How China lost its wolf pack: the fracturing of the emerging-power alliance at the WTO

There has been considerable debate about the capacity of emerging powers, such as the BRICS (Brazil, India, China, South Africa), to act as a unified and coherent force in global economic governance. In the case of the World Trade Organization (WTO), strategic cooperation and alliance-building among the emerging powers—specifically Brazil, India and China (BIC)—were essential to counterbalancing the US and other traditional powers and enabling the rising powers to defend their interests. However, as this article shows, the BIC alliance at the WTO has collapsed. The core issue that historically united the emerging powers and provided the foundation for their alliance was ‘special and differential treatment’ (SDT) for developing countries. Yet both Brazil and India have now defected from the alliance, abandoning China. Brazil was the first to defect, switching sides and realigning itself with the US; the change in its alliance calculations reflected shifting economic priorities and a fundamental reorientation of its foreign policy strategy away from its earlier Third Worldism. India then defected when its alliance with China, once an important source of strength in WTO negotiations, instead became a liability. As a result, having lost its key allies at the WTO, China is increasingly isolated in multilateral trade negotiations.

There has been immense debate about the significance and impact of emerging power alliances, such as the BRICS (Brazil, Russia, India, China and South Africa). The emerging powers have sought to act together to increase their bargaining power and influence in global politics and governance, and many have celebrated their rise as ushering in a new pluralism in the global order and a shift away from western dominance.1 Yet some have questioned the significance of their alliances, arguing that divergent interests and mutual distrust have prevented the emerging powers from acting together as a unified political bloc.2 Sceptics have thus dismissed the BRICS, for instance, as merely a ‘fable’ or ‘fallacy’.3

In the case of the multilateral trading system, however, there is no question that the impact of emerging power alliances has been profound.4 The alliance between Brazil, India and China (the ‘BIC’) drove a significant shift in power at the World Trade Organization (WTO).5 These three countries allied themselves to counterbalance the United States and other established powers, and their alliance proved remarkably resilient and highly consequential. The BIC alliance transformed the power structure of the WTO, bringing an end to the longstanding dominance of the United States and other advanced industrialized states, and propelling the emerging powers into the inner circle of power. The resulting clash between the old and new powers led to the breakdown of the Doha round of trade negotiations and repeated paralysis in subsequent negotiations.6 Nor has such cooperation been limited solely to the trade regime. Studies in other areas of global governance, such as finance and development, have found similar examples of collaboration and joint action among the emerging powers.7

This article contributes to the ongoing debate about the capacity of the emerging powers to act as a unified and coherent force in global economic governance by analysing shifting alliance politics at the WTO.8 As a core pillar of global economic governance, the WTO has been a key site of global power struggles, making it an important case for assessing contemporary relations among the emerging powers. As previous research has demonstrated, strategic cooperation and political alignment between China, India and Brazil were essential to counterbalancing the established powers and overturning prevailing power hierarchies at the WTO. In this article, however, I show that the alliance among the emerging powers—which endured for nearly two decades in the WTO context—has now collapsed. The core issue that historically united the emerging powers and provided the foundation for their alliance was ‘special and differential treatment’ (SDT) for developing countries, which the emerging powers used successfully to resist pressures from the United States and other established powers to open and liberalize their markets. SDT has become the central issue of dispute in WTO negotiations, responsible for the repeated breakdown of the Doha round as well as of subsequent negotiations. But both Brazil and India have now defected from the BIC alliance, abandoning China. Brazil was the first to defect, switching sides and realigning itself with the United States. Soon after, India also deserted China. In the case of Brazil, the change in its alliance calculations reflected shifting economic goals and a fundamental reorientation of its foreign policy strategy away from its earlier Third Worldism. For India, its alliance with China, once an important source of strength, had become a liability. The result is that China lost its key allies at the WTO, and now finds itself increasingly isolated within multilateral trade negotiations.

The emerging power alliance at the WTO

Existing scholarship has highlighted the important role of emerging power alliances in driving recent power shifts at the WTO.9 For nearly half a century, the multilateral trading system had been dominated by the United States, EU and a handful of other rich countries, while developing countries were excluded from decision-making and their interests marginalized.10 Over the course of the Doha round, however, which began in 2001, Brazil, India and China allied themselves with one another to enhance their bargaining power, successfully surmounting their diverse trade interests and other sources of rivalry to cooperate and coordinate their negotiating efforts.11 Their political alignment served as the foundation for highly effective bargaining coalitions, such as the Group of 20 (G20T)12 and the Group of 33 (G33), which transformed the Doha negotiations into a battle drawn along North–South lines.13 Moreover, beyond their formal bargaining coalitions, as the primary axis of conflict came to centre on a clash between the United States and the emerging powers, their informal alliance was critical in enabling the BIC to counterbalance US power.

The emerging powers —even China—were each acutely aware of the dangers of isolation. Fearing that it would be targeted by the United States, China determined to focus on ‘unity’ and ‘solidarity’ with other developing countries.14 As one of its negotiators summarized: ‘Our prospects of winning are higher if we are with other developing countries and not alone. The United States is still the superpower—the world's biggest economy. In a one-on-one setting, the US will most always win.’15 Through allying with India and Brazil, he continued, ‘it is no longer one-to-one, but the US versus a group of countries. The US is the big elephant, but we now have a group of wolves—then we have a chance.’ For China and the other emerging powers, their alliance was thus motivated by awareness that, as one ambassador put it, ‘isolated, we're easy prey’.16

The BIC alliance proved remarkably successful. By aligning themselves together, China, India and Brazil had a significant impact on the Doha negotiations and prospective agreement, evident both in their success in blocking proposals by the established powers and in advancing their own initiatives.17 Most importantly, they were able to secure substantial SDT for developing countries across virtually all aspects of the proposed Doha agreement, including reduced liberalization commitments, greater flexibilities and exemptions, and longer implementation periods. Strategic cooperation among the emerging powers was thus essential to overturning prevailing power hierarchies at the WTO.

The unifying threat: differentiation and access to SDT

The fundamental issue uniting the emerging powers at the WTO has been the threat of ‘differentiation’ among developing countries that would restrict their access to SDT. A core principle of the multilateral trading system is that developing countries should be granted SDT that allows them greater scope to use tariffs, subsidies and other trade policy tools to promote economic development. But amid shifts in global economic power, SDT has become one of the most contentious issues in the trading system. SDT is based on the belief that developing countries should not be held to the same standards and expectations as developed countries, but instead granted greater freedom to use trade measures than would otherwise be permitted under WTO rules. With no established criteria for determining what constitutes a ‘developing country’ at the WTO, states are allowed to self-designate to access SDT.

During the Doha round, the United States and other advanced industrialized states became increasingly dissatisfied with the prospect of extending SDT to countries like China, India and Brazil, arguing that ‘the size and growth trajectories of the emerging economies combined with the fact that some are now leading producers and exporters in key sectors … set them apart’ from other developing countries.18 The United States and others sought to restrict the emerging powers' access to SDT, maintaining that they had ‘graduated’ from developing country status. The emerging powers, however, ‘strictly oppose[d] any talk [of] differentiation’, insisting that ‘SDT should apply equally to all developing countries’.19 The threat of differentiation and being pushed to undertake greater liberalization provided a powerful inducement for the emerging powers to ally themselves, despite their otherwise disparate interests.

The issue of differentiation and whether the emerging powers should be entitled to SDT ultimately came to lie at the heart of the Doha collapse. As one participant stated, ‘the issue of differentiation became the central stumbling block in the Doha round, across virtually all areas of the negotiations’.20 By the 2008 ministerial, which was intended to conclude the round, the prospective Doha agreement—which included substantial SDT provisions for developing countries, including the emerging powers—had become unacceptable to the United States. The US accordingly sought to ‘rebalance’ the deal by demanding greater market opening from the emerging powers. But they refused, arguing that the United States' demands—that they commit themselves not to use certain SDT flexibilities in agriculture and agree to participate in aggressive liberalization in specific manufacturing sectors—were unjustified and out of proportion with the concessions the United States itself was willing to make, particularly in agriculture. With the emerging powers closely united, the United States was unable to overpower China, India and Brazil, or force them to undertake greater liberalization, and the negotiations became deadlocked.

With the Doha round declared at an impasse in 2011, the focus shifted to trying to negotiate stand-alone agreements on narrower issues, such as agriculture and fisheries. Yet SDT has remained a major source of conflict, and the strategic alignment among the emerging powers continued into the post-Doha era of negotiations.21 As one negotiator summarized:

We have two overriding common concerns—development and SDT. When it comes to SDT, we remain united on not having that core principle undermined. Whenever there is an attack on the development component of the round, there is a strong sense of solidarity, a reaction of sticking together.22

The emerging powers were keenly aware that their alliance was critical to enhancing their bargaining power and their ability to defend their interests—as one of their negotiators put it, ‘our strength lies in the group’.23 Even after the Doha breakdown, China, India and Brazil remained prime targets of the United States, and the threat of differentiation and being denied access to SDT continued to knit them together. As one representative put it, the BIC ‘still tr[ied] as much as possible to stay as one’.24 The emerging powers continued to maintain that, as developing countries, they should have access to SDT and be entitled to the same exemptions as other developing countries. The BIC insisted that the principles of SDT ‘should be fully preserved and for all members’, and identified this as a ‘red line’ on which they were unwilling to budge.25 The strategic alignment among the emerging powers that characterized the Doha round thus proved durable and enduring beyond the collapse of the round.

For China, forming alliances—‘a group of wolves’ as its above-cited negotiator put it—has been central to its strategy at the WTO. Both during and after the Doha round, the enduring alliance it formed with Brazil and India was critically important in enabling it to defend its interests against pressure from the established powers. At the crux of this alliance, uniting the emerging powers, lay the issue of SDT. But despite lasting nearly two decades, as tensions in the trade regime and the battle over SDT escalated, the emerging power alliance ultimately fractured. One by one, China's key allies abandoned it—first Brazil in 2019, followed swiftly by India in 2020. By defecting from the BIC alliance, Brazil and India left China alone and isolated on the central issue of SDT.

Escalation of the fight over SDT

The conflict over SDT intensified significantly under the Trump administration amid the US–China trade war. While seeking to restrict SDT for all large emerging economies, the United States' primary concern is China. As the world's largest trader and second largest economy, China now accounts for 16 per cent of global GDP (compared to India and Brazil at just 3 per cent and 2 per cent respectively) and 12 per cent of total merchandise trade (compared to India and Brazil at 2 per cent and 1 per cent).26 These disparities have grown dramatically since the BIC alliance formed in 2003 (figure 1). In addition to the large and growing economic gap between China and its alliance partners, China is viewed as the chief threat to American hegemony—a ‘strategic challenger’ threatening US ‘power, influence and interests, [and] attempting to erode American security and prosperity’.27 Thus, as one US negotiator summarized: ‘Our problem is very much one-country focused—China.’28 In the battle over SDT, the United States' overwhelming concern is therefore with China.

Figure 1: Open in new tabDownload slide Growing economic disparities: GDP of the BIC Source: World Bank data.

The provision of SDT to large emerging economies such as China became one of the United States' chief complaints about the WTO, fuelling President Donald Trump's claims that the organization systematically disadvantages the United States and constitutes ‘the single worst trade deal ever made’. According to Trump:

The WTO is BROKEN when the world's RICHEST countries claim to be developing countries to avoid WTO rules and get special treatment. NO more!!! Today I directed the US Trade Representative to take action so that countries stop CHEATING the system at the expense of the USA!29

As a White House memorandum put it in more measured terms, ‘the WTO continues to rest on an outdated dichotomy between developed and developing countries that has allowed some WTO members to gain unfair advantages in the international trade arena’.30 This alleged unfairness of the system became a key justification for the US turn away from the WTO, which began under Trump and has continued under President Joe Biden.

Amid Trump's assault on the WTO—which included paralysing its dispute-settlement mechanism by blocking Appellate Body appointments, unilaterally imposing tariffs in blatant violation of WTO rules, and repeatedly threatening to pull out of the institution entirely—one of the few areas where the United States continued to actively engage with the WTO was on the issue of SDT.31 Trump directed US officials to ‘use all available means’ to secure changes to prevent emerging powers from claiming developing country status. In February 2019, the United States submitted a proposal for a radical change in how SDT operates. Insisting that WTO agreements should be ‘reciprocal and mutually advantageous’, it called for an end to the practice of allowing states to ‘self-designate’ as developing countries.32 The United States proposed that the WTO adopt criteria for SDT, whereby a country would be ineligible if it is: (1) a member of the OECD or in the process of accession; (2) a member of the G20; (3) considered a ‘high-income’ country by the World Bank; and/or (4) accounts for more than 0.5 per cent of world merchandise trade.33 These criteria would exclude China, India and Brazil from accessing SDT in all future WTO agreements.

This marked a pronounced shift in US strategy. After over a decade of increasingly vociferous complaints about SDT, the United States had now taken concrete action by tabling a proposal to overhaul SDT fundamentally and comprehensively in WTO law. This move was all the more striking given that the United States had otherwise largely disengaged from the institution and failed to provide concrete proposals for reforms in other areas, such as the Appellate Body. In addition, the United States unilaterally revoked access to SDT for many emerging economies under its own national trade laws.34 The United States also enlisted the support of other established powers, such as the EU and Japan. Collectively, as part of the Trilateral Initiative, they made SDT one of their primary objectives for WTO reform, arguing that self-designation of development status ‘inhibits the WTO's ability to negotiate new, trade-expanding agreements and undermines their effectiveness’, and calling on emerging powers to ‘undertake full commitments in ongoing and future WTO negotiations’.35 The EU issued a similar proposal for establishing criteria for SDT, mirroring that of the United States.36 Both the EU and US explicitly identified China as a country that should not have access to SDT.37

Amid this escalation of the SDT battle, two of the three BIC allies remained united. China and India responded swiftly to the US proposal with joint submissions of their own, insisting that SDT is a ‘fundamental’ and ‘unconditional right’ of developing countries, which ‘must be allowed to make their own assessments regarding their own developing country status’.38 They described any attempt to ‘water down’ SDT or differentiate between developing countries as a ‘recipe for intractable deadlock in negotiations’.39 Emphasizing the large gap that remains between emerging and advanced economies, and the policy space needed to continue their economic development, they argued that access to SDT is essential for ensuring ‘equity and fairness’ in the WTO system.40 In the words of China's Ambassador to the WTO, ‘we will never give up the institutional right of SDT granted to developing countries’.41 India, likewise, described SDT as ‘an integral part of the multilateral trading system’ and ‘a non-negotiable right’ of all developing countries,42 insisting that it ‘should be preserved in all current and future negotiations’.43 Importantly, however, while China and India remained strongly united on SDT, Brazil made a very public and striking defection from the alliance.

In March 2019, Brazil announced, in a joint statement with the United States, that it was relinquishing its claims to SDT in WTO negotiations. This marked a dramatic about-face in Brazil's strategy and alignment at the WTO. Brazil not only abandoned China and India on the core issue that formed the basis for their alliance, but switched sides to join the United States, throwing its support behind US efforts to restrict their access to SDT. The announcement came following a meeting between Presidents Jair Bolsonaro and Trump at the White House. In exchange for Brazil agreeing to forgo the use of SDT in future WTO negotiations, the United States agreed to support Brazil's bid to join the OECD.44 Not long after this, Brazil went even further, joining the United States in attacking China's ‘non-market-oriented policies and practices’.45 Remarkably, Brazil turned from allying closely with China and India in leading Southern coalitions in opposition to Northern dominance at the WTO, to allying with the United States in opposition to its former allies. In the words of one analyst writing for a Southern NGO active on trade, Brazil ‘has now changed its positions so radically that it appears to be beyond comprehension’.46 But this profound shift in Brazil's alliance strategy at the WTO has reflected broader, and equally significant, changes in its foreign economic policy goals and strategy.

Brazil's alliance with China and India was born during the Worker's Party (PT) government of President Lula (2003–2010). Brazil's identity as a developing country was then central to its foreign policy strategy, which emphasized South–South solidarity, cooperation and shared struggle against the traditional dominance of the global North in global governance. Southern coalition-building served Brazil's aspirations to boost its status as a ‘rising star’ on the international stage, strengthen its position in international organizations, and support its efforts to gain greater voice and influence in decision-making.47 At the WTO, Brazil presented itself as a leader of the developing world, defending and promoting the interests of the global South. Its alliance with India and China formed the basis for its leadership of the G20T, which propelled Brazil into the WTO's inner circle of power.48

The election of Bolsonaro, a right-wing populist who openly expressed his admiration for Trump, undoubtedly marked a significant shift in Brazil's role conception and alliance strategy. Bolsonaro, who assumed office in 2019, has been characterized as implementing ‘the most radical foreign policy change in living memory’, seeking ‘near-automatic alignment with the Trump administration’.49 This included a more confrontational and belligerent approach to China. But Brazil's abandonment of the BIC alliance at the WTO cannot be attributed solely to Bolsonaro.

Within the WTO, Brazil had already begun reducing its emphasis on South–South solidarity and cooperation before the Bolsonaro government took office. aThis was spurred in part by the frustration of its powerful agribusiness industry with the Doha breakdown and the WTO's negotiation paralysis, which had prevented Brazil from making gains for its agricultural exports, and which both its industry and its negotiators blamed primarily on China's and India's inflexibility.50 Brazil began demonstrating a more flexible and pragmatic, rather than identity-based or ideologically driven, approach to alliances, which included greater willingness to partner with developed countries, even former foes, to pursue its export interests.51 Most significantly, Brazil worked in close conjunction with the EU—which, along with the United States, had once been its chief adversary—to secure a WTO agreement on agricultural export competition (export subsidies and other forms of state support to boost exports) in 2015. In a further sign of its shift away from a strategy of developing world solidarity, Brazil also began launching numerous WTO disputes against its erstwhile allies, particularly to defend its agro-export interests. This included cases against China (over sugar import restrictions in 2018) and India (over sugar subsidies in 2019), as well as against other emerging economies such as Indonesia and Thailand.

A reorientation of Brazil's foreign economic policy goals and strategy was already under way before Bolsonaro. Beginning in 2014, Brazil entered into a severe economic recession—the worst in its modern history—battling high inflation and unemployment, alongside a growing political crisis amid the Lava Jato corruption scandal and the later impeachment of President Rousseff. In 2015, Brazil lost its investment-grade credit rating and saw its sovereign debt downgraded to junk status, limiting the availability of capital and increasing borrowing costs for both the government and the private sector. In this context, joining the OECD—a group of primarily advanced industrialized states—became one of Brazil's highest foreign policy priorities.52 Dilma Rousseff's PT government signed an OECD cooperation agreement in 2015, and the centre-right government of Michel Temer submitted a formal request to join the OECD in 2017.53

Joining the OECD was seen as critical to arresting Brazil's downward economic spiral and putting the country back on a secure economic footing.54 The OECD is viewed as a bearer of the liberal economic agenda. Prospective members are assessed on the basis of their alignment with the policies of existing members and degree of ‘like-mindedness’ towards the organization's ‘fundamental values’ of economic liberalism.55 Accession is based on internalization of the liberal economic norms of the organization, through adopting the OECD acquis—its 237 legal instruments and agreements. For Brazil, OECD membership was therefore seen as ‘a guarantee’ of its commitment to liberalization and market-orientated reforms.56 As a representative of Brazilian business put it, ‘in the eyes of investors, OECD membership is a seal of approval’.57 Brazil's objective was to show that it was adopting ‘international best practices’ and creating a more favourable ‘institutional–legal environment’ for business.58 In joining the OECD, the government sought to foster economic stability by improving the business environment and attracting foreign investment, increasing productivity and competitiveness, and boosting employment and growth. Brazil also sought to recover the investment-grade credit rating it had recently lost.

In a remarkable shift, dispensing with its former identity and alignment as part of the global South, Brazil was now eager to join the ‘rich countries club’. The OECD was seen as ‘a supporting group for how to become and stay a rich country’.59 While it had previously prioritized relations with developing countries, Brazil's bid to join the OECD was part of an effort to strengthen ties with the advanced industrialized states of the global North.60 When Mexico and South Korea acceded to the OECD, they were both formally required to withdraw from the G77 developing-country coalition in the UN, ‘reflecting the view that belonging to these groupings were mutually exclusive strategies’.61 Brazil is, notably, the only BRICS country that has sought OECD membership.

When Brazil submitted its OECD accession request in 2017, it expected that the process would be swiftly concluded within three years.62 Brazil had been cooperating with the OECD since 1998 and had been a ‘key partner’ since 2012; it was the most active non-member in the OECD's committees and legal instruments, participating in 24 committees and adhering to 36 of its legal instruments.63 Much to its surprise, however, the United States blocked Brazil's membership bid. In addition to Brazil, the OECD was formally assessing the candidacies of five other prospective members from Latin America and eastern Europe. The United States was concerned that the mass entry of these countries could lower the institution's standards and weaken its mission. It was with the aim of unlocking the process that the Bolsonaro government decided to relinquish future SDT at the WTO in exchange for US support to join the OECD. This proved successful, enabling Brazil to begin OECD accession negotiations in 2022.

Ironically, Brazil became eager to gain political recognition as a developed country at precisely the time when, in concrete economic terms, it was moving further away from that goal. Amid the worst economic recession in decades, which ‘follow[ed] a period of increasing prosperity and rising expectations’, Richard Lapper argues that ‘the psychological impact of the financial contraction was harsh’.64 When Brazil's economic fortunes were on the upswing in the 2000s—as illustrated in figure 2, with a surge in per capita GDP putting it in range of becoming a ‘high-income country’ according to the World Bank's classification and making it a prominent development success story—Brazil was happy to align itself with the developing world and present itself as a leader of the global South. Just a few years later, however, when its economy was in free fall, with its per capita GDP plunging, Brazil became desperate to be seen as a developed country and to join the OECD ‘rich country club’. Within Brazil, the decision to trade off SDT at the WTO in exchange for OECD membership was portrayed as ‘gaining the status of a developed country’.65 Relinquishing SDT not only unlocked Brazil's OECD membership bid, but was also seen as demonstrating that Brazil had reached ‘the point of economic maturity’ and ‘is able to negotiate on equal terms with rich nations’.66

Figure 2: Open in new tabDownload slide Brazil's shifting economic fortunes, as shown in per capita GDP Source: World Bank data.

At the WTO, Brazil deserted its former emerging power allies, throwing its weight behind US calls for differentiation and restrictions on access to SDT for large emerging economies. The United States immediately claimed Brazil's new stance, coming just a month after the American SDT proposal, as evidence that its proposal ‘was already gaining important support’.67 In a marked switch from its former insistence that it would never forsake its alliance partners in defending SDT as a universal and unconditional right of developing countries, Brazil now maintained that SDT should be viewed as a ‘flexible concept’.68 According to Brazil's new position, there are ‘significant differences in capability among developing countries and some who need SDT more than others’, and ‘as a matter of fairness’ access to SDT should therefore be based on the ‘true needs’ of individual countries.69 Moreover, SDT should ‘not be an excuse to avoid commitment to the trading system’.70 Brazil has suggested that the lack of ‘flexibility’ shown by its former allies has ‘undermined negotiations of new disciplines and ultimately threatened broader efforts to revitalise and strengthen the WTO’.71

In a further sign of Brazil's turn against its erstwhile allies, in July 2020 it allied with the United States in issuing a joint statement on the importance of ‘market-oriented’ conditions in the trading system, clearly aimed at China. In their joint statement, Brazil and the United States asserted that ‘market-oriented conditions are fundamental to a free, fair, and mutually advantageous world trading system’ and expressed

serious concerns with non-market-oriented policies and practices that have resulted in damage to the world trading system and lead to severe overcapacity, create unfair competitive conditions, hinder the development and use of innovative technologies, and undermine the proper functioning of international trade.72

Previously, Brazil had sought to remain neutral and had intentionally stuck to the sidelines of the debate over China's (non-)market economy status, insisting that ‘we are not going to point fingers’.73 But, now, it aligned itself firmly with the US against China. Condemning ‘the harmful effects of non-market-oriented policies and practices’, Brazil argued that the original purpose of the WTO was to promote participation in the world trading system ‘based on market-oriented policies’, and that ‘the principles of market economy and the pursuit of open trade … must be re-established at the WTO … Members should be prepared to live up to the WTO foundational principles.’ 74 China, not surprisingly, vociferously condemned such calls.

Brazil's shifting objectives have profoundly changed its strategy at the WTO. Where before it strongly emphasized its identity as a developing country and solidarity with the global South, it has now moved towards closer alignment with the United States, aspiring to join the ranks of the advanced industrialized states at both the WTO and the OECD. Brazil has abandoned the Third Worldism that was once the cornerstone of its foreign policy and formed the basis for its alliance with China and India at the WTO. Instead, Brazil has now placed itself firmly on the side of the United States against its former allies. The BIC alliance was based on the three countries' shared identity as emerging powers from the global South and their common desire to enhance their bargaining power vis-à-vis the traditional powers, the US and EU. Now, however, for Brazil, that ‘marriage of convenience’ was no longer convenient.75 Brazil abandoned the BIC alliance when it no longer served its strategic and economic interests.

Initially, despite Brazil's defection, China and India remained firmly united, standing together to counter US-led efforts to deny their access to SDT.76 However, by the following year, 2020, India too had split with China. The breach in the China–India alliance originated in the fisheries negotiations, which is one of the few active areas of WTO negotiations. The fisheries negotiations began in the Doha round but gained new impetus with the UN's announcement in 2015 of its Sustainable Development Goals (SDGs), which identified the need for a WTO agreement to eliminate harmful fisheries subsidies as an urgent international priority. Delivering a WTO fishing subsidies agreement was seen as essential to demonstrating the institution's continued relevance.

The world's fisheries are in crisis. Subsidies have led to overcapacity and overfishing, causing fish stocks to plummet. An estimated 90 per cent of global fish stocks are already fully exploited and almost a third are being fished at a biologically unsustainable level.77 This is not just an environmental issue but also a development issue, as many developing countries rely heavily on fisheries for food security and livelihoods. The objective of the WTO negotiations has been to reach an agreement to discipline subsidies that contribute to overcapacity and overfishing, as well as those that contribute to illegal, unreported and unregulated fishing.

In the fisheries negotiations, the issue of differentiation and SDT has become ‘explosive’ and ‘the central stumbling block in the negotiations’.78 Throughout the fisheries negotiations, stretching back to the Doha round, China and India (and once Brazil) had been closely allied, regularly tabling joint proposals defending their right to SDT.79 As a result of continued close cooperation between China and India, the post-Doha fisheries negotiations came to be characterized as ‘a showdown between the US on the one side and China and India on the other over SDT’.80 The United States has accused the emerging powers of ‘hiding behind their developing status to avoid taking on additional commitments’, and has even pushed for a fisheries agreement without any SDT.81

In March 2019, a month after issuing its proposal to establish criteria that would exclude emerging powers such as China and India from SDT in all current and future WTO negotiations, the United States tabled a similar proposal specifically for the fisheries negotiations. It proposed introducing a three-tiered system of subsidy caps, with countries classified on the basis of their shares of production and export, rather than their development status. Countries that accounted for more than 0.7 per cent of global production or exports—including China and India—would be required to cap and reduce their subsidies, while others would be subject to lesser or no cuts.82 India and China responded with counter-proposals calling for SDT for all developing countries.83 They remained united in rejecting any criteria for SDT, insisting on the ‘unconditional right’ to SDT and that developing countries must be allowed to self-designate.84

In a striking rupture, however, in July 2020—with pressure ramping up amid a push to conclude the agreement by the end of the year, the deadline set by the UN SDGs—India broke with China and abandoned their alliance on SDT. It issued its own proposal that would exclude China from access to SDT. India proposed that developing countries be exempt from prohibitions on subsidies that contribute to overcapacity and overfishing; however, a developing country would not be eligible for the exemption if (1) it engaged in distant-water fishing; (2) its per capita GNI exceeded US$5,000 for three consecutive years; (3) its share of global marine capture exceeded 2 per cent; and (4) the share of its agriculture, forestry and fishing sectors was under 10 per cent of its GDP.85 On this basis, the proposal would allow India, but not China, to access SDT.

This proposal represented a stark reversal of India's negotiating position. India had previously stood together with China in insisting that SDT is a ‘fundamental’, ‘unconditional’ and ‘non-negotiable right for all developing members’ that must be ‘fully preserved’ in all WTO negotiations.86 India had insisted that only developing countries themselves should be able ‘to decide whether they should be categorized as developing members’ to access SDT.87 It had rejected any attempt to establish criteria to differentiate between developing countries as a basis for restricting SDT, characterizing this as ‘a certain recipe for intractable deadlock in negotiations’ and signalling that it would block any such proposal.88 It had further argued fervently that depriving developing countries of the right to self-designate ‘would be a gross violation of the basic tenets of equity and justice and strike at the very legitimacy of the rules-based system’.89 Now, however, from calling for SDT to apply to all developing countries, India proposed that China should be excluded from access to SDT.

Several factors led India to recalculate its alliance strategy. The pressure on it increased as the negotiations moved towards an anticipated conclusion. There was a major push to secure an agreement, which was seen as a critical test of the future of the WTO, at a moment of crisis for the institution. Given the importance of the agreement for the environment and for many developing countries, for India to be seen as obstructing that agreement would risk attracting international opprobrium and carry significant reputational costs. Moreover, as WTO negotiations proceed towards an ‘end-game’, negotiators report that it is ‘increasingly difficult’ to maintain shared positions and that alliances often break down, becoming ‘dog-eat-dog’ with ‘every country negotiating for their own interests’.90 India was faced with a concrete proposal to differentiate among developing countries and establish criteria for SDT in fisheries, an approach that was gaining increasingly widespread support among the WTO membership, as well as among external stakeholders such as environmental and development NGOs. That US proposal ultimately became the basis for negotiations, with criteria for SDT forming part of the draft texts of the proposed new WTO fisheries agreement crafted by the chair of the negotiations.91 India's negotiators could read the writing on the wall. Differentiation, in some form, was becoming unavoidable. The question was where the line would be drawn—and on which side India would fall.

Once an asset, China's growing economic might had increasingly become a liability, threatening to jeopardize India's own efforts to secure SDT. Since the two countries first allied themselves in the early 2000s, China's rapid ascent had significantly widened the gulf between them: at that time, China's GDP and per capita GDP were both roughly twice the size of India's; by 2019, they were nearly five times as large as India's (India's per capita GDP was just US$2,100, compared to China's US$10,100).92 Similar disparities are also evident, if not even more striking, in fisheries.

In recent years, China has come to dominate the global fishing industry: it now has the world's largest industrial fishing fleet, and is the largest producer and exporter.93 It is also by far the world's largest subsidizer, spending more than US$6 billion annually on harmful subsidies, nearly three times as much as the next largest subsidizer, the EU.94 Those heavy subsidies have fuelled the outward expansion of China's industrial fishing fleet across the world's oceans, contributing significantly to the depletion of global fisheries resources. For many developing countries, in particular, as Greenpeace puts it, ‘the impact has been devastating’.95 In West Africa, for example, locals fishing from hand-hewn canoes are being forced to compete against China's industrial mega-trawlers. Declining fish stocks have caused incomes for local fishers to plummet, and led to reduced domestic food supply—in countries already suffering from high rates of poverty and food insecurity. While other industrial fishing countries have also played a role in the crisis, China is now the leading culprit, owing to the sheer size and scope of its global fishing operations. China is estimated to have nearly 17,000 vessels engaged in distant water fishing (DWF); in comparison, the EU's DWF fleet consists of 289 vessels, while the United States has 225 DWF vessels.96

Despite its emergence as the world's dominant fishing power, China has refused to relinquish its claim to SDT, insisting that any new fisheries disciplines ‘must’ include ‘meaningful SDT’.97 China's fisheries subsidies serve both economic and security objectives, making it fiercely resistant to accepting any restrictions on them. But China's resistance is also tied to broader systemic concerns. From China's perspective, any proposal at the WTO that erodes the distinction between developed and developing countries, or threatens the privileges afforded to it as a developing country, is a threat.98 The stakes go beyond fisheries, as a negotiator explained: ‘If China agreed to accept differentiation here, it would create a precedent … The moment China were to give an inch here, they [the United States and others] would use it in other areas of the negotiations.’99 Hence China's intense resistance to differentiation or the creation of criteria to limit access to SDT in fisheries.100

While China's heavy subsidies have propelled the explosive growth of its fishing industry, India has a much smaller and less developed fishery, and the subsidies it provides amount to only a tiny fraction of China's. In contrast to China's US$6 billion in annual capacity-enhancing subsidies, India spends just US$174 million—placing it 22nd on the list of the world's top subsidizers.101 And in contrast to China's massive distant-water fleet, India's fishery remains largely confined to domestic waters, meaning that the effects of its subsidies on other countries are far more limited.102

As a result, for India, linking itself with China had become increasingly detrimental to its own efforts to secure SDT. As the country with the world's largest fleet and highest subsidies, China's claims to SDT had become increasingly unsupportable. In the fisheries negotiations, it is clear that, as one US negotiator said of China, ‘they are the target’.103 India therefore determined it was better to break with China and go it alone. It made the strategic calculation that, by making its own case for SDT, it would have a greater chance of securing more favourable treatment. Moreover, as one negotiator explained, ‘India wants to see China's subsidies disciplined. They are afraid of China because China is fishing in their waters, and it's by far the biggest fleet in the world.’104 India wants to grow its own fishing industry, giving it reason to seek SDT for itself while limiting that accorded to China. As another negotiator summarized:

India needs to feed 1.4 billion people; they don't have much protein and a big part of their stocks are overfished. So they need to fish elsewhere, which means they need to build up their fleet, which means they need to subsidize. And China is their biggest competitor.105

The explosive growth of China's fishing industry thus changed India's alliance calculations.

After a close alliance that had lasted for nearly 20 years, India now sought to distance and differentiate itself from China. Without mentioning China by name, India strongly criticized proposals, such as that by the United States, that would put countries with less developed fishing sectors ‘in the same category’ as countries with ‘highly developed industrialized fishing fleets’.106 It insisted that ‘those who have provided huge subsidies and depleted marine resources by engaging in unsustainable fishing must take higher responsibility’.107 Rather than demanding SDT for all developing countries, India—like Brazil—now called for SDT to be limited to ‘developing countries who need it’.108 It argued that ‘disciplines should focus on distant water and large-scale industrial fishing’ and that ‘fishing nations with large number of industrial vessels’ should be required to reduce ‘their harmful subsidies and capacity’, while SDT should be provided to countries with only ‘minuscule’ subsidies.109

This rupture in its alliance with China over differentiation and SDT represents a profound shift in India's strategy at the WTO. The principle that access to SDT is a fundamental right and that members have the right to self-designate as developing countries had been at the core of the China–India alliance at the WTO for nearly 20 years. But with its new position in the fisheries negotiations, India has now embraced, and become a proponent of, differentiation. By creating a framework for distinguishing between developing countries and making their access to SDT contingent on defined criteria, India violated what had long been considered a ‘red line’ for both itself and China operating together in WTO negotiations. Moreover, in proposing that China be excluded from SDT, India abandoned its closest ally on a core issue of contention in the multilateral trading system. While the action has taken place in the fisheries negotiations, the implications go far beyond that area, as it is widely believed that establishing differentiation and restrictions on access to SDT in fisheries would serve as a precedent and lead to a domino effect across other WTO negotiating areas.

It is important to note, nonetheless, that while India has on this issue effectively lined up on the same side as the United States against China, relations between India and the United States remain highly conflictual and combative. Unlike Brazil, India has not abandoned its claims to SDT, nor has it aligned itself with the United States on SDT or more broadly at the WTO. On the contrary, India and the United States remain fierce adversaries in the fisheries negotiations—with India staunchly defending its right to SDT, which the United States is seeking to restrict—as well as across many other areas of WTO negotiations, such as agriculture. Indeed, although a limited fisheries agreement was reached at the 2022 ministerial meeting, proposed disciplines on subsidies that contribute to overcapacity and overfishing—widely considered the core purpose of the agreement—ultimately had to be scrapped owing to this intense and intractable conflict over SDT, which threatened to scupper the entire agreement. While negotiations continue, the prospect of agreement on these key issues is dim.110

Despite their frequently divergent trade interests, Brazil, India and China formed a highly effective alliance at the WTO. The BIC alliance was forged in response to an external threat, centred on protecting the emerging powers from pressures from the United States and others to open and liberalize their markets. The core issue that united the emerging powers and provided the foundation for their alliance was defending their collective right to SDT. Their alliance enabled the emerging powers to successfully balance against the United States and other traditional powers and to defend their interests in the Doha round and subsequent negotiations.

Yet, as this article has shown, the BIC alliance, a prominent feature of multilateral trade politics for nearly two decades, has now collapsed. For both Brazil and India, their alliance calculations changed—albeit for different reasons. Brazil was the first to defect from the alliance, relinquishing its claims to SDT in exchange for support for its bid to join the OECD, which, amid a severe economic crisis, had become a key policy priority. In a striking shift, Brazil not only abandoned its former alliance partners, but took sides with the United States. In breach of their collective, longstanding opposition to differentiation and insistence that SDT is a fundamental right of all developing countries, Brazil now placed its support behind US-led efforts to restrict its former allies' access to SDT.

India defected not long after Brazil. Originally, China's economic might made it an attractive ally for India, seeking a powerful friend in its corner. Over time, however, China's continued economic expansion heightened the tensions and contradictions in this alliance, shifting India's strategic calculations. As China's aeconomic weight has grown, vastly outpacing that of India and other emerging economies, its claims to SDT have become increasingly dubious—especially in fisheries, where its subsidies are considered particularly egregious given their harmful effects on other developing countries. Allying with China became less attractive as it became clear that China was the key target in the negotiations. For India, its alliance with China had become increasingly detrimental to its own efforts to secure SDT. As a result, India broke with China, by proposing that the latter should be excluded from access to SDT.

While both Brazil and India have cast off the BIC alliance, there are important differences between their respective positions in the shifting alliance politics of the WTO. Although India has abandoned its alliance with China, it still remains rooted in identity and alignment with the global South, and continues to present itself as a leader of the developing world. Brazil, in sharp contrast, has abandoned that identity and alignment entirely, and instead is now seeking to identify itself as a developed country. In addition, Brazil has aligned itself with the United States on the core issue of SDT, as well as on other highly contentious issues, such as the need for ‘market-orientated’ conditions in the trading system and criticism of China's ‘non-market-orientated’ practices. Unlike Brazil, however, India's relations with the United States at the WTO remain adversarial, as the US and India continue to battle over India's right to SDT. Recent dynamics in the trade regime are thus distinct from those at work in other areas of global politics. While in the realm of security, India has aligned itself with the United States in the Quad to counterbalance China, that has not been the case at the WTO, where the India–US relationship remains highly confrontational and combative. Although India may have dealigned from China, it has not realigned itself with the United States.

Does the collapse of the emerging power alliance at the WTO mean, then, that the BRICS sceptics—who doubted the ability of these states to form meaningful alliances—were right after all? The fact remains that the BIC alliance, which successfully endured for nearly two decades, profoundly transformed the structure of power at the WTO and enabled the emerging powers to increase their voice and influence in multilateral trade negotiations significantly. Yet in contrast to the expectations of the BRICS boosters, this alliance proved transient and impermanent. It would be unreasonable, however, to expect alliances in global economic governance to be fixed and unchanging. Such alliances result from the interplay of a complex set of forces. National interests and identities are not static, but may change with new governments, fluctuating economic circumstances and shifting configurations of power, making it unrealistic to expect alliance strategies to remain constant. The collapse of the BIC alliance is, however, likely to reduce these countries' collective bargaining power and influence at the WTO—their ability to be rule-makers rather than simply rule-takers. Growing conflict among the emerging powers in the trade regime may also make it less likely that they will be able to cooperate in other areas of global economic governance.

Having lost its core allies, China now finds itself isolated at the WTO, at a time when it has become the prime target of efforts to reform global trade rules. This raises the question whether the loss of its former allies will render China more vulnerable to such pressures, or whether it is now sufficiently powerful to defend its interests alone. When China first allied with Brazil and India in 2003, its share of global GDP was just 4 per cent. But China now accounts for over 17 per cent of the world economy, and it could become the world's largest economy within the next decade or so.111 Its ability to withstand external pressure has grown significantly, as indicated by its increasingly assertive stance in both regional and global politics. A key question going forward is thus whether China is now strong enough to stand on its own, without its former ‘pack of wolves’.

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