Special Article

New Delhi, 29 August 2009

Doha Round

ALL EYES ON DELHI MEET

BY Dr. P K Vasudeva

As New Delhi gears up to host an informal two-day meeting of trade ministers beginning today, India will lend a healing touch to help revive the stalled Doha Development Round of the World Trade Organisation (WTO). Ironically, just over a year ago, in July 2008, the global media largely blamed India for the collapse of multilateral discussions at Geneva. “The international media treated us unfairly. It is time for us to set the record straight,” Commerce Secretary Rahul Khullar is learnt to have said. And, perhaps that is what the Government is trying to do as it chairs the meet.

Other than 40 trade ministers and the WTO top brass, including director-general Pascal Lamy, attending the meeting, its outcome will have an impact on over 100 WTO member countries. The participating nations are key members of various WTO lobby groups like the G-10, Nama–11, Cotton 4 and G-90. India is a member of WTO groups like the G-33, which wants to have flexibility in maintaining higher duty on certain farm products, as well as the G-20, which is a coalition of developing nations demanding a fair environment for global agriculture trade. Invited WTO members include Pakistan, China, Indonesia, Brazil, Argentina and Japan.

The objective is to keep contentious issues aside and build consensus instead. So, rather than haggle over specific offers from member nations, New Delhi will seek to get ministers to focus on the bigger picture: the need to close the Doha Round, which has been deliberated upon since 2001.

The mini-ministerial meeting may iron out differences in perceptions and lay the groundwork for a balanced and successful outcome of the Doha Round. In fact, the New Delhi meeting comes less than a month after India signed two free-trade deals, one with South Korea and the other with ASEAN – a clear indication that the country wants liberalised global trade. It so happens that after the global economic crisis, many countries, including developed nations, have turned protectionist. But fortunately for India, it has managed to ink two trade deals in this environment.

This apart, even as top negotiators from both the US and the EU prepare to attend the Delhi meeting, India has warned against trade-restrictive measures initiated by the two key WTO members. And, Commerce Minister Anand Sharma ensured that he highlighted these at the conference of Indian Diplomats held recently in the Capital.

The law enacting buy American provisions (by the US) is a case in point. Similarly, the imposition of non-tariff barriers to free trade is there for all to see. Indian consignments of pharmaceuticals bound for Africa are repeatedly held up in the European Union. Therefore, the heads of missions were urged to remain vigilant to such trends and enable the Government to respond to growing protectionism in the West.

New Delhi maintains that the meeting will not mean dilution of its earlier stand to protect the interests of poor farmers from the surge in cheap agricultural imports. In addition, it has been demanding that market access talks on industrial goods should be based on the parameters mentioned in a draft agreement released by the WTO in December, 2008. 

Clearly, the convening of the two-day mini-ministerial WTO meeting is a positive signal to get the stalled Doha Round negotiations going again. Negotiators are working overtime and an early agreement on a global trade deal will only be possible with more cooperation of all the countries. At the end a successful conclusion has a lot to offer in terms of sustainable solutions.

“World leaders at various forums have emphasised a successful result for Doha negotiations because they see the positive contribution that an improved multilateral trade regime will make to the economic recovery of the world,” is how Dr Harsha Vardhana Singh, Deputy Director-General, WTO is viewing the progress. Even though the negotiations are in their last mile and are expected to be complete by 2010, success in other more cumbersome issues such as climate change or the economic crisis would be even more difficult. 

Indeed, issues that led to the breakdown of the talks last year, like the flexibilities provided to developing countries through special products and safeguard mechanism for agricultural products, will be addressed on a priority basis. On a positive note Singh feels that “We are in the last phase of negotiating these issues, having travelled a long road which has accommodated India’s concerns in a major way.”

According to a study by the Peterson Institute for International Economics, a successful Doha round trade deal could boost the global economy by $300-700 billion a year, The figures that the Washington-based institute calculates are similar in size to stimulus packages deployed by the biggest countries to tackle the economic crisis, and underline how much is at stake in the long-running talks.

Delays in completing the round, now in its eighth year, prompted two leading trade economists at the institute -- Gary Clyde Hufbauer and Jeff Schott -- to examine the potential benefits. The economists estimated the boost to global exports from concluding the Doha Round could range between $180 billion and $520 billion annually, depending on how far-reaching an eventual deal turns out to be. The potential GDP gains are significant, between $300 billion and $700 billion annually, and well balanced between developed and developing countries.  

The Peterson economists looked at the impact on exports and imports of cutting tariffs and subsidies in agriculture and industrial goods, examine the broader impact on the economy, and then look at the possible impact of some proposed deals — some of which are still far from agreement. Proposed agreements in agriculture and industrial goods would increase exports by $65 billion a year, pushing up world gross domestic product by $100 billion annually, they said.

“The reason GDP gains are so large is that both imports and exports contribute to economic efficiency and income growth, and world two-way trade gains are more than double export gains alone,” they explained.  As such, proposals to create duty-free zones in the chemicals, electronics and environmental goods industries — sought by the United States but resisted by China and some other countries — would increase exports by a further $57 billion and the world economy by a further $104 billion a year.  

Liberalising services such as banking and telecoms could add another $56 billion to exports and $100 billion to world GDP. Helping developing countries trade more effectively by developing ports and customs, easing red tape and improving the service sector could increase world exports by $340 billion and world GDP by $385 billion.

Let us hope and let hope not in vain that the New Delhi meeting will be a resounding success and a step forward to iron out the differences between the developed countries on Doha Round. ---INFA

(Copyright, India News and Feature Alliance)