The SAIIA Trade Policy Briefing No 19 January 2008 Series is intended to elicit debate on critical issues relating to South ’s overall trade strategy. Reflections on Governance The broad focus of the series is on the political economy of the Adaptation by the South in the international trading system and South Africa’s strategic responses WTO to it. This covers the full spectrum of our trade strategy, from the by Vincente Paolo B. Yu III multilateral trading system, to strategic regional and bilateral partnerships, and particular issues The South and Calls for Global the --South Africa (IBSA) within the trade agenda. Economic Governance Reform Forum; the strengthening of regional integration mechanisms, such as ASEAN, ognisant of the difficulties and SADC, Mercosur, etc.; and engagement in Anyone wishing to respond to or Cimbalances that they face in group-based action in negotiating forums contribute articles should contact: participating effectively in various global (such as in the WTO). economic institutions, developing countries In all of these initiatives, developing The South African Institute of have consistently called for governance countries have been consistent in stressing International Affairs (SAIIA) reforms that would allow for their increased that development should be the main participation and representation in such focus for international cooperation and Tel: +27 0)11-339 2021 (General) institutions. These calls have been made global action. The past few years of robust Fax: +27 (0)11-339 2154 in the context of, for example, the World (although unequal) growth among many Email: [email protected] Bank and the International Monetary developing countries, especially among the www.saiia.org.za Fund vis-à-vis voice and quota reforms, big emerging economies of Brazil, India, the UN Security Council with respect to China, and South Africa, have spurred VINCENTE PAOLO B. YU III, its permanent membership, international an increasing sense of confidence, self- Programme Coordinator, Global financial institutions such as the Bank reliance, and optimism not only in terms Governance for Development of International Settlements (BIS), of national prospects for development Programme, South Centre, international standards-setting organis- but also regarding enhanced South-South . For more information ations such as the Codex Alimentarius and cooperation and the utility of working regarding this article, please e-mail: the International Standards Organization together in different institutions, such as [email protected] or see www. (ISO), and in the WTO itself. the WTO. southcentre.org. Parallel to these initiatives, developing The views expressed in this countries have also been active in WTO Governance and the South: article are the author’s and do not establishing mechanisms designed to Innovation and Adaptation necessarily reflect the official views improve both their ability to cooperate or positions of the South Centre, and coordinate with each other in these The WTO’s institutional decision-making its Member States, or any other international institutions and to bolster process, individual negotiating capacity . their substantive capacity to participate. limitations, and information asymmetries These include the long-standing are, among others, constraints to the actual This briefing forms part of SAIIA’s institutions such as the , the effectiveness and mode of participation research programme on the role Non-Aligned Movement, and the Group by developing countries in the WTO’s of emerging powers in a changing of 24; the establishment of domestic decision-making system. In response to world, funded by the Konrad non-governmental and intergovernmental these constraints, developing countries Adenauer Foundation and SIDA. think tanks (such as the Research and have increasingly turned to forming Information System (RIS) in India, the informal groupings or coalitions and to South African Institute of International strengthening existing groupings with other Sida Affairs (SAIIA) in South Africa, the South developing countries. This response has Centre in Geneva); the creation of South- been particularly evident since the launch ISSN Number: 1729-5815 South high-level political and economic of the WTO’s Doha negotiations in late arrangements such as the Group of 15, 2001. Pg 2 No 19 January 2008

Ideational Shift – Promoting a African Group, the ACP Group, the LDCs and through which developing countries Development Agenda in the WTO Group, the Small Vulnerable Economies can enhance their role in shaping decision- Group, all have distinctly pegged their making. Today’s coalition-building by developing positions in the WTO to a clear ideational They also represent a clear recognition countries in the WTO goes beyond being a preference for linking negotiated on the part of developing countries that mere behavioural change in response to their concessions to their respective longer-term negotiating success in the WTO lies in historical experiences or marginalisation strategic development objectives and ideas. improved levels and modes of coordination in the GATT/WTO system. It can be with other developing countries in order argued that a fundamental ideational shift Rational Adaptation – South-South to secure more effective and active has indeed taken place in terms of how Coalitions in the WTO participation in the WTO decision-making developing countries view the WTO, process. Thus, developing countries have its role in their respective development Working together and forming coalitions is improved in their ability to establish and processes, and their role as participants in a rational adaptation response by developing maintain their coalitions in the context its governance system. This shift underlies countries to both the issue of negotiating of the WTO negotiations, and they have the basic negotiating positions of today’s constraints and the issue of being better become more strategic in doing so. WTO developing country coalitions. able to advance their development agenda. Of the 112 WTO members who are Developing country coalition-building Coalitions enable developing countries commonly recognised as, or who ascribe to in the WTO Doha negotiations is helped to pool together resources, find strength themselves the designation of, ‘developing by the fact that the negotiating mandate in numbers, be represented (directly or countries’, 99 (or 88.4%) are members of established at Doha and further clarified in indirectly) in various negotiating formats, one or more developing country groups or the July 2004 framework package provided and have a vehicle through which they coalitions. Sixty-seven developing countries them with both the moral and political can influence the negotiating outcome. In (or 59.8% of developing WTO members) basis for stressing the need to ensure that essence, by working together in coalitions, have joined one or more informal issue- the negotiating outcomes support their developing countries in the WTO can based developing country coalitions. Sixty- articulated development priorities. The increase their power and consequently their one developing countries are members of Doha negotiation’s mandate on promoting ability to influence outcomes, despite the a regional group (including 35 which are developing countries’ needs and interests complexity of the issues and the political also members of one or more issue-based gave developing countries the flexibility to dynamics that occur in the negotiations. groups and 37 which are members of one establish a basic level of commonality of As one author has pointed out, a function or more common characteristic groups). interests in many of the negotiating areas of coalitions in multilateral negotiations Fifty-one developing countries have joined that later formed the basis for their groups’ ‘is to give power to their members to help one or more common characteristic group. negotiating positions. them achieve their objectives. A common Nineteen countries have membership in all More than simply viewing the WTO platform, incorporating the minimal three types of developing country groups as an international forum where trade demands of each separate coalition or coalitions. concessions may be negotiated and member, is easier to handle and negotiate As can be seen, while region-based exchanged, developing country coalitions than the sum of individual items.’1 or common characteristic-based groups now view the WTO as a forum in which There are studies on the kinds of (such as the African or ACP Groups for the development implications of trade collective action-focused coalition building the former and the LDC Group for the concessions will need to be considered that developing countries have undertaken latter) continue to be major vehicles for as part and parcel of the philosophical in the WTO.2 These have looked at the coalition-based action by many developing moorings of and values underlying the mechanics, internal dynamics, and the role countries, informal issue-based groups multilateral trading system. This developing that these coalitions play in WTO decision- or coalitions such as the G-20, the G-33, country insistence on viewing the WTO making. and the NAMA-11 have now become the as not merely a trade institution but as These studies all point to the same primary means for group-based action by a development and trade institution has overall conclusion – developing country developing countries. been clearly evident in all of the ministerial coalitions are becoming an integral part of These informal coalitions tend to be conferences since Seattle in 1999, and WTO decision-making. They have become more proactive, making specific proposals indeed was instrumental in ensuring that the de facto preferred response of developing instead of general statements towards the mandate of the Doha negotiations was countries to imbalances in power, process, negotiated issues. However, ‘formal’ groups a developmental one. and participation that existed in the GATT such as the African Group and LDC Group As a result, developing countries in the and which persisted into the WTO. They were also very proactive on negotiations that Doha negotiations now participate both help harness the power of numbers in dealt with special and differential treatment directly – as individual members – and favour of those who join the group, and or on specific interests such as transit trade indirectly – as members of various groups help improve the negotiating ability of for landlocked developing countries. or coalitions. In the major negotiating issues their members by allowing them to put The use of both formal and informal of agriculture, Non-Agricultural Market together a more proactive and defensive coalitions by developing countries as Access (NAMA), and trade facilitation, this negotiating position.4 As such, they are vehicles for their participation in the trend is much more evident. The G-20, the becoming the vehicles through which some negotiations naturally leads to overlapping G-33, the Non-Agricultural Market Access, of the worst aspects of such imbalances memberships. For example, all members of the Core Group on Trade Facilitation, the may be remedied on an operational basis the African Group and the CARICOM are

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members of the ACP Group. All 32 LDC into the WTO. The utility and effectiveness development implications of the policies WTO members, except for Bangladesh, of developing country coalitions lie not that are negotiated under its auspices. Cambodia, Haiti, Maldives, and Nepal, simply in the result of the combined The current stalemate reflects the impact are also members of the ACP Group. market power of their members but also of increased South-South cooperation Overlapping membership among the in the political weight of the group. and coordination in putting forward a various developing country coalitions is Of course, problems continue to development agenda. prevalent as can be seen below: persist for many of these coalitions. This has created a situation significantly

35 are members of both a regional group and 1 or more issue-based coalitions 61 are members of a regional group

67 are members of 1 or more issue-based coalitions 19 are members of 1 or more regional, issue- based, and common 99 are members of 1 or more characteristic coaltions developing country groups or coalitions

37 are members of a common characteric group and 1 or more 112 developing WTO common characteristic coalitions members

51 are members of 1 or 27 are members of 1 or more issue- more common characteric based coalitions and 1 or more coalitions common characteric coalitions

As negotiating cooperation vehicles in While in many ways they have defined different from that which existed during the WTO, developing country coalitions the broad parameters of their substantive the Uruguay Round and up to the now show, to one degree or another, the development-focused negotiating agenda, early years of the WTO – developed following characteristics: there is still a need for clearer operational countries now no longer dominate • a clearly defined substantive agenda as articulation of this agenda. Furthermore, WTO governance but rather, they have their common basis for action; more proactive alternative solutions to engage seriously with the developing • improved intra- and inter-group day- and formulation that promotes their country membership. At the same time, to-day functional coordination and substantive agenda on various aspects of change often breeds resistance, and this sharing of resources; the WTO negotiations need to be crafted. happens in the WTO as well. The current • more strategic and improved tactical There also continue to be challenges in stalemate also reflects to a great extent use of media and public projection; improving the capital–Geneva linkage continued developed country resistance and on substantive issues, and the capacity of to the South’s development agenda and • more conscious linkage between capital and other support institutions to to improved and more effective Southern political objectives (e.g. South-South support negotiating teams on a real-time, participation in the institution. solidarity) and negotiating practice. day-to-day basis. As such, they are becoming an What we are now seeing in the WTO Governance Adaptation Lessons: integral and important part of current is a clash of ideas between developed WTO and Developing Country WTO governance mechanisms, having and developing countries over what the Coalitions become the de facto preferred response WTO and its rules should be about – of developing countries to imbalances i.e. is it an institution purely about trade The rise and use of informal developing in power, process, and participation that liberalisation or is it an institution that country coalitions in WTO negotiations existed in the GATT and which persisted should also be concerned about the can be seen as an informal innovation in

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institutional governance in the absence within their respective regions) through and issue-based purely developing of formal reforms. It is a necessary adaptive group action has been country groupings in the run-up to the first step towards improving developing crucial in the development of strong 2003 Cancun Ministerial Conference was country participation and reshaping developing coalitions. The willingness followed by greater efforts on the part of WTO governance. The lessons that can of a broad range of developing these coalitions to work together more be learned from the WTO experience countries to work together in various closely and in a more coordinated fashion of developing countries with respect formats and on various issues despite both internally and with other groups. to agenda articulation, substantive often divergent interests is another The result has been a marked preparation, group coordination, and crucial factor; improvement in the extent of overall common action, can be exported to help • Multilateral activism and engagement developing country participation in the improve developing country group action in global governance institutions (both WTO negotiations, albeit indirectly. A in other global economic governance formal and informal) need to be based greater ability to influence (but not yet institutions such as the on good coordination and substan- to determine) WTO decision-making is (G-77 and NAM), the Bretton Woods tive preparation among developing evident from the fact that developing institutions (G-24), and other global countries and their groups; country issues relating to the need to have economic institutions. • Developing self-reliance in the design a strong development-oriented content The innovation in WTO governance and implementation of domestic now form part of the central negotiating arising from developing country action development policies, the identification agenda of the WTO. Whether or not this – i.e. having an ideational shift about the of trade and economic interests, and content will be effectively reflected in institution and coming up with adaptive engagement with other developing the final negotiated outcome will depend group action on the basis of such countries is important. There must in many ways on the extent to which ideational shift – has resulted in improved be a consciousness to engage with developing countries are able to strengthen participation and governance changes in developed countries only on an equal their coalitions and work together even the institution. These participation and footing, and having one’s own agenda, more effectively and strategically. governance changes include, for example, without co-optation, and only when ensuring that key de facto representatives one is ready to engage; Endnotes of major developing country groups • Effective action can only be undertaken are present in small-group negotiating on the basis of good preparation and 1 Christophe Dupont, ‘Negotiation as Coalition formats; and, most importantly, the a sound understanding of the issues Building’, International Negotiation, 1, 7-64, 1996, recognition that no decision can be made involved, the political process used, p. 49. unless all major developing country groups and the dynamics that form the context 2 See e.g. Amrita Narlikar, International Trade and have been consulted and their agreement for the negotiations; Developing Countries: Coalitions in the GATT and obtained. Whether this will suffice for the • The promotion of South-South WTO, 2003; Robert Wolfe, New Groups in the long-term is another question. However, cooperation and institutions, especially WTO Agricultural Trade Negotiations: Power, Learn- the following lessons might be worthwhile at the regional level, can lead to ing and Institutional Design, CATPRN Commis- to keep in mind for developing countries: effective South-South group action. sioned Paper CP 2006-2, May 2006; Peter Draper • Developing countries, individually, as This means that developing countries and Razeen Sally, Developing-Country Coalitions in regions, and as a whole, need to be should improve and enhance their Multilateral Trade Negotiations, 2005; Luisa Bernal et clear about their strategic long-term existing groups in other institutions al., South-South Cooperation in the Multilateral Trading development agenda and goals and such as the UN and the Bretton Woods System: Cancun and Beyond , South Centre TRADE the policies and institutions required institutions as well as their regional Working Paper No. 21, May 2004, (hereafter Ber- to achieve these in the context of new mechanisms, and strengthen existing nal et al). challenges and opportunities such as South-South policy institutions (e.g. the 3 See e.g. India Trade Minister Kamal Nath’s re- the current global economic imbalance, South Centre) and political initiatives sponse to a question about the role of the de- climate change, the widening wealth (e.g. G-15, IBSA, etc.). veloping country negotiating blocs. He explained gap between developed and developing that ‘India’s responsibilities as a leader of the countries, inappropriate or irrelevant Conclusion G-20 bloc of countries did not constrain it in institutions, and the search for negotiations. Rather, representing the G-20 has economic and institutional alternatives. To conclude, there has been a distinct guaranteed that India pursues a balanced deal This means that a creative, proactive change in the negotiating dynamics because the G-20 itself groups together a broad and strategic approach to negotiations, among WTO members since the late range of offensive and defensive interests across formed on the basis of a clear agenda 1990s. Developing countries are working different sectors. The positions taken by the and idea about what is important for together in cohesive groups or coalitions G-20 already represent a compromise between developing countries’ development based on their self-identified interests in the interests of many developing countries.’ See prospects, is a requisite to effective a much better and more coordinated way http://www.carnegieendowment.org/events/index.cfm?fa action; as compared to, for example, the way in =eventDetail&id=1016&&prog=zgp&proj=zted. • The positive engagement of the which they interacted prior to the Seattle ‘big’ developing countries – i.e. Brazil, Ministerial Conference in 1999. The India, China, and South Africa – with development of more cohesive regional, other developing countries (especially cross-regional, common characteristic,

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