Open Forum

New Delhi, 11 September 2009

Delhi To Geneva

MIXED SUCCESS IN WTO TALKS

By Dr P K Vasudeva  

The recently-concluded World Trade Organisation mini-ministerial meeting in Delhi early this month has raised two questions: One, has India been able to re-energize the Doha Round? Two, has the mini-ministerial provided the 'value-addition'?

Well, the answer to both these questions is yes/no. It was a pyrrhic victory for India as it succeeded in getting the trade ministers of 35 countries to agree to resume negotiations in Geneva later this month. But the main stumbling block — the opening of developing countries’ agriculture and services sectors to exports from developed countries, keeping the flexibility of imposing duties when the need arises, and the issue of the huge hidden subsidies provided to American and European farmers — still remains.

However, the silver lining is that the trade ministers representing the broader membership of the WTO are said to have lifted the logjam in the Doha Round of talks to clinch a global free trade agreement on goods and services. The two-day meet got a unanimous affirmation that chief negotiators and senior officials should restart the entire process as there was need to conclude the Doha Round within 2010. It was decided that the work agenda for the least developed countries (LDCs) covering all specific issues across the spectrum should be put on a fast-track for negotiating convergence with the WTO chief, Pascal Lamy, and Chairs of Negotiating Groups taking the lead in this process.

This was possible as the mini-ministerial group clearly recognized that differences subsist on issues and intensifying the negotiations was the first step towards bridging the gaps. The Doha Round, which began in 2001 in the Qatari capital, has been stalled on differences between the rich and poor countries over agricultural subsidies and non-agricultural market access (NAMA) i.e., industrial goods and the last ministerial meet floundered in July 2008.

Farmers in India are convinced that their produce could become competitive if both the US and Europe did not fund their farmers with huge hidden subsidies. The two worlds remain as divided as they were, and nothing has really changed since July 2008. India, for instance, has very little options. If it opens its agricultural sector to the developed world, it would be a betrayal of its farmers and of rural India, already facing the impact of some other free trade agreements signed earlier. Farmers’ suicides continue till this day, the recent being in the Vidarbha region of Maharashtra, despite the loan waivers and other welfare schemes, showing the tremendous distress, particularly in the non-irrigated farmland areas, which form the bulk of rural India.

There are even fears in certain quarters that the Government might relent on reducing or doing away with tariffs on NAMA as a trade-off to get more HI-B1 visas from America for the high-profile information technology sector. The US is extremely unlikely to change its stand on the basics, and in fact its trade representative Ron Kirk made it known in Delhi that rich developing nations such as India, Brazil and China had the added responsibility of making tough decisions in order to make the Doha Round successful.

However, he drew an instant retort from Brazil’s feisty external affairs minister Celso Amorim that developing countries had already made significant concessions while the rich nations only paid lip service to the development dimensions of Doha’s agenda. They had brought nothing substantive to the table. Worse, the recent global economic crisis, had affected both developed and developing countries, wherein the two had difficulties in living up to the reforms and commitments the new Doha round would require.

Indeed, much has changed across the world since July last year due to the deepening economic crisis and the scars it left, particularly in the rich nations.  As a result, they have become even more protectionist. For example, if the US makes any commitment it would have to pass the scrutiny of its Senate, which will not be easy given the rising American unemployment figures. France, usually far more liberal and internationalist in matters of trade, has also turned more protectionists due to pressure from its trade unions.

Thus, the undercurrents at the New Delhi meeting and the official summary issued at its end, in fact, clearly demonstrate that none of the substantive issues had moved an inch towards resolution since the Doha round. From the Indian perspective, the fact that we were able to place our concerns--the need to move forward on services negotiations along with agriculture and industry rather than leave opening up of services for later --is however, a plus.

Realistically speaking it is unlikely that the round will conclude by December 2010. But then, trade negotiations involving more than 153 countries are bound to be a torturous process. Stumbling blocks are inevitable. But a 'development round' that fails to take on board the concerns of developing countries is a non-starter. It is time the developed world woke up to that.

Recall that the special safeguard measure (SSM) was one of the issues, which led to the collapse of the talks last year. While the US, backed by some agriculture exporting developing countries, was pushing for a less effective SSM (with high trigger points and a ceiling on the increase in import duties), India and China wanted the mechanism to be easier to operationalise.

Another area of disagreement was the issue of sectoral negotiations for reducing duties to zero on select industrial goods. India wants that the sectoral negotiations should be purely voluntary, while the US wants they should be linked to flexibilities in other areas like a lower reduction obligation in average tariffs. The issue related to the freedom of using the flexibility for keeping some items out of reduction commitment (anti-concentration) also needs to be settled. India should make efforts to work on informal timelines for sorting these out. ---INFA

(Copyright, India News and Feature Alliance)