Lula Visits India
Standing Up to US Trade Bullying
by Ashok B. Sharma

January 27, 2004

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India celebrates its 55th Republic Day on January 26, 2004. The guest of honour on the occasion is President Luiz Inacio Lula da Silva of Brazil.

This is the best tribute which India can pay to the architect of G-22 coalition and a friend of the Third World farmers.

In fact, President Lula showed the way how the developing and the least developing countries (LDCs) can negotiate terms of trade with dignity and honour at the WTO, an organisation greatly influenced by the developed world. His diplomats helped to organise a coalition of 22 developing countries at the Cancun ministerial meeting of the WTO which stood firm and declined to bow to the pressures and allurements of both the European Union and US. The LDCs representing the African, Caribbean and Pacific (ACP) nations also grouped themselves into a coalition called G-99.

Both G-22 and G-99 were firm in demanding reduction in subsidies and support given by developed countries to their farm sector which have depressed the global prices, affecting the farmers in the Third World. Both groups also demanded greater market access for their products in the markets of the developed world. The re-introduction of the contentious Singapore Issues designed to unilaterally benefit the multinational companies of the developed countries was equally opposed by the developing countries and the LDCs. The result was that the Cancun negotiations collapsed.

But the US did not rest after the defeat. It resumed its policy of threats and allurements to break the G-22 and G-99 coalitions. The US Trade Representative, Robert Zoellick said that he would negotiate bilateral trade agreements with the "can do" nations, never mind the "won't do" nations. The US started issuing economic threats and reprisals against the Latin American nations which supported the cause of G-22. The Caribbean nations were told to forget their new trade negotiations with US and they succumbed. Central American countries were threatened with the likely loss of trade preferences. One of Brazil's initial ally, Costa Rica was told to privatize its energy and telecom sectors. Peru and Columbia pulled out of G-22 and Paraguay and Uruguay continued to maintain their distance, despite being members of Mercosur group.

But, in the then prevailing situation, President Lula got one of the best compliments from former Dominican ambassador to the WTO, Federico Cuello who was forced to resign under circumstances. He said "Brazil embodies the hope of countries like the Dominican Republic, showing that you can still have dignity at the negotiation table." He further said, "I doubt Lula, who has massive public support and a top-notch Cabinet, will be intimidated."

US policy of going ahead with Free Trade Agreement of Americas (FTAA) without Brazil did not succeed. Argentina refused to accept such a proposal. As both Brazil and Argentina together account for two-thirds of South America's economic output and with Argentina refusing to ditch Brazil, the US threat proved to be hollow. President Lula is conscious of what ravages to the Mexican economy have been created by NAFTA.

Despite every efforts of US the the blueprint of G-22 agenda still survives as the major economies like Brazil, Argentina, China, India and South Africa continue with their commitments.

This, however, does not prove that the left-wing President Lula is anti-trade. He has a vision for trade and economic cooperation not only within South American nations but with all developing countries and fair terms of trade under WTO. He pleaded closer economic relations between the Mercosur group and its rival, Andean Pact nations. He offered to mediate between the Colombian government and the revolutionary guerrillas of FARC. He extended $1 billion credit to Venezuela for buying Brazilian goods. He joined Argentina president Nestor Kirchner in releasing the Buenos Aires Consensus as an alternative to the Washington Consensus. Brazil also plans to have FTAs with India and other developing countries. Brazil and China have signed an accord for agribusiness and cooperation in technology transfer, construction and exploitation of natural resources.

President Lula also placed a proposal for eradicating worldwide hunger at the UN General Assembly and suggested revamping of UN. He toured African and gulf countries to explain his agenda. He was successful in persuading South Africa and India to join Brazil in a new triangular dialogue on technological alliances and social issues like world hunger.

President Lula presence in India on the occasion of the Republic Day will be an opportunity to not only cement ties between the two countries but also for strengthening the unity of the developing countries. He is after all the most popular political leader in Latin America.

Ashok B. Sharma is a New Delhi based correspondent for the Financial Express newspaper of India.







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