SINCE its establishment on August 20 of last year the G20 has awakened a lot of interest and raised all sorts of expectations in many quarters, some positive, others less so. Although the Group is very recent perhaps a little history, concentrating on the circumstances that surrounded its creation, can contribute to clarify its nature and purpose and help to understand its future role.
The G20 was established in the final stages of the preparation of the WTO Cancun Ministerial. Its agenda is focused on the central issue of the round: agriculture. The Group was integrated by developing countries from the three Continents and China. Its objective was to defend an outcome in the agricultural negotiations which would reflect the level of ambition of the Doha mandate and the interests of the developing countries. For this purpose, the Group adopted a common position that was circulated as an official document of the WTO, prior to and during Cancun (WT/MIN(03)/W/6). This position remains the central platform of the Group.
The Group was initially integrated by a majority of Latin American countries, but this started to change in Cancun and some other countries left right after the Conference. Others, however, especially from Africa, joined the Group, which has now 19 members countries: 3 from Africa, 8 from Asia and 8 from Latin America. Brazil has been coordinating the Group since its creation.
The Group met frequently at the level of Heads of Delegation in Geneva prior to Cancun and continues to hold most of its meetings there. These meetings are plenary sessions but there is also an informal group of five coun tries (Argentina, Brazil, China, India and South Africa) which meets, from time to time, to organize the work of the Group. The Group also meets at a technical level to discuss specific proposals in the context of the WTO agriculture negotiations and to prepare technical papers in support of the adopted common platform of the Group. The frequent contacts and meetings at Ministerial level in Cancun consolidated the Group and made it possib le for the G20 to resist the strong pressures against its unity. As indicated before there were some casualties, but the G20 withstood the pressure and passed the test.
The only area where there was active negotiation in Cancun was agriculture and these negotiations took the form of Ministerial level meetings, chaired by the facilitator for Agriculture, Minister George Yeo, from Singapor e. These meetings discussed the three pillars of the agriculture negotiations (domestic support, market access and export competition) taking as reference the text prepared by the Chairman of the General Council, Ambassad or P?rez del Castillo, as well as individual proposals on the table, especially the one presented by the G20. The significance of this procedure will become apparent later in this discussion. The negotiations on agriculture in Cancun took the form of rounds of consultations between the G20, first with the EU and the US individually, and then a final round with the three. Of course, the facilitator also held consultations with other groups , especially the Cairns Group, but the actual discussion of positions, confronting the views of the EU and the US, which had prepared a joint proposal largely reflected in the Chairman’s text, and the dissenting views, was done with the G20.
TACTICAL BATTLES IN CANCUN
Before highlighting some of the main substantive preoccupations of the G20 in agriculture perhaps it would be useful to review the tactical battles in Cancun. Even before the Ministerial, some developed countries tried to dismiss the Group, by refusing to take seriously its proposals and by accusing the Group of trying to introduce an ideological dimension in the negotiation, by importing into the WTO positions and tactics that had their origin in the North-South dialogue. This reflected a sort of annoyance with an attempt by a group of developing countries to try to interfere with the agreement between the EU and the US which should represent the basis for the results on agriculture at Cancun. This understanding, left until very late in the game, was, in reality, an attempt at steamrollering the results in Cancun. The main elements of the agreement were taken up in the t ext prepared by the Chairman of the Council giving to the understanding between the EU and the US the aura of impartiality. The attempts by many countries from the G20 and from other groups to change the bilateral deal to better reflect there interests were met with a negative reply. The G20 was born to try, as it did, to avoid a predetermined result at Cancun and to open up a space for negotiations in agriculture.
At Cancun, the Group had to face an initial attempt to disqualify its proposals by the insistence that the only document on the table was the draft prepared by the Chairman of the Council, a draft which the Group, together with a large number of other delegations had already criticized in Geneva and did not consider an adequate basis for negotiations at Cancun. The G20 insisted that its own proposals should be placed on the table. The Group asserted that no procedural dispute was necessary as the discussion on agriculture should be structured pillar by pillar, taking into consideration all proposals on the table. (Editor’s note: the three « pillars » of the agreement on agriculture are domestic support, export subsidies and market access.) This was finally accepted by the Chairman of the Conference and the consultations on agriculture had that format allowing the G20 the op portunity of presenting, clearly, its proposals.
FAILED ATTEMPTS TO DIVIDE AND CONQUER
The second battle at Cancun faced by the G20 was the attempt to divide the Group and to create difficulties in its relations with other groups in the WTO, especially the Cairns Group and the African Group. In spite of strong pressures put on members of the Group, the G20 remained united during the whole of the Conference with the withdrawal from the Group of only one delegation. Another delegation, Nigeria, joined the Group at the final s tages of the meeting. After Cancun a small number of countries also left the Group, but others became members (Tanzania and Zimbabwe). As a result, the Group has today 19 members, 18 of which were represented at the Minis terial Meeting on 11 and 12 December, 2003 in Brasilia. At this meeting 12 countries were represented by Ministers.
Since its inception the G20 has established close relationships with other groups in the WTO with a special interest in the agricultural negotiations. The G20 is not a closed group. To the contrary, it is open to the participation of other interested countries that share its objectives and positions. It is thus only natural for the Group to have close contacts with other groups. A majority of G20 countries are members of the Cairns Group and there is a large degree of coincidence between the positions of both groups which naturally support each other and try to cooperate for their common purpose: the faithful implementation of the Doha mandate.
It is not a question of competition between the two: each has its own personality. The G20 tries to strike a balance between the interests of trade liberalization and the development objectives of its members. Cairns is more focused on trade liberalization. Their respective agendas and interests coincide as regards the need for the end of trade distorting policies in agriculture and for the opening of developed countries markets. The difference lies in the definition of special and differential treatment for developing countries, especially in the area of market access. The G20 clearly accepts the need for a dual approach to market access that fully takes into account the needs of rural development and the situation of countries with a large rural population. The Cairns Group acknowledges in its platform the need for special and differential treatment for developing countries but defends, as it is only natural due to its composition, where major exporters of agricultural products play a central role and where developed and developing countries are present, a policy more committed to open markets in agriculture, in both developed and developing countries.
As the G20 is composed only of developing countries, it has strong ties to other developing countries’ groups. As noted above the G20 tries to combine the broader interests of economic and social development, especially i n rural areas, with trade liberalization. The African Group recognized the existence of a common ground with the G20 in the Cairo Communiqu? and some African countries have joined the Group since Cancun Others have indica ted their interest in the Group’s work and may join in the future.
At Cancun, the G20 maintained frequent dialogues with the Cairns Group and the African Group and the G20’s reaction to the Derbez text incorporates elements of the position of both groups. In the case of the African Group the issue of cotton was taken up by the G20 as part of its platform.
G20 IS A POLITICAL DECISION
As a Group focused on the agricultural negotiations of the WTO and established to respond to the challenge posed by the common position reached by the US and the EU, which created the risk of marginalizing the interest of the developing countries in agriculture in Cancun and of reducing the level of ambition set in Doha with consequences, in the light of the central role of agriculture in the Doha Development Agenda (DDA), for the whole o f the Round, the G20 had, from the beginning, to develop a sound substantive position dealing with the complex issues involved in the agricultural negotiations.
The establishment of the Group and its composition involved a political decision and sent a message to all participants in the round, especially the developed ones, that there was a new factor to be taken into account in the negotiations. No one could lightly dismiss a group that represented almost 60% of the world population, 70% of world’s farmers and 26 % of world trade in agriculture. The creation of the Group was a political statemen t. The Group’s position, however, was and is based on concrete interests and expressed in concrete proposals that try to fully implement the mandate agreed to in Doha. EU Commissioner Pascal Lamy defined the G20 as having a geopolitical father and agriculture as mother. If by that he meant that the creation and composition of the group was a political gesture, of course he was right. But if the perception was that the Group would simply t ry to block agreements and not put forward positions that tried to generate progress in the negotiations, then it was a wrong perception.
At Cancun, the Group not only presented its views and influenced the elaboration of the proposed final text of the Conference, but, also, after the presentation of this text, it met for several hours and prepared a number of concrete amendments to the text for the final round of negotiations which unfortunately never took place. As we know, the Conference closed on the lack of agreement on the Singapore issues. If, however, we would have had a final negotiating session on agriculture the G20 Ministers present at that discussion would have had before them a set of alternative drafts to propose to the Chairman’s text.
READY TO NEGOTIATE
The G20 is, thus, prepared to engage, at any moment, in negotiations on agriculture on the basis of concrete proposals. This position was reaffirmed at the Ministerial Meeting in Brasilia, last December. On this occasion, the Group had the opportunity of having a dialogue with the Director General Supachai and a consultative session with Commissioner Pascal Lamy. This last event, in particular, generated a very fruitful exchange of views between the two sides. The G20 is clearly today an important partner in the agricultural negotiations in the WTO.
Without going into the intricacies of the negotiations on agriculture it is, perhaps, useful to present the essential elements of the Group’s position, pillar by pillar, and with reference to special and differential trea tment for developing countries.
As stated before the central tenet of the G20’s position is the belief that, in agriculture, as in other areas of the round, we must combine the development objectives with the interests of trade liberalization. The relat ionship between development and trade liberalization is neither linear, nor simple. This is not the place to embark on this discussion. Suffice to say that the central objective must be economic and social development and that trade liberalization can be an instrument that, under certain conditions, can help attain that objective. This is of special significance in agriculture because the greater gains developing countries can obtain in t his round are in agriculture. Agriculture and development are clearly linked in the DDA and to put development at the center of the round we need substantive results in agriculture in line with the Doha mandate.
On the other hand, agricultural trade is largely outside the rules of the WTO, dominated by protectionist policies. To achieve trade liberalization today means to put agriculture at the center of the round. But to liberal ize trade in agriculture we must bear in mind the trade distorting policies adopted by developed countries in the area of domestic support and export competition and the differences between the rural sectors in developed and developing countries, especially those that have a large part of their population living in rural areas engaged in subsistence agriculture. Even in the case of Brazil, that has a large, modern and competitive agricult ural sector, the global picture is very uneven, with widespread areas of poverty and millions of small sharecroppers living at subsistence level. There is, therefore, the need when considering trade liberalization in agri culture to have in mind those disparities and the fact that commitments in market access have to take into account rural development needs in developing countries.
THE G20 APPROACH
Based in these concepts the G20 developed an approach to negotiations on agriculture that tries to fulfil the Doha mandate of substantial reduction in domestic support, substantial improvement in market access, eliminatio n of all forms of export subsidies and special and differential treatment.
In the first pillar of domestic support the Group has two main objectives: assure substantial cuts in trade distorting domestic support in a manner that avoids shifting support between products or between boxes and improv ing the discipline on the green box to guarantee that the remaining support there is really non-distorting. (Editor’s note: the « amber » box houses trade distorting subsidies and must be eliminated, the « blue » box houses » quite » distorting subsidies but there is no limit to the amount that can be put in this box, while « green » box subsidies are supposedly « non-trade distorting » – although this is disputed.)
On market access the Group proposes a different approach for developed and developing countries, in light of the differences mentioned above. Without going into the discussion of the formula, the Group accepts the concept of a « blended » formula but tries to guarantee that there won’t be any element in the formula that will allow for only minimal improvement in market access to developed countries, without generating new trade flows. Due t o the complex nature of barriers to agricultural trade in developed countries, where tariffs coexist with quantitative restrictions (QR) and special safeguards (SSGs), the G20 defends substantial liberalization of non-tar iff barriers and a reduction of tariff escalation, as well as the abolition of SSGs for developed countries. In the case of developing countries, the Group accepts the need for a contribution in market access but tailored to the ability to contribute and taking into account rural development and food security concerns of developing countries. Finally, in the case of export competition the Group sees the Doha mandate as a commitment to the elimination of all forms of export subsidies.
LOOKING FOR A ‘TRUE’ NEGOTIATION
After this presentation of the G20 and its objectives and proposals, it is possible to sum-up by saying that the creation of the Group was a response to the challenges of the agricultural negotiations in the WTO and, in p articular, the understanding between the two major trading partners that could lead to reducing the level of ambition set at Doha. The G20 was not created to block negotiations, but to guarantee a true negotiation and avo id a « fait accompli ». The G20 is inclusive, combining development and trade liberalization, ambition in market opening with fairness and ability to pay. The G20 has established itself as a factor in the WTO negotiations a nd intends to play a central role in the negotiations on agriculture.
The G20 is here to stay. The Group has withstood strong pressures to disband and has remained active in the negotiations. We see a recognition of this in the fact that other groups and countries try to engage in discussio ns with the G20 to attain progress in the negotiations. There is a renewed sense of commitment to achieving results in Geneva during 2004. The statements by the European Commission at the end of last year and the recent l etter by USTR Robert Zoellick to all members of the WTO are positive indications in that regard. The G20 is ready to reengage in Geneva and to meet with all parties interested in making progress in the negotiations.
PROSPECTS FOR 2004
After a post-Cancun period of re-examination by all countries of the situation of the Round and of their positions in the negotiations we are now moving to a resumption of negotiations trying to achieve progress during 2004. Again the G20 is at the forefront of these efforts. The Ministerial Meeting of the Group in Brasilia strengthened the resolution of the G20 to, through direct consultations and negotiations with other partners, explor e alternatives to reaching an understanding on a framework for the negotiations on agriculture. The guiding principles for the G20 in this exercise will be the respect for the level of ambition of the Doha mandate and the development objectives of the Round.
Let us now consider the future of the Group and its potential to shift the balance in trade negotiations in favour of a more positive attitude towards development issues. When the Group was launched but especially during the Cancun Ministerial, the press and civil society organizations rapidly perceived the potential of the Group, in the context of the Doha Round. From the beginning, the Group was able to enjoy a positive image and this w as instrumental in helping to resist centrifugal pressures. Perhaps, it is not an exaggeration to say that the role the G20 played before and at Cancun was a distinctive and new element in the scenario of trade negotiatio ns. In the past, agricultural negotiations have always been hostage to the possibility of an understanding between the two major trading partners based on their own interests. A similar situation was taking shape before C ancun. The Cairns Group represented the first attempt at changing this picture, during the Uruguay Round. The G20 now adds its force in favour of accomplishing what we all agreed to at Doha: reforming agriculture to make agricultural trade subject to the rules of the multilateral trading system and to promote social and economic development through trade.
G20 CANNOT SOLVE ALL THE PROBLEMS
After Cancun, and in the light of the role the G20 played at the Conference, there have been some suggestions that the Group could perhaps play a larger role encompassing other areas of the WTO agenda or even the broader agenda of cooperation for development. Perhaps, this is only natural and reflects the need that is felt in many quarters for a new coalition in favour of revitalizing the debate on development issues in international fora . This is even more so in view of the growing fatigue with orthodox adjustment, self-regulating market forces as an answer to development problems and the negative aspects of globalization. Nevertheless, the G20 is perhap s not the answer and to try to expand the mandate of the Group would possibly jeopardize its unit. One of the strengths of the G20 is its ability to combine a political stance with a focused approach to agricultural negot iations. By doing so, the Group is able to project itself as a political factor in the WTO, thus capturing the imagination of many who wish to see the organization working in a more open and democratic manner, while being able to act constructively and in defence of its members’ interests in agriculture, by presenting concrete and technically sound proposals for making progress in the negotiations. This is not a minor achievement for, as stated above, if we change the picture in world trade on agriculture we would certainly be making a major contribution to attaining the development goals of the WTO negotiations.
Ambassador Clodoaldo Hugueney, Under Secretary General for Economic & Technological Affairs, Ministry of Foreign Affairs, Brazil. He is responsible for coordination of G20 senior officials. This paper was prepared for the debate « G20: here to stay or a passing phenomenon » hosted by Focus on the Global South, CUT Brazil, FES Germany and the Economic Research Foundation and The Hindu, India, held at the 2004 World Social Forum.