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G-22: Who will crack first'

Cancun, Sept. 13: The G-22 coalition of developing nations appeared to be holding on even as trade negotiators from 146 nations grappled with tortuous trade proposals that will impact prices of a range of products from rice to drugs and from wines to cars, and frame the new ground rules for sustainable development across the world.

A deal at Cancun will hinge crucially on who backs off first from the confrontation. The G-22 looks vulnerable to pressure from the big players in the skewed world game with Brazil looking to be the most likely candidate.

The US negotiators have been in contact with Brazilian officials here and appear to have tried to pressure them to break ranks. Brazil has trade worth almost $30 billion with the US and is the 12th largest trading partner of the US. In terms of investments, the US has more investments in Brazil than in Mexico and China.

But given its geographical proximity, the fact that the US is eager to push through a free trade agreement with Latin and South America — a region where Brazil is a key player — and the size of its commodity exports especially coffee to the US, Brazil could be the first to break ranks.

India is not doing badly either: trade between India and the US crossed $15.9 billion in the year 2002. The government’s figures put this at $24.7 billion for the year 2002 and the discrepancy may be because trade in invisibles that hasn’t been captured in the US statistics.

Among the G-22 members, China has the biggest trade going with the US. However, US is looking to slowly prise open the Chinese market and will certainly be squeamish about talking tough with China.

The EU has been taking a tough line on the negotiations and has already stated that it is agreeable to the idea of eliminating trade-distorting export subsidies. But that is as far as it is ready to go: it will resist any attempt to force a review of green box subsidies (basically payouts for research, disease control, infrastructure and food security that are considered least trade distorting) or concede greater market access without matching commitments from the developing countries.

Any of the small nations in the G-22 could crack under pressure — but to wreck the coalition itself, the US and the EU will have to get one of the Big Five in the G-22 to relent. Clearly, there’s a lot to play for here in Cancun.

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