Shaping a new global economic order

Updated: Jun 13 2007, 05:30am hrs
In recent years, confabulations between the heads of governments of Brazil and India have gone way beyond the efforts aimed at cementing the strategic partnership that has been developing between the two emerging economies. The synergies that have developed between them are being effectively channelised in several multilateral forums, which, in the ultimate analysis, could result in a salutary effect on re-shaping the global economic and political order.

For more than three decades, Brazil and India, together with other developing countries, have been striving for putting in place a new global economic and political order. The most vocal articulation of this intent was the Declaration for the Establishment of a New International Economic Order (NIEO) that was adopted by the United Nations General Assembly in 1974. The NIEO Declaration underlined the need to introduce systematic changes in the global governance structures that would allow developing countries to realise higher growth trajectories.

In this context, reform of the global trading system was identified as a key factor. The primary intent of the developing countries was to loosen the control of the Quadthe US, the members of the European Union, Japan and Canada, over the multilateral trading system that was then governed by the General Agreement on Tariffs and Trade (GATT).

Although they had challenged the hegemonic influence of the Quad even when the first steps towards the eventual emergence of the World Trade Organisation from the edifice of the GATT were taken during the 1980s, it not until the turn of the century that their efforts bore fruit. The agenda for modifying the rules of global trade that was adopted at the Doha Ministerial Conference with its emphasis on development, was unmistakably the turning point for the multilateral trading system.

The Doha Development Agenda, which orchestrated this change, made it clear that the enunciation of the development dimension was not a mere expression of well-meaning intent; this dimension must be operationally effective. Encompassing the development dimension were critical issues such as public health concerns, and in particular access to medicines, which have long undermined the capacity of developing countries to emerge from the shadows of underdevelopment.

But what really changed the dynamics of multilateral trade negotiations was the decision taken by Brazil and India to challenge the arbitrariness in the agricultural policies followed by the US and the European Union, which had resulted in unfair competition in the markets for agricultural commodities. As a result, a large majority of developing countries have found it difficult to meet their food security needs as well as provide livelihood opportunities for a majority of their populations. The Brazil-India joint action resulted in the formation of the G-20, a group that has been arguing for the elimination of the egregious policies adopted by the US and European Union.

The trigger provided by the G-20 countries has had two noteworthy consequences for the dynamics of multilateral trade negotiations. In the first place, the merits of coordinating their negotiating strategies were soon recognised by most developing countries.

As a result, in most negotiating areas or parameters that form a part of the Doha Development Agenda, developing countries are increasingly working together towards realisation of their objectives. This was quite evident in the Hong Kong Ministerial Conference in 2005 when 110 of the then 149 members of the WTO joined hands to end the perpetuation of inequities in global trade and to ensure that development remains at the centre of the Doha Development Round.

The second development, one that has certainly changed the dynamics of the multilateral trade negotiations, is the formation of the G-4, comprising of the US, the European Union, Brazil and India, that is currently shepherding the agriculture negotiations.

The presence of Brazil and India in this new Quad is an eloquent testimony of the fact that not only are the voices of developing countries being heard, these countries are playing a decisive role in laying the foundations for a more equitable global trading system.

The efforts that are thus being made by Brazil and India for the reform of trading system, which is the cornerstone for the much needed inclusive global economic system, could have its impact felt in other multilateral negotiating forums where the two countries are working in tandem for realising similar objectives. In this context, the efforts of the four countriesBrazil, Germany, Japan and India, for the reform of the United Nations by enlarging the Security Council are particularly noteworthy.

Both Brazil and India have expressed the opinion that the enlargement of the Security Council would be the much-needed step towards democratising the United Nations, and this in turn would create an environment that would contribute to global prosperity.

The writer is Professor and Head,Centre for WTO Studies,Indian Institute of Foreign Trade