In New Delhi on January 25 India signed an agreement with Mercosur to establish a free trade area intended, it is reported, to reduce dependence on trade with rich countries (SN, January 26).
Mercosur is the common market established next door to Guyana between Brazil, Argentina, Para-guay and Uruguay. Guyana has signed a Memoran-dum Of Understanding with Mercosur but a working relationship is still to be developed. In the meantime a "partial scope" agreement has been signed with Brazil with the real prospect of increasing trade.
The special significance of the agreement signed in New Delhi two weeks ago lies importantly in the fact that it was signed for Brazil by President Lula da Silva. While having enormous value in itself the agreement should be seen as an important element in the programme initiated by President Lula to provide a new thrust for the developing world in its negotiations with the industrial countries.
Earlier in his own capital city Brasilia at a meeting in mid-December of the Group of 20 which includes China, India, Nigeria and South Africa, Lula (if one may now refer to him in the way in which he is increasingly known to the peoples of the world) had exhorted the group to "be more brave and think of the launch of an area of free trade between the G-20 countries, open to other developing countries." This, he said, could fully explore "the potential which exists between us and not depend on concessions from rich countries" (SN Dec 13). On Tuesday, last week in New Delhi Lula returned to this theme. He said "We have been treated as second class citizens....... we must change the economic geography of the planet" (SN January 28).
In calling for a change in economic geography President da Silva is referring to the North/South economic structure of the global economy. Manufactured goods for the most part flow from North to South. Commodities and raw materials are traded from South to North. Shipping lines follow the flow of goods and people move in the same direction. Goods shipped from one port in the South to another port in the South most frequently have to be transhipped through a port in the North. Airlines fly a similar pattern of routes. Indeed it was once the case in Africa that to fly from a capital city in the South to the capital city of an immediately adjacent territory one had first to fly North to London or Paris and then back South again. There were few shipping or any links across the southern part of the world.
Nor was it only a mater of transport routes. Freight rates and prices were arranged to ensure North/South dominance. Thus the freight costs of shipping a ton of manufactured goods from the South to the North was set deliberately higher than shipping a ton (same weight and space) of raw material to the North, an arrangement which ensured that manufacturing remained a prerogative of the North, with the people of the developing world remaining hewers of wood and drawers of water. There was a steady downward pressure on prices of commodities so that eventually it took several tons more than before to buy the same harvester.
That in a simplistic way is the economic geography which the President of Brazil hopes to change so as to decrease the dependency of the developing world. But he does not see it in terms of a disconnect with the North but as proceeding from new trade expansion and of equal importance, enhanced political and economic leverage for the South in its negotiations with the North.
The idea is not new. The germ of it existed in the Bandung Declaration. It has been described variously as collective self-reliance , the term preferred by Nyerere, or economic cooperation among developing countries (ECDC), the term used in the UN system or plain, South/South.
Guyana once played the vanguard role in trying to implement the idea. On the eve of the Conference of the Foreign Ministers of Non-Aligned Countries held in Georgetown in August 1972, Guyana as host country assembled a group of economic experts from Africa, India, Yugoslavia and Latin America to formulate a programme of action to implement South/South. The result was the Georgetown Action Programme for Economic Cooperation among Developing Countries which has since provided the basis for all similar subsequent programmes. In the absence of a NAM Secretariat the overseeing of the implementation of sectors of the Action Programme was entrusted to particular states. Guyana was assigned responsibility for promoting and overseeing progress in the sector Trade, Transport and Industry.
This Chapter in Guyana's Foreign Policy has been described by former Foreign Minister Rashleigh Jackson in his recently published memoirs entitled Guyana's Diplomacy (pages 82-85 Free Press). Here let it suffice to note that Guyana secured the support of the international community for these initiatives by getting the UN General Assembly to adopt a wide-ranging resolution of ECDC. With a substantial grant from the Swedish and Netherlands governments Guyana established with the UN a joint secretariat in Georgetown in which for several years a small number of experts from the developing world worked on the formulation of projects in ECDC, especially in the field of pharmaceuticals. But those are matters for separate discussion.
In the end, while the project established beyond doubt the potential of South/South cooperation it achieved little in concrete results largely because as Rashleigh Jackson notes "Governments seemed to lack the political will either to commit financial resources to the project or to take the necessary steps to implement those aspects already agreed upon which would require the modification of some traditional relationships."
In the three decades since the Guyana project, there has been some change in the North/South pattern. There are now a number of shipping lines across the southern part of the world. There is for example more than a billion US dollars worth of trade between Brazil and India. And technology through the Internet is creating a global network. Yet the North/South pattern persists. Thus the WTO negotiations are essentially concerned with two North/South issues, the demand of the South for satisfactory access to the markets of the North and the demand of the North for access to the markets and control of the economies of the South. Changing the pattern will not be easy. Creating new shipping infrastructure for example will be a slow process. Ships will not sail new routes unless there is cargo to move and cargo will only materialise if there is the prospect of shipment. It is a chicken and egg situation. Moreover the development of an essential network of commercial intelligence and banking and so on to support new southern trade will be fitful and complex. Nor should it be expected that the industrialised states will not take measures to thwart such developments.
So much will therefore depend on the leadership of President Lula da Silva. He is in a strong position to provide the essential dynamic. The New York Times in its issue of January 24 in an article headlined "Brazil's Movement" has observed that Lula has displaced Vicente Fox of Mexico as the most influential Latin American leader. From Hugo Chavez of Venezuela to Nestor Kirchner of Argentina, Latin Leaders are looking less to Mexico and more to Brazil to provide regional leadership. Some of Brazil's economic statistics likewise appear to indicate that it may have a certain space for manoeuvre. About 80% of Brazil's public debt is held internally and a large part of its externally held debt is owed to international financial institutions. Moreover Brazil is unique in that it imports more from the United States than it exports to it. In addition, Lula seems to have worked out a mutually acceptable relationship with the US administration.
What does all this signify for Guyana? It provides Guyana with an unrivalled opportunity to play to its own advantage an expanded diplomatic role. There is already a constructive relationship with Brazil as witnessed by the trade agreement and the project to cultivate the south savannahs - a project which when it materialises will rank in importance with the great drainage schemes of the fifties. With Guyana's experience in South/South cooperation it is uniquely placed to help advance President da Silva's ideas on that front. In such a role, Guyana could position itself to become a major promoter of the interests of small developing states with the G-20. Nothing would enhance Guyana's security and economic prospects more than to be seen to be playing a vanguard role in international affairs as happened once before.