC increased several-fold from a mere $0.12 billion in 2001 to an estimated $2.6 billion in 2009.

Moreover, another congregation with potential to lead such an initiative is ECOTA. Apart from strategically located Turkey, ECOTA comprises of the geopolitically vibrant and resource-rich Afghanistan, Pakistan and Iran, and the naturally endowed Central Asian republics of Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan. ECOTA’s total exports are estimated to be $289 billion. Intra-ECOTA development cooperation can itself support the respective government’s preparedness for multilateral negotiations.

It is therefore important to see whether the forthcoming WTO Ministerial at Geneva can introspect not merely about what is deterring the negotiations, but necessarily what can enhance global preparedness for negotiations

(The author is Associate Director at CUTS International, a Jaipur-based think tank and advocacy organisation)

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