The WTO's North-South conflict: a dangerous new (old) international economic order?

• Author: Sevilla, Christina R.

DEVELOPING country delegates, ranging from Brazil to India to the Philippines to South Africa, left the WTO Cancun Ministerial ebullient over the collapse of mid-term talks intended to advance the Doha Development Agenda. They reveled in the newfound power of the G-21 group, a coalition of mid-sized and small developing countries, to block consensus on a framework to conclude negotiations by 2005. Brazilian Foreign Minister Celso Amorim, speaking on behalf of the 21-nation bloc, said the Cancun conference was a "political victory" for developing countries that showed unity in pressing their demands. Sir Ronald Sanders, the Antigua and Barbuda trade minister, captured the sentiment of many developing nations when he asserted that, had the poorer countries accepted the proposals of the rich at the WTO, "We would deserve our people's condemnation.... We would have condemned them to a life of perpetual underdevelopment." In fact, the exact opposite may be true: developing countries have the most to lose if the Doha Development Agenda is derailed through a misguided strategy of blockage and stalemate.

A Short History of Economic Conflict

FIFTY-SIX years after the inception of the 1947 General Agreement on Tariffs and Trade (GATT), the Cancun meeting will be remembered as one of the most consequential instances of North-South economic conflict in GATT/WTO history. Such confrontation is not new: it has occurred before in international fora, and even on a much larger scale, but never with much ultimate significance for the course of international relations. This is not the case, however, with the Cancun meeting.

To understand the greater consequences of the present North-South economic antagonism, some historical perspective is needed. In the early-1970s, developing countries at the United Nations Conference on Trade and Development (UNCTAD) coalesced into what became known as the Group of 77 to press their demands for a New International Economic Order (NIEO). This aspiration grew out of the neo-Marxist political economy theory of the 1960s, which argued that the international trading system was condemning the "periphery"--Latin America and other developing countries--to poverty, exploitation and dependency. Among other measures, the NIEO specifically called for a system of price supports for a number of key developing country commodity exports, indexation of developing country export prices to developed countries' manufactured exports, technology transfer and the negotiated redeployment of some developed country industries to developing nations. By the 1980s, the NIEO agenda at the UN had foundered due to divergences in developing country interests, the inability to replicate OPEC's success with other commodities and, most importantly, the discrediting of its command-based economic theories. This was evidenced by the astonishing success of Taiwan, South Korea and others that pursued trade liberalization and export-led growth.

Thirty years later, at Cancun, many officials opined that the harsh rhetoric employed by major developing countries such as Brazil and India, as well as smaller African and Caribbean countries, was strongly reminiscent of the 1970s UNCTAD experience. The themes of Northern economic exploitation have become fashionably recurrent, even though the remedies demanded by the South at the WTO now differ from the NIEO. Rather than price supports for commodities and exports, developing countries at Cancun called for unilateral trade concessions and compensation by the rich countries.

While there were many reasons...