The Hindu : Forging an alliance

Online edition of India's National Newspaper
Wednesday, Oct 22, 2003

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Forging an alliance

By Tony Smith

Argentina and Brazil were determined to maintain the alliance of developing countries and to continue pressing for more equitable trade for farmers.

A STATEMENT of intent signed in Buenos Aires last week by the Presidents of Argentina and Brazil might have been short on economic specifics, but it did send a clear message: The South American countries will resist efforts by the United States to undermine their unity in regional and global trade talks.

The joint message probably will not go unnoticed in Washington, particularly with negotiators at the World Trade Organisation in Geneva scrambling to salvage what they can from the wreckage of the recent WTO meeting in Cancun, Mexico, and the U.S. hoping that a meeting next month in Miami will edge the Western Hemisphere closer to agreement on the Free Trade Area of the Americas, a free-trade zone stretching from Alaska to Antarctica that is supposed to be established by January 2005.

Using increasingly stern language, diplomats from the U.S. have blamed Brazil for the collapse at Cancun, saying it was too obdurate in championing the demands of developing countries for an end to farm subsidies in developed countries.

After the Cancun talks, the U.S. trade representative, Robert B. Zoellick, called Brazil the leader of the "won't do" countries and warned that America could opt to strike bilateral deals with the "can do" nations.

Since then, the group of 22 developing countries, which included Brazil, China, India and South Africa, has shrunk to 12. The defectors, which included Colombia, Costa Rica, Ecuador, Guatemala and Peru, apparently gave in to American pressure.

Even pro-business lobbies and some Government officials in Argentina and Brazil wavered, suggesting their negotiators adopt a more conciliatory stance in Miami.

Instead, the two Presidents, Nestor Kirchner of Argentina and Luiz Inacio Lula da Silva of Brazil, signed the joint statement, dubbed the Buenos Aires Consensus, as a rejoinder to the Washington Consensus — a policy mix of free-market economics and fiscal austerity often held up in the 1990s as the best path to growth for developing nations.

The statement promised action to generate jobs, not just profit, and fight for fair, not just free, global trade. On the latter point, the statement was clear. Argentina and Brazil were determined to maintain the alliance of developing countries and to continue pressing for more equitable trade for farmers in those countries.

At the signing, Mr. da Silva's aides brushed off American criticism, saying the President is merely doing what the U.S. President, George Bush, always does — defending his country's national interests.

"A country of 176 million people cannot be isolated," said Marco Aurelio Garcia, the foreign policy adviser to Mr. da Silva, "and if a country has a solid alliance with Argentina, South Africa and India, even less so." He described the American efforts to chip away at the alliance of developing countries as "political blackmail" but insisted that "with us, it won't work."

In Mr. Kirchner — who has already taken a pugnacious stance against big business, in particular utilities and banks, foreign creditors and the International Monetary Fund since he took office in May — Mr. da Silva has found a staunch ally.

Despite the odd hitch, like a recent squabble over Brazil's perceived failure to root loudly enough for Argentina in its negotiations with the IMF, analysts say relations between the two countries have never been better. Not only do both have Left-leaning Governments, but are potential agricultural superpowers — together they produced more soybeans this year than the U.S. — and have an increasing number of common interests. They are also less dependent on the U.S. and the European Union than in years past, now that China is opening its economy and needs to buy food.

"Before, Brazil and Argentina had to dance to the tune of the G-7 because they were the only markets for their products, but all that is changing," said Walter Molano, chief Latin American economist at BCP Securities in Greenwich. Now "South America is realising that the future lies not in the United States, but on the other side of the Pacific, where there is demand for food."

Yet some observers feel the South Americans should tread more softly when dealing with the U.S.

"Brazil is fighting for equal market access and that's a fair fight," said Eliana Cardoso, a visiting professor at Georgetown University in Washington. "But outright confrontation will not help Brazil."

While they jointly chair the free-trade talks for the Americas, Brazil and the U.S. have differing views of what the free-trade zone should look like. Faced with Washington's repeated refusal to include agriculture, Brazil says it will not admit American-proposed investment rules.

Perhaps unsurprisingly, the negotiations have fallen behind schedule. Yet Mr. Garcia predicts there will — ultimately — be a mutually acceptable outcome.

"Yes, there are real points of conflict,"' he said. "But who really wants a policy of confrontation with the United States in Brazil or with Brazil in the United States? Nobody." — New York Times News Service.

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