WTO Ministerial Section • Volume • Number • 18th May 1998

G-15 call for currency market regulation, more cooperation

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G-15 leaders meeting last week in Cairo called for increased participation in world trade by developing countries and equitable participation in the recovery from the Asian financial crises. The G-15 is comprised of Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaica, Kenya, Malaysia, Mexico, Nigeria, Peru, Senegal, Venezuela, and Zimbabwe. Jamaica holds the rotating G-15 chairmanship.

Jamaican Prime Minister P.J. Patterson told his fellow G-15 ministers at the close of last week’s meeting that the Group must focus on steering the global economy more toward the interests of developing countries. “We do not allow others to maintain sole control of the steering wheel,” Mr. Patterson said.

Mr. Patterson and other G-15 leaders called for stricter control of currency flows. “We are indeed likely to experience continued instability in international financial markets so long as unconstrained speculative currency activities are neither monitored nor regulated,” Mr. Paterson said. Malaysian Prime Minister Mahathir Mohamed told reporters last week that currency speculation undermines development achievements. “It is possible to impoverish a country merely by reducing the value of its currency. . .What [Malaysia has] grown is still there but the value of our wealth has diminished by 50 percent,” Mr. Mohamed said.

The G-15 met amid growing unrest in member-country Indonesia, whose President Suharto was on-hand at the summit even as protestors in Jakarta called for him to step down. At least 500 people were killed in Indonesia last week as masses of people protested rising food and fuel prices. Prices surged in Indonesia after subsidies on essential commodities were lifted as part of Indonesia’s bailout agreement with the International Monetary Fund.

Egyptian Foreign Minister Amr Moussa last week said the social impacts of liberalization and economic reform must be kept in the forefront in WTO negotiations. “Liberalization is not an end in itself. [The G-15] believe in it and move towards it to push forward the development process. Liberalization must be balanced with the requirements of development in the context of achieving the integration of the developing countries in the world trade order,” Mr. Moussa said.

The G-15 called for stepped-up south-south cooperation within the WTO. “[The G-15] has to articulate the position for the developing world, ensure that there is effective south-south cooperation and a framework for dialogue between the south and the north. The G-15 countries cannot operate in isolation. That is why they must operate as a strong group and . . . influence the discussions of the WTO so that the laws that are passed are not inimical to the growth of those countries,” Nigerian Foreign Minister Tom Ikimi said last week.” A common G-15 strategy has been difficult to forge because of the tremendous diversity of cultures and agendas among the G-15 nations.

The U.N. Conference on Trade and Development (UNCTAD) prepared a report on the Asian financial crises for the G-15 summit, outlining a pessimistic view of its effect on developing economies. Outside Asia, countries such as Chile, Peru, Ecuador, Zambia, Tanzania, Congo, South Africa and Saudi Arabia will be hardest hit as commodity prices plummet. Asian economies also face reduced demand for merchandise exports.

The UNCTAD report strongly warned developing countries against constructing new trade barriers or engaging in competitive currency devaluation as a means to defend against cheaper Asian exports, lest they “endanger worldwide growth.” The report noted that the group of Southeast Asian nations was the third largest importer of goods in 1996, and that a reduction in import demand could have bigger effects on world trade than some institutions including the WTO are predicting.

“G-15 ministers examine Asian crisis, world trade,” REUTERS, May 9, 1998; “UNCTAD more pessimistic about Asian crisis,” FINANCIAL TIMES, May 5, 1998; “G-15 summit calls for balanced world trade,” REUTERS, May 11, 1998; “G-15 countries demand greater say in trade,” REUTERS, May 13, 1998; “Latin, African suppliers cut critical Asian exports,” JOURNAL OF COMMERCE, May 11, 1998; “Leaders fail to co-ordinate trade efforts,” FINANCIAL TIMES, May 13, 1998.