World trade: Emerging markets join forces

At the WTO conference in Doha in November 2001 Murasoli Maran, then Indian Trade Minister, got on the nerves of western trade diplomats by opposing negotiations on internationally binding rules for additional policy sectors. In the end, the conference reached formal compromises – not least by rhetorically glossing over remaining controversies. For instance, the question of creating rules for the so-called Singapore issues – such as investors' rights, competition policy, transparency in government procurement and faster Customs handling – was to be decided at the next WTO ministerial conference in 2003. And, in fact, in “explicit consensus”.

Maran harped on about the choice of words. At the last minute he had the record of the conference lay down that the (inherently redundant) formula indeed meant that there would be no consensus if only one government objected to such negotiations. Observers from industrialised nations rolled their eyes. But some consoled themselves by reckoning they were seeing the last of India as the self-appointed champion of the Third World. After all, China would be involved in the next WTO conference – and Beijing would not leave that role to Delhi.

Things turned out quite differently in Cancún this year. Beijing and Delhi did not allow themselves to be pitted against each other. On the contrary, they got their act together before the ministerial conference and then found the support of other important emerging market governments. The Asian duo became the anchor of two loose alliances. One group, the so-called G21, with Brazil taking an active part, opposed the industrialised nations' protectionism on agriculture. The second group, with Malaysia as its mouthpiece, fought against the agenda of the Singapore issues. Emerging economies simply are not interested in globally binding rules that would restrict economic policy options. This will only change once they catch up with the development level of the trailblazers – as South Korea has done.

That China and India are in harmony here reflects their well-understood national interest. So their close alliance will probably remain stable – and that changes the power relations in the poker game of multilateral politics. On top of that, the two countries combined with populations totalling billions look like a safe bet for smaller states as well. The chance that the two giants will change their course for opportunistic reasons at the same time is practically zero. Moreover, insiders remember that India already found important allies in Doha – for instance, Brazil on patent protection for medicines, and Malaysia on the Singapore issues.

The trade diplomats are to take stock in Geneva by mid-December and focus on the question: where does the Doha Round stand? If the USA and the EU really stay committed to multilateral trade politics inspite of severe disputes among themselves (concerning, for instance steel tariffs or tax breaks for exports among themselves), they must prepare to face long-term coalitions of the heavyweight emerging nations. True, some smaller countries have dropped out of the opposition front. However, in terms of the multilateral poker game for power which require consensus, it hardly matters whether or not Peru and Costa Rica support the nay-sayers. The major emerging economies have recognised their joint power and continue to foster close contacts with each other. The rich nations' threat to fall back on bilateral and regional trade policy does not intimidate these countries. They are aware of their own economic significance, they have competent experts and can fend for themselves - in both regional and bilateral terms.

Doha was marked by September 11, 2001. Despite reservations on content – manifested by peculiar terms such as “explicit consensus” – the participants were willing, in an Arabian capital, to sign up to a multilateral balance of interests. After all, successful trade policy is always also peace policy. The representatives of the rich world spoke volubly about a development round, and hoped that, after the debacle of Seattle, they had hit the right note this time. However, by Cancún at the latest their rhetoric proved to be hollow. Otherwise, the ministers from Brussels, Washington, Tokyo and other rich country capitals would not have attempted to yet again divide the poor countries. Since Seattle, the latter's most powerful representatives have become more self-confident – and have gained China as an additional comrade-in-arms.