TRADE DIPLOMACY

DIANA TUSSIE 1

Pre publication draft for The Oxford Handbook of Modern Diplomacy , 2012

“Free trade is God’s diplomacy. There is no other certain way of uniting people in the bonds of peace.” , Richard Cobden, cotton trader , British politician,originator of the Cobden Chevalier Treaty, 1857

“Dieu est mort, l’OMC l’a remplacé!”.Demonstrators, WTO headquarters, 1999

1. Introduction

Trade arouses passions in many directions; is it the reason forgoing to war or the pillar of peace? Yet traders have alwaysbeen diplomats. International trade diplomacy is as old as tradeitself. What has turned so dramatically since Cobden articulatedhis vision of free trade as God’s diplomacy? The aim of thisessay is to highlight the potential uniqueness of trade, on theone hand and, on the other, the broader transformations in termsof the range of participants and the patterns of interactionthey now deploy. I concentrate on specificity, novelty andchange.

Trade, allocates economic resources between private interests.It creates winners and losers leading to demands as well asclaims for compensation. Trade negotiations are about who getswhat and how. Even Cobden´s free trade ideal is a politicalbalancing act between higher notions of the public good and theinterests of specific constituencies; and even more a questionof distribution than optimality. This implies normative choicesabout whom should benefit and whom should bear the burdens ofadjustment. In this sense, the ‘free’ trade ideal and the‘protectionist’ backwater are constructions at best made inheaven (or hell). Real preferences are pragmatic choices

1 The generous and diligent research assistance of Linda Curran is acknowledged with gratitude.

1

situated along a continuum where neither one ever reignssupreme.

Trade diplomacy as such is concerned with the management oftrade regimes as well as the market factors affected by theregime. A distinctive feature of trade and economic diplomacyat large (See Lee and Mills in this volume) is that marketactors are involved in the push pull of diplomatic efforts,either at the forefront or the rearguard, either tacitly orexplicitly.

Trade diplomacy thus faces tensions between politicalauthorities and markets. Market interests will drive diplomacybut political considerations can also outweigh trade interests.For example, many Muslim majority countries have yet toestablish trade relations with Israel and likewise manycountries with close ties to Israel have resisted recognizingthe State of Palestine. In the opposite direction , in order notto upset trade relations , when the government of Bangladeshallowed the establishment of a private business office fromTaiwan , copious diplomatic efforts were deployed to confirmthe “one-China policy” (meaning Taiwan is recognized as part ofChina) .

Today, a significant part of diplomatic work is dedicated tocommercial issues. Firms are fervently trying to capture exportmarkets and countries are deepening their cooperation in themaster body, the World Trade Organization (WTO), as well as inregional, bilateral, continental and transcontinental tradeagreements. This burst of activity has led to a scenario that isenormously more challenging, complex and demanding than it hasever been. Economic globalisation has turned trade diplomacyinto a significant factor in foreign policy. Many foreignoffices have merged with trade departments. The Department ofForeign Affairs was changed to Department of Foreign Affairs andTrade in Australia in the late 80s and in the early 1990s inArgentina and Canada. In Chile the Foreign Ministry gainedoverall responsibility for trade diplomacy in 1994 (SeeGreenstock on bureaucracy in this volume)

In many parts of the world, the field of trade diplomacy as suchonly materialized with the nationalization of industry from the50s to the 70s (Rashid 2005, Cerny 2008). Professional diplomatswere gradually trained in trade matters to commercialize theircountry´s products. Nowadays, trade and economic affairs havebecome the midfield of international relations and diplomacy.

2

The bounce represents an appealing turn in the history ofdiplomacy. Even a couple of decades back, trade diplomacy wasconceived as a sort of a “black hole” by diplomats pursuing afast–track career, and paled in comparison with political work.Trade diplomacy seen previously as largely inconsequential nowlooms large on all fronts. The standoff in the Doha Round is aclear indication of the fundamental change in trade diplomacy.

The global south2 was a late-comer to this event. But this stageentry has changed the structure as well as the process ofnegotiation, a theme that remains considerably under-representedin the literature (Odell, 2006). The newcomers are now at thecusp of the transformation of trade diplomacy. Recognising therelevance of trade and foreign direct investment in economicdevelopment, governments have multiplied their commercialrepresentation in other countries. At the same time they have anew willingness to engage in the WTO and in regional agreements,coming out of the fringes and shedding their defensiveness.Leading global south countries empowered by mastering the rulesand practices of reciprocity-based bargaining have posedchallenges to the WTO’s practices.

This chapter explores the particular and most outstandingmanifestations of trade diplomacy in this era. It aims to locateit in a context broader than dominant assumptions andtraditional actors. By doing so, it will be highlighted how thisspace is now shared and shaped in new ways and increasinglyoccupied by an ample network of diplomatic structures working ina number of proliferating sites. It first examines how thegovernance of global trade has moved away from a single focalpoint to multiplying sites. Secondly, it explores the challengesthat the eruption of civil society has posed to the traditionalstate to state processes; and finally it looks at how diplomacyhas been shaken to its core by the rise of new knowledge-basedbargaining strategies in the global south.

2. The tangled web of global trade governance: From a singlewindow to a spiral of escalators

2 I use the term ‘global south’ somewhat loosely as both geographic metaphor andhistorical fact to describe a very diverse group of countries, at sharply differentstages of development, who see themselves as a bloc of countries with differentinterests than the global north -- the advanced economies of the globe.

3

As argued in the Introduction to this handbook , internationalorganizations are sites of global governance in which theunfavourable position of the weaker party are offset somewhat,albeit not totally. The WTO and its predecessor, the GeneralAgreement on Tariffs and Trade, was for a long time the singlestandard setting body that aimed to ensure rules for marketaccess. It was not seen as a site in which the weaker partiescould find refuge. At best it was viewed as lacking transparencyand suffering a democratic deficit, while able to satisfy onepowerful constituency—multinational corporations that sought toexpand their own exports and investment abroad ( Keohane andNye, 2000) . Citizens were confronted with a number of faitsaccomplis, making domestic politics easier to manage. From thestandpoint of professional diplomats these were welcomefeatures. They could limit the intrusion of domestic politicsand hold good working relationships with their colleagues fromother countries. As the WTO gained relevance and diversemembership, it became more controversial, as the Seattledemonstrations of November 1999 showed rather loud and clear.

Until the early 1990s most developing countries were hardlyintegrated into international trade-and-production networks andremained on the sidelines of trade flows and trade diplomacy.Under the axis of state-led industrialization strategies and thenationalist creed that characterized the decolonization process,their trade policies focused on the domestic markets and heavystate intervention, and thus ran in the opposite direction tothe gradual trade liberalization that took place among Westernindustrial countries until the rise of an export-orientedstrategy in East Asia in the 1960s and 70s. It becameincreasingly clear that those developing countries that turnedto export-led growth now had a growing interest in a bettermultilateral organization per se. It also meant that industrialcountries now saw them as competitors, and were thus reluctantto open spaces for change.

Decision-making within the GATT was solidly ‘pyramidal’ instructure in the sense that the major trading partners (US, EUand Japan) had implicit, yet effective, veto power over thenegotiation’s overall outcome (Winham, 1998). Formal equality,in which every country has an equal vote, did not translate intoparticipation in diplomatic construction. Rule making remainedin the hands of a few major industrial countries in the so-called Green Room process. The “green room” was the name givento the traditional method used in the GATT/WTO to expedite

4

consultations. It refers to a real room, the director-general’sboardroom but also the closed meetings between the directorgeneral and a small group of members, numbering between 25 and30 and including the major trading countries, both industrialand developing, as well as a number of other countries deemed tobe representative. Once a narrowed down consensus was obtained,agreements were passed on to those outside the green room forapproval or rejection, thus legitimating negative ‘consent’. Thecomposition of the green room meetings tended to vary by issue,without an objective basis for participation (Helleiner, 2002;Kumar, 2007: 5; UNDP, 2001: 13-14, 77-78; Smythe, 2007).

The informal system imploded in Seattle when it was realizedthat this old way of getting business done could not workanymore, because neither civil society organizations nordeveloping countries could be “rolled over” as quiet bystanders.As a result of the significant concessions made in the UruguayRound, developing countries felt entitled to be included in thegreen-room process. On multiple occasions from that point onthey had submitted declarations stating that they would notadhere to any consensus reached without their effectiveparticipation. In the run up to the 1999 ministerial meeting,diplomatic activity went into a frenzy. Almost 250 proposalswere submitted to the WTO General Council in the preparatoryprocess for the Seattle conference. Developing countries assumedan active role by submitting over half of these proposals. Theseinaugurated a new diplomatic tone and form, moving away fromprotest and confrontation to well founded proposals workingwithin the culture of the WTO.

After the implosion of the 1999 meeting in Seattle, thesubsequent ministerial meeting in Doha in 2001 convened rightafter September 11 was rather tame by comparison. (see Higgot inthis volume) But the turning point was the subsequentministerial meeting in Cancun in 2003. While ministerialmeetings are now fraught with drama and uncertainty, after the2005 Ministerial, the WTO failed to hold another fullMinisterial in 2007 or 2008, although there is a mandate to holda Ministerial every two years. It would appear that the DirectorGeneral and the members are reluctant to hold formal Ministerialconferences unless there is a possibility for substantivediplomacy in terms of making decisions on new rules or newmarket access outcomes, unattainable under a mood of widespreadunhappiness and even outrage.

5

By now there is a new vitality in ever- multiplying regionalsites of trade diplomacy. Trading rules have always beentolerant of regional associations– a policy not viewed asinconsistent with the purpose of the global freeing of trade.The disintegration of the USSR in the year 1991 marked an end ofthe bipolar world and paved the way for the spurting of regionalcongregations. Earlier regional trade diplomacy had taken placein integration processes involving several member countries,both in Europe (the European Economic Community and the EuropeanFree Trade Association) and among developing countries. Aslightly later vintage of this type of agreements was the 1983Australia New Zealand Closer Economic Agreement. In thedeveloping world, the most active regions had been Western andSouthern Africa, Latin America and the Caribbean, but there werealso some agreements in the Middle East (the Gulf CooperationCouncil), East Asia and the Pacific. The movement that tookoff in the 1990s with the creation of NAFTA and led to averitable proliferation of trade agreements has prompted many tospeak of a world of regions (Acharya, 2008). In the 90s we sawthe establishment of NAFTA, MERCOSUR and AFTA. In the 2000s,East Asian region became the most intense site of regional tradediplomacy, again led by a few countries, particularly Singaporeand, increasingly, Japan and China. Turkey also turned toregional diplomacy over the past decade. The former members ofthe USSR became active in the late 1990s, essentially replacingthe old trade arrangements of the Soviet era with new agreementsamong themselves, with Ukraine as the most active country, alsoinvolved with other regions (such as countries that made upformer Yugoslavia).3

Mapping regional activity and discerning its global trends andcharacteristics presents severe difficulties due to the fastpace and random nature of this rapidly moving “kaleidoscope".(Fiorentino, et.al, 2006) But some trends stand out. For mostcountries regional sites are now the centrepiece of their tradediplomacy. Increasingly, these sites have ceased to begeographically bound. There are also North-South and South-South links (tied to the emergence of several major hubs) andcross-regional sites as well. The latter represent the mostdistinctive feature of the current “kaleidoscope”. Indeed theyconnote a shift from the traditional concept of “regionalintegration” among neighbors to the emergence of newpartnerships and ultimately the creation of new regions across

3 For a complete list of agreements notified to the GATT/WTO totaling over 200 see http://rtais.wto.org/UI/PublicAllRTAList.aspx

6

the globe linking, for example, South Korea with Peru, Panama orChile or Brazil, Venezuela and Argentina with the Arabcountries.

The case of the Association of South East Asian Nations (ASEAN)is of particular interest since it was the only regionalarrangement which was born as a security arrangement from whichtrade links were forged. It was created in 1967 by 5 states(Indonesia, Malaysia, Philippines, Singapore and Thailand) laterfollowed by five others (Brunei, Vietnam, Myanmar, Lao andCambodia). In 1992 ASEAN created the ASEAN free trade area(AFTA) which later continued widening by inviting other Asiancountries to participate. The ASEAN+3 initiative was implementedbetween 1998 and 2006 and is the result of free trade agreementssigned with China (2002), Japan (2003) and South Korea (2006).ASEAN stands out among developing country groupings because onvarious occasions it has successfully presented a unifiedposition at the WTO, especially in matters in relation to theinformation technology agreement to which they were allsignatories. Narlikar (2003) attributes this to the setting up nof a Geneva Committee and the loose nature of this regionalarrangement. By avoiding tighter (and classical) formsintegration countries were able to negotiate on an ad hoc basisand generate common positions at the WTO.

The most interesting aspects of regional trade initiatives isthat, while they attempt to inscribe a set of established tradepractices onto the regions’ pattern of interaction (Fawcett2004), these practices are both expressions of regionalspecificity, as well as of ‘regional projection on the globalscene. We are essentially back to the complexity of bilateralrules that characterized the 1930s, paradoxically for exactlythe opposite reason: competitive liberalization rather thancompetitive protectionism. Since then, the pace has beencontinuous and has contributed to multipolarity in a world whereit is not the individual states but their regional congregationswhich seems to make a difference in trade diplomacy.Socioeconomic and political interdependence within a region, andthe ability of a developed or a fast developing state toapparently control diplomatic endeavors in its region havecontributed to multipolarity. A multipolar structure capturesthe complexity of the new world and provides an accuratedescription of the pattern in which economic power isdistributed among players (Subacchi 2008). Even, the rapidadaptation of trade policies towards China has been the result

7

of the fact that it is now a hub for a wide range of Asiancountries and a recognized factor of transformation.

To understand how the proliferation of sites can affectdiplomacy, it is worth reflecting on why internationalinstitutions are considered to be important in the first place.(Introduction: Karns and Mingst in this volume). The processthrough which institutions can facilitate cooperation is bycreating a common set of rules. According to this approach,international institutions are a key mechanism which enablesdiplomatic cooperation. By becoming focal points, institutionscan bring to light instances when states defect from the agreedrules.

The proliferation of international trade fora makes it moredifficult to determine when an actor has actually defected fromspecific rules. Under a single international regime, it iseasier for members to recognize when a partner is deviating fromrules. If there are multiple, conflicting regimes to resolve aparticular issue, members can argue that they are complying withthe regime that favours their interests the most; even if theyare defecting from other regimes. In a world thick withcompeting sites, the problem is but selecting among a welter ofpossible sites. Institutional choice is now more than just astarting point. For many issues and/or regions, more than oneset of rules can claim competency.

Consider, for example, a trade dispute between the United Statesand the European Union over genetically modified organisms(GMOs) in food. The US insists that the issue falls under theWTO’s purview – because the WTO has embraced rules that requirethe EU to demonstrate scientific proof that GMOs are unsafe. TheEU insists that the issue falls under the 2001 CartagenaProtocol on Biosafety -- because that protocol embraces theprecautionary principle. The result is a legal stalemate, withthe bio safety protocol’s precautionary principle flatlycontradicting the trade regime’s norm of scientific proof ofharm and vice versa. Examples of the overlapping of trade rulesabound. For instance, when the global hit Ecuador, the countryrather than restricting imports from neighbors under the AndeanCommunity rules, negotiated a WTO safeguard covering allimports. A divisive row ensued: Andean countries upheld theirregional rights and Ecuador its multilateral cover.

Once international regimes are created, they will persist evenafter the original distributions of power and interest have

8

shifted. True, but stalemates occur and the modus operandichanges when there is no visible member support for either abottom-up or top-down redesign of the WTO’s institutionalstructures. The global governance structure of trade hasmorphed from a single focal point to a web of agreements markedby proliferation and overlapping, from a tightly woven compactto a loose net of variegated sites of diplomacy.

3. Civil society: Spinning the wheels

While the eruption of regional associations represents a loss ofcentrality, diplomacy within the WTO has also morphed. After theend of Cold War all global institutions had become subject tothe piercing scrutiny of non-governmental organizations (NGOs).At the root of the anti-WTO backlash was the democratic deficitof trade diplomacy, not only in taking for granted that was isgood for the market is good for society at large, but alsopresenting outcomes as faits accomplis. Ever since the mid 1990s,the participation of NGOs had been gathering momentum,exercising voice, demanding participation and rejectingprefabricated processes . The number of NGOs represented inministerial meetings increased with each session. For the HongKong Session of the Ministerial Conference in December 2005, thenumber of accredited NGOs had reached 1065, of which 836actually attended (see Table1 bellow).

Table 1. NGO Representation at WTO Ministerial Conferences

Number ofaccredited NGOs

NGOs attended

Singapore 1996 159 108Geneva 1998 153 128Seattle 1999 776 686Doha 2001 651 370Cancún 2003 961 795Hong Kong 2005 1065 836

Source : Peter Van den Bossche (2010)

NGO participation has evolved in two linked phases: firstrolling from protest to protest, but gradually becomingsuppliers of technical assistance. The power of persuasion withthe backing of scientific evidence is seen to carry much more

9

weight than emotional claim making and mobilizing. Bydefinition, technical assistants work within the establishedpolitical parameters of an era. They produce evidence to supporta particular cause in increasingly contested settings. Assuppliers of technical assistance NGOS strive for a compromisebetween the concerns of policy space and the intellectual powerof institutionalized ideas; without the aspiration of throwingthe system down they are vigilant and industrious withinformation, arguments and perspectives.

Several case studies of NGO influence in trade diplomacydemonstrate that in the two years that passed between Seattleand the Doha Ministerial Meeting in 2001, large internationalNGOs have become engaged in negotiations alongside states,present at the table as part of country delegations. The driveto eliminate cotton subsidies illustrates the point. Thesuccess in getting cotton into the Doha agenda as a singleseparate issue, the creation of the Sub-Committee on Cotton andthe inclusion of the ambition on elimination of cotton subsidiesin the Hong Kong Ministerial Declaration were all the result ofthe efforts of a transnational alliance between developedcountry NGOs, African NGOs, and African member states. Thecotton campaign involved close cooperation and collaborationbetween the Cotton 4, the group of four West African cotton-producing economies (Benin, Chad, Burkina Faso and Mali), a fewinternational NGOs with technical credentials, and grassrootsAfrican organizations of cotton-producing interests. Thealliance was characterized by a division of labour and thepooling of resources and capacities. Oxfam ran the mediacampaign and its Make Trade Fair campaign highlighted theinequities of cotton subsidies. The International Centre forTrade and Sustainable Development hosted Cotton Day at the HongKong ministerial and acted as initial facilitator for thealliance to take shape. ENDA Tiers Monde produced the White Bookon Cotton providing a platform for African voices, and financedtravel arrangements for delegates. NGOs provided strategicadvice, procedural and scientific information, and conducted acoordinated external media and lobbying campaign (Sapra 2010).

Likewise, the Consumer Project on Technology, Médecins SansFrontières and Oxfam were key drivers of the declaration ontrade related intellectual property (TRIPs) and public healththat was agreed by ministers in Doha (Odell and Sell 2006). Thedeclaration responded to civil society concerns that theintellectual property rules were excessively biased in favour ofpharmaceutical interests. This declaration stated that:

10

“The TRIPS Agreement does not and should not prevent members fromtaking measures to protect public health. Accordingly, whilereiterating our commitment to the TRIPS Agreement, we affirm thatthe Agreement can and should be interpreted and implemented in amanner supportive of WTO members' right to protect public healthand, in particular, to promote access to medicines for all”4.

In August 2003, an additional WTO agreement was reached toclarify remaining ambiguities from the Doha declaration. InDecember 2005 the sum of these reforms were finally codifiedthrough a permanent amendment to the TRIPs agreement. Theseevents were the culmination of a sustained campaign by globalcivil society designed to scale back intellectual propertyrestrictions on the production and distribution of generic drugsto the developing world. Global civil society advocates anddeveloping countries wanted as broad a “public health” exceptionto TRIPS as possible, covering any and all forms of illness –and got what they wanted in the Doha Declaration.5 (Shadlen,2004)

In this way, NGOs have emerged as strategic actors in globaltrade negotiations, deploying multiple strategies, making useof political opportunities, framing and steering issues,aligning strategies to state interests, defining problems,setting agendas, and influencing norms and outcomes, sittingwith pen and pencil back to back with delegations. Ostry (2002)has called them transformational coalitions. Many have access tospecific professional expertise and specialized knowledge thatfacilitates the construction of focal points for resolvingcoordination problems across multiple issues. Rather thanconfronting the informational and transaction costs themselves,government diplomats frequently find that cooperation with NGOscan provide effective and efficient assistance to support theircause.

In the process, non state actors have moved out of the fringesas mere consumers of trade diplomacy into the forefront as

4 “Declaration on the TRIPS Agreement and Public Health,” http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

5 The turn to providers of technical assistance has materialized in the same manner inregional trade diplomacy , except in the case of the European Union. In the Americasnonetheless the Hemispheric Social Alliance managed to bury the Free Trade Area of theAmericas (FTAA) with the backing of the Brazilian, Argentinian and Venezuelangovernments in the Mar del Plata Summit in 2005.

11

producers of diplomatic outcomes (Hocking, 2004). They provide awealth of specialised knowledge, resources and analyticalcapacity. Indeed, a revolving door has opened between NGOs andgovernments where collaborative horizontal relationshipspredominate, and essentially turning the closed preserve oftrade diplomats (merely accountable to each other) inside out.This creates a more subtle and nuanced pattern of relationshipsbetween state and non-state actors than the conflict stereotypemore frequently suggested. Esty and Geradin, (2000) describe thesituation as one of 'co-opetition'- a mix of co-operation andcompetition both within and across governments and betweengovernment and nongovernmental actors.

4. Governmental coalitions: the building of nested circles

If Seattle signalled the entry of civil society, four yearslater, Cancun signalled the newfound confidence of the globalsouth, marking another turning point in the diplomatic process.The pressure of NGOs and the exponential growth in WTOmembership had by then shaken the diplomatic terrain allowingpolitical opportunities for erstwhile bystanders. Todayapproximately 100 of the WTO’s 144 members are developingcountries which have strived to increase their leveragearticulating their specific interests and building coalitionsissue by issue. (Odell, 2006, Narlikar 2003; 2006; Kumar, 2007;Narlikar and Tussie, 2006). These coalitions are voluntary – nomember of the WTO has to join a coalition, nor does a memberundertake vows to remain part of it. But their emergence andindeed proliferation (See Table 2 below) has added newsubstantive issues to the agenda and changed the larger dynamicsof building consensus. Coalitions are now important players.

Table 2. A sample of selected coalitions in the WTO

12

Commoncharacteristics groups

Agriculture Non-agriculturalmarketaccess

Rules Environment Services TRIPs

G-90- ACP- LDCs- AfricanGroup

Small andVulnerableEconomies(SVEs)

RecentlyAccededMembers (RAMs)

Small andVulnerableCoastalStates (SVCS

Like MindedGroup (LMG)

Offensivecoalitions:- Cotton-4- TropicalandAlternativeProducts- CairnsGroup- G-20

Defensivecoalitions:- G-10- G-33- RAMs- SVEs

NAMA-11

Friendsof MFN

FriendsofAmbitioninNAMA

Friendsof Fish

FriendsofAnti-dumpingNegotiations(FANs)

Friends ofEnvironmentalGoods

Friends ofthEnvironmentandSustainableDevelopment

G-25

ASEAN - 1

AfricanGroup,ACP, LDCs,SVEs

Real Good

Friends ofGATS/Friends ofFriends

Plurilateral'friends'(promotingspecificsectors andmodes ofdelivery)

African Group

DisclosureGroup ofDevelopingCountries

Friends ofGeographicalIndications

FriendsagainstExtension ofGeographicalIndications

Source: Wolf, 2007

The Recently Acceded Members, the African Group, the Small andVulnerable Economies, G-33, G-90, and so on, provide theirmembers with an opportunity to learn about issues with fellowtravelers and to coordinate positions for WTO meetings. Theresistance of the LMG and the African Group against theexclusionary decision-making procedures had been a factorleading to the breakdown of the ministerial meeting held inSeattle in 1999. Two years later backed by civil society twoother initiatives had hatched at Doha, the TRIPs and publichealth coalition (Odell and Sell 2006), and the Cotton-4 (Patel2006). Leaning on these campaigns, governments can manipulatevalue conflicts, trim proposals and react with counterproposals.Dealing with asymmetry becomes less of an exercise inhelplessness. Instead, it becomes more of an exercise innegotiated accommodation where state and non-state actorsinteract and feed off each other in a process whereby valuesbecome shared, rules gradually codified, and all actors get toreinvent themselves.

These were important precedents for developing countries insignalling the relevance of forming new groupings as a means to

13

promote their views on key issues collectively (Keet 2006: 14).The Cancun meeting in 2003 catalyzed the emergence of at leastfour new coalitions: the G206, the G33, the Core Group onSingapore Issues, and the Cotton Group — in addition to theactivism of others that predated the ministerial, including theAfrican, Caribbean and Pacific Group, the Least DevelopedCountries Group, the Africa Group and the Like-Minded GroupThey succeeded in getting three of the four so-called Singaporeissues (investment, competition policy, and governmentprocurement) dropped off the negotiating agenda of the DohaRound and led to the impasse at Cancún . Cancun marked adiplomatic turning point. In its aftermath the G-33 stepped upits demands for special and differential treatment as aprerequisite for progress in the negotiations, particularly theright to identify special products on which there would be notariff or quota reduction commitments.

Present day coalitions differ from their older counterparts andpredecessors. They adopt a more prominent and publicly visiblediplomatic role, which often involves issuing publicdeclarations, holding press conferences, engaging in mediacampaigns, creating logos and forms of branding. Anotherdistinctive feature of new coalitions is their engagement withNGOs in the framing of negotiating positions and in theundertaking of public advocacy campaigns. The alignment withNGOs on cotton subsidies and the framing of negotiations ofintellectual property as a health issue in the Doha conferenceillustrate the point. Finally, there is also considerablecooperation between various coalitions which at times canoverlap. The resulting openness to other coalitions rather thana us-versus-the-rest antagonism and logrolling that is notcompletely random but relatively more focused on a smaller setof issues (partly as a result of the analytical support) makesthe more recent coalitions considerably evolved, and certainlymore evolved than the traditional ideology driven third wordlistdemands.

The particular form that is adopted by these coalitions dependslargely on the kinds of agendas for which they were created.Coalitions that are built in response to particular threats –which tend to dissipate over time – are formed by ‘alliance-type’ groups that come together for ‘instrumental reasons’.Conversely, coalitions built for the negotiation of a variety of6 This G20 is different from the finance G20 and is composed of Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, Tanzania, Uruguay, Venezuela and Zimbabwe.

14

issue areas generally consist of ‘bloc-type’ groups of like-minded states. In this case, such coalitions rely on identity-related methods (Narlikar 2003), and often develop some kind offormal structure to facilitate analytic burden-sharing in thepreparation of proposals. Coalitions provide countries not onlyweight but also resources (including analysis) to balance theagenda.

Two coalitions stand out in this regard for the hot issue ofagriculture: the G-33 with defensive interests and the G-20where offensive interests predominate.7 The G-33 emerges fromthe bottom-up understanding among civil society actors—small-scale farmers, nongovernmental organizations (NGOs), academics—that economic liberalization has been negative for food securityand rural communities. The G-20 is driven by agribusiness,forged in reaction to the inadequacy of the US and the EUproposals to liberalize agriculture on the eve of Cancun.

The G-33 relies primarily on the analysis produced by key membercountries (e.g., India, Indonesia, Philippines); a multilateralinstitution, the Food and Agriculture Organization (FAO); anintergovernmental institution, the South Centre; and a handfulof NGOs. Its work has primarily been to strategize on thecontent and timing of negotiating positions, tactics, and publicstatements. On this basis, a technical group builds itsproposal, which is submitted to a periodic meeting of heads ofdelegations. From there, it goes to capitals for consideration.Heads of delegations then meet to assess reaction from capitalsand approve the proposal by consensus. On a day-to-day basis, G-33 negotiators in Geneva have the ability to do some researchand formulation of positions, but they require backup in certainsituations, especially when specific technical questions ariseor they require confidence that their formulations are strongenough. At crucial points the coalition may turn to outsideinstitutions and researcher for help. For example, theInternational Centre for Trade and Sustainable Development(ICTSD) assisted the G-33 in ways to develop the concept ofspecial products and to operationalize it through indicators. Asthe G-33 negotiators then set about to refine the indicators,they sought assistance from other research institutions inGeneva to validate their thinking. When the World Bank addedpressure with a paper that suggested the application of special

7 This G20 is different from the finance G20 and is composed of Argentina, Bolivia,Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador,Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines,South Africa, Thailand, Tanzania, Uruguay, Venezuela and Zimbabwe.

15

products would actually increase poverty in low-incomecountries, the coalition requested additional research inputfrom the South Centre and ICTSD to assess the potential impactof special products on South-South trade (Mably, 2009).

Like the G-33, the G-20 also turns out substantive researchwithout endowing itself with a collective analytical capacity.Particular countries take the lead on specific issues that arethen incorporated as part of the G-20 agenda. A de factodivision of labor thus emerges as issues roll on. Researchinitiatives of the G-20 have contributed to the substance of thenegotiations on formula reductions, on special safeguards foragriculture, and on product-specific caps.This is not grandagenda setting, but one meant to flesh out proposals and shapecounterproposals. Many developing countries have learnt thatcoalitions are essential in an organization that never takesvotes and where nothing is agreed until everything is agreed(the so called single undertaking) Considerable effort is alsobeen expended in government consultations with various domesticgroups in each country. That process has served an importantfunction of legitimization—this time, to the domestic audience.

The drive for the formation of the G-20 was summed up by theBrazilian Permanent Representative of Brazil to the WTO, LuizFelipe de Seixas Corrêa, when he assertedthat:

What prompted the creation of this group in the WTO was a recurrentphenomenon that we think has to be changed in order to cope with thenew realities of multilateral negotiations. There is the belief orunderstanding that everything can be solved when the two majors gettogether and carve out a deal that represents their convergence ofinterests. And that the rest of the world, being so disunited orbeing so fragmented or having so many different perspectives, endsup one by one being co-opted into an agreement - for lack of anorganizational framework..8

Old established processes are now shaken and splintered both bythe emergence of significant opportunities elsewhere and byequally significant coalition building inside. Part of what themany coalitions in Table 2 have done is to create a claim thatone of their members should have access to any closed meeting.The strengthening of accountability in countries across theglobe has made trade negotiators both more cautious and tougher,

8 Statement at the WTO, 26 January 2005, available athttp://www.wto.org/english/thewto_e/dg_e/stat_seixas_correa_e.htm

16

as they have constituencies watching for any indication thattheir interests have not been adequately defended represented.Government diplomats no longer “command and control”; insteadthey negotiate. Governing activity is diffused over varioussocial actors with the state increasingly in the role offacilitator and cooperating partner (Strange, 1996). The jury isstill out on whether coalitions have helped or hindered the Doharound itself, which was still struggling when this chapter waswritten. But that is not the point here. One way or the other itis safe to assume that coalitions have changed the scene andwill remain with us in varying shapes and sizes. In the same waythat the proliferation of sites leads to a spiraling system ofescalators, coalition formation from within has resulted in aprocess of nested circles where coalitions and civil society arepart of the process. It is not that the master organization hasbecome irrelevant but that ever- multiplying stakeholders withinit (as the new sites of activity outside) have churned out thetranquil pools of diplomacy.

5. Hierarchy gives way to networking

This paper has been concerned to raise questions and suggestlinkages that emerge from the way that the structure as well asthe process of negotiation has been agitated in the last twodecades. It allows proposing some conclusions.

With emerging countries asserting themselves in every region ofthe world, trade diplomacy has become a multifaceted creature.What we have seen is that the club model of diplomacy has burstat the seams. In the club model of diplomacy, diplomats remainlimited to interaction with the fellow members of the clubs:themselves and business. Yet it is no longer possible to assumea tightly centralized bureaucracy standing in isolation. In thesame manner that the trade scene is changing from a single focalto multiple focal points, there is an overall shift in processfrom the club model to a networked process, which applies notonly to international organizations but to national diplomacy aswell (Hocking, 2004; Heine, 2006). The network model stressesthe need for states to develop the capacity to engage with anincreasingly diverse range of institutions and actors(Slaughter, 2003). The shift from a ‘club’ model, where the fewdecide for the many, to a ‘network ’ model, in which the manydecide for the many is illustrated in the following table. It

17

presents as ideal types the most outstanding differences of eachmodel.

Table 3. Club and Network Diplomacy

PlayersStructure Transparency Main purpose

ClubDiplomacy Few Hierarchical Low Sign agreements

NetworkDiplomacy Many Flatter High

Improve process;introduce issuesSource: adapted from Heine (2006)

Newcomers have challenged the “classic” way of doing business.Nowadays, numbers do make a difference, but so does theintellectual landscape in which newcomers operate and to whichthey contribute. As contending players grow in strength andstature they have at the same time invested in becomingtechnically empowered to propose and counterpropose throughknowledge, research and value creation. Diplomacy has becomeintensely knowledge driven. Indeed, some participants presentthe production and exchange of analysis as core functions of thenetworked diplomacy itself. Knowledge is used to frame or re-frame an issue, to define interests, identify policy problemsand preferred solutions, especially to posit causalrelationships. Such constructions can matter, not simply becausethey can provide the substantive content of demands in a tradenegotiation, but also because they can serve as an importantlegitimising device. This search for legitimacy is at the coreof diplomacy; it concerns the ability of governments to frameparticular demands and agendas in terms of notions, concepts orthemes that can enhance the imperatives of one position overanother avoiding or softening visibly ideological grounds. Inthe elusive quest for legitimacy, successful trade diplomacyrenders compromises between parties. Without legitimacy,international agreements are hard to make and are often notkept, at least not for long; with legitimacy, states arearguably more easily bound to their commitments. In that wayknowledge is played out through a complex and contested processof feedback and adaptation in order to gain trust and ultimatelysustaining legitimacy.

18

Indeed, a reaffirmation of the fundamental and intrinsiccentrality of diplomacy emerges as a forceful conclusion fromthis analysis. If the Uruguay Round closed on a mix hope,finger-crossing and ignorance (“there is no alternative”), intoday´s world we are called on to navigate a sea of contendingperspectives. Knowledge must argue that the world we have isnowhere near as good as the world we could have. In otherwords, trade negotiations require interest based knowledge.Agenda setting, assessment, and the construction ofcounterproposals involve continuous evaluations and filtering tosuggest alternative modes of actions. Knowledge building mattersnot simply in providing the substantive content of a country’sdemands in a trade negotiation, but also because it articulatesa different world with fresh options moving the agenda away fromthe mantras that “there is no alternative” which is functionalto “the maintenance of order on a hierarchical basis” (as putforth in the Introduction to this volume). A diplomat demandinga high level of concessions from the opponent or refusing tomake any concessions needs first, to challenge universalistclaims, and will subsequently be taken more seriously whenbacked up by detailed studies. There are thus two distinctive,and sometimes mutually exclusive, purposes to knowledge buildingin networked diplomacy: the first is to genuinely give shape toa country’s negotiating agenda; the second is to somehowlegitimize the agenda that has evolved as a result of severalother, often political, forces. The distinction between thesetwo purposes of knowledge assumes special importance today.

This is so in a variety of senses, of which one might behighlighted: negotiations require the construction of a maximumaspiration position as well as a reserve position, which will bethe lowest acceptable outcome. A negotiating strategy includes acomparison of the potential advantages of a negotiated solutionwith alternatives available away from the negotiating table. Thestrategy of walking away should be based on sound analysis ofthe likelihood of securing a better or more acceptable outcomethrough negotiations. A negotiating party can develop thestrength and availability of what is often called a bestalternative to a negotiated agreement (BATNA), while converselyintroducing evidence into the negotiating process that threatensthe attractiveness of other negotiating parties’ BATNAs. Clearanalyses of BATNAs are important factors in a successfulnegotiating strategy because they allow for wise decisions onwhether to accept a negotiated agreement. As such, they providea standard that will prevent a party from accepting terms thatare too unfavorable and from rejecting terms it would be better

19

off accepting. Furthermore, having a good BATNA increases aparty’s negotiating power and a well prepared negotiating teamwill be able to gauge the desire of the other team for anagreement. This will allow for the most effective use ofpressure and the most appropriate demands being placed on theother negotiating team.

In the process of negotiation, analyses and integration ofdifferent proposals is required. The gap between competinginterests is breached when each side gives something to theother side and vice versa. This is possible through issuelinkages; each party makes concessions in different topics sothat the balance produces relative satisfaction. Parties mustwork to develop potential options for such issue linkages andneed to have something to offer each other. Negotiators canenlarge the space of agreement by identifying and discussing arange of alternatives, by improving the quality and quantity ofinformation available to the other parties, and by trying toinfluence their perceptions. Much of trade negotiation involvessuch integrative bargaining because parties can enlarge the areawhere their interests overlap by identifying and discussing arange of alternative options and opinions. Facing the demandsof complex and perennially moving agendas, negotiators seekanalytical support that is usable for a specific place and spaceof time. Governments may therefore need the capacity not only toabsorb and produce their own research, but also to share andcontrast findings.

Harnessing cooperation in the XXI century will require such networks to provide context-based knowledge and adaptation to concrete issues. The state now lies at the intersection of a vast array of processes and structures as we witness the reconfiguration of the world trading system into a more fragmented and regionally anchored one and the rapid expansion of transnational social links .With all states pursuing new frames to enhance their strategic interests, trade diplomacy will be less prefabricated in terms of issues, sites, process and outcomes than we have known it.

No grand narrative in the making, but a complex reality in a state of flux ,where knowledge inputs create an enabling environment for trade diplomacy for the sake of wider circles. Neither the hand of God bonding peoples, nor the demon in WTO clothes ready to spread sulphur across the globe.

20

REFERENCES

21

Acharya , A. (2008). “Regional Worlds in a Post-hegemonic Era”Keynote Speech, 3rd GARNET Annual Conference, Bordeaux, 17-20September, available athttp://spirit.sciencespobordeaux.fr/Cahiers%20de%20SPIRIT/Cahiers%20de%20SPIRIT_1_Acharya.pdf

Cerny, P. (2008) Embedding Neoliberalism: The Evolution of aHegemonic Paradigm. The Journal of International Trade and Diplomacy 2 (1),Spring: 1-46 available athttp://www.jitd.com.tr/dtmadmin/upload/EAD/KonjokturIzlemeDb/JITD/volume_2_no_1/Philip_Cerny.pdf )

Charlton, A. (2005). “A proposal for Special and DifferentialTreatment in the Doha Round”. Mimeo, Geneva

Drache, D. (2010) Reform at the Top: What’s Next for the WTO? ASecond Life? A Socio-Political Analysis. Working Paper preparedfor the Workshop at the ONATI International Institute for theSociology of Law, Socio-legal perspectives on the adjudicationof international economic disputes, July

Esty D. and D. Geradin, (2000) `Regulatory Co-opetition',Journal of International Economic Law, 3 (2): 235-255

Fawcett, L. (2004): “Exploring Regional Domains: A ComparativeHistory of Regionalism”, International Affairs, 80(3): 429-446

Fiorentino , R., L. Verdeja and C. Toqueboeuf, (2006). “TheChanging Landscape of Regional Trade Agreements”: 2006 Update,DISCUSSION PAPER NO 12, World Trade Organization, available athttp://www.wto.org/english/res_e/booksp_e/discussion_papers12a_e.pdf

Heine, J (2006). “On the Manner of Practising the NewDiplomacy,” CIGI Working Paper No. 11 (Waterloo, Ontario: Centrefor International Governance Innovation, October .

Helleiner, G. K. (2002) ‘Developing Countries in Global EconomicGovernance and Negotiation Processes’, in Deepak Nayyar, ed., GoverningGlobalization: Issues and Institutions, UNU/WIDER, Oxford University Press,pp. 308-333 Hocking, B. (2004) Changing the terms of trade policy making:from the `club? to the multistakeholder model?, World Trade Review,

22

3(1) available athttp://www.jhubc.it/ecpr-porto/virtualpaperroom/047.pdf)

Keet, D. (2006) ‘South-South Strategic Alternatives to theGlobal Economic System and Power Regime’, Amsterdam:Transnational Institute. Available athttp://www.cibera.de/fulltext/16/16865/docs/200611271851098257.pdf

Keohane , R. and J. Nye (2000). “The Club Model of MultilateralCooperation and the World Trade Organization: Problems ofDemocratic Legitimacy, Available athttp://www.hks.harvard.edu/visions/publication/keohane_nye.pdf

Kumar, N. (2007) ‘Building a Development-friendly World TradingSystem’, Bridges, year 11, No. 5, August, a publication of theInternational Centre for Trade and Development (ICTSD), pp. 3-5

Mably Paul, (2009) in Tussie, Diana (ed)” The Politics ofTrade: The Role of Research in Trade Policy and Negotiation”,IDRC, Ottawa, ON, CA. http://hdl.handle.net/10625/38551

Narlikar, A. (2003) International Trade and Developing Countries: Coalitions inthe GATT and WTO, London: Routledge.

Narlikar, A. (2006), ‘Bargaining over the Doha DevelopmentAgenda: Coalitions in the World Trade Organization’, Series LATNPapers, no. 34

Narlikar A. and D. Tussie, The G20 at the Cancun Ministerial:Developing Countries and their Evolving Coalitions in the WTO,World Economy, Vol. 27, No.7, July 2004, pp. 947-966.

Odell J.S (ed) (2006) Negotiating Trade: Developing Countries in the WTO andNAFTA. Cambridge: Cambridge University Press

Odell, J. S. and Sell, S. K. (2006) ‘Reframing the issue: theWTO coalition on intellectual property and public health, 2001’,Odell, J. S., ed., Negotiating Trade – Developing Countries in the WTO andNAFTA, Cambridge, UK: Cambridge University Press.

Ostry, S. (2002) The Trade Policy-Making Process—Level One ofthe Two Level Game: Country Studies in the Western Hemisphere,(Institute for the Integration of Latin America and theCaribbean, INTAL-ITD-STA, Occasional Paper 13, available athttp://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=784457

23

Patel, M. (2006) ‘New Faces in the Green Room: DevelopingCountry Coalitions and Decision-Making in the WTO’, GEG WorkingPaper 2007/33, Global Economic Governance Programme, Universityof Oxford [online: www.globaleconomicgovernance.org].

Rashid, H. (2005). Address to the Indian Economy & BusinessUpdate, August . Available at,http://rspas.anu.edu.au/papers/asarc/update/05_IndiaUpdate_Rashid.pdf

Sapra, S. (2010) , “ Domestic politics and the search for a newsocial purpof governance for the WTO”, in Debra Steger (ed),Redesigning the WTO for the XXI Century, CIGI and Wilfred LaurierUniversity Press

Sell, S. and A. Prakash (2004) ‘Using Ideas Strategically’,International Studies Quarterly 48: 143-175.

Shadlen, K. (2004), “Patents and Pills, Power and Procedure: TheNorth-South Politics of Public Health in the WTO”, STUD. INCOMP. INT’L DEV. 39 (3) pp 76-108

Slaughter, A-M. (2003). ” Everyday global governance” , Daedalus;Winter; 132,

Smythe, E. (2006) “Assessing the Doha Development Round”, Lee,D. and Wilkinson, R., ed., The WTO after Hong Kong, Chippenham,UK: Routledge

Strange, S. (1996). “The Retreat of the State: The Diffusion ofPower in the World Economy”, Cambridge, Cambridge UniversityPress

Subacchi, P. (2008): New power centres and new power brokers:are they shaping a new economic order? International Affairs, 84(3):485-498

Tussie, D. (2009), “Process Drivers in Trade Negotiations: Therole of research in the path to grounding and contextualizing”,Global Governance July-September, Vol 13, No 3, pp

Van den Bossche Peter , (2010) “A Comparative Perspective onNGO Involvement in the WTO: Is the Glass Half-full or Half-empty?”, Journal of International Economic Law, Volume11, Issue4Pp. 1-33. available at

24

http://jiel.oxfordjournals.org/content/early/2008/10/17/jiel.jgn032

Winham, G.R. (1998) ‘Explanation of Developing Country Behaviourin the GATT Uruguay Round Negotiation’, World Competition, 21: 3.

Wolfe, R. (2007) ,” Adventures in WTO Clubland”, Bridges, June –July 2007 | No. 4, http://ictsd.org/downloads/bridges/bridges11-4.pdf

25