The Hindu : MR. ZOELLICK COMES CALLING

Online edition of India's National Newspaper
Wednesday, Feb 18, 2004

Opinion

Opinion - Editorials

MR. ZOELLICK COMES CALLING

THE WORLD TOUR of United States Trade Representative Robert B. Zoellick to breathe new life into the stalled Doha round of trade talks of the World Trade Organisation has hit an early road block in New Delhi. India has not said it is uninterested in a revival of the WTO negotiations. But, as Union Commerce Minister Arun Jaitley has pointed out on the occasion of Mr. Zoellick's visit, the many proposals in the U.S. to place restrictions on offshore business process outsourcing (BPO) make it difficult for India to support the larger agenda of WTO-driven trade liberalisation. The BPO issue has become a useful tool for the U.S. in the multilateral trade talks. In contrast to the situation of less than a year ago, when the U.S. was clear that it would not place any restrictions on offshore outsourcing, it now suggests that this is conditional on India moving much more rapidly to open up its agriculture and service sectors to import competition. This is a linkage that cannot be justified. The Doha agenda is about progressive liberalisation, where the dispute is about the pace of removing existing restrictions on trade. On the other hand, the Indian concern is about U.S. proposals to erect new barriers to trade in BPO. There is clearly no connection between the two sets of issues and the U.S. should not be allowed to hold outsourcing hostage to India giving up its interests in the Doha round.

In a year of presidential elections, the USTR has been brave enough to push for a fresh impetus to the WTO negotiations, which have remained in inertia after the Cancun collapse in September 2003. Following on his proposal in January that the members of the WTO focus this year on ending the impasse in the key issues of agriculture, industry and services, Mr. Zoellick is engaged in bilateral meetings to push his case. But in all the capitals visited so far — Tokyo, Beijing, Singapore and New Delhi — the USTR has heard the same message, one that he will doubtless hear during the rest of his world tour. Most of the WTO's members share the American concern about the state of play in the Doha round; where they differ from the U.S. (and the European Union) is on how to break the deadlock in the most contentious area of trade in agriculture. Despite making many noises about being willing to travel the extra mile to accommodate the interests of the group of 20 (G-20) developing and middle-income countries and the cotton-cultivating countries of West Africa, neither the E.U. nor the U.S. has come up with concrete proposals to more rapidly reduce farm subsidies and lower tariffs on agriculture. This was evident most recently in official-level talks among the G-20, the E.U. and the U.S. in Nyon, Switzerland, where the developing world saw a continued E.U.-U.S. inflexibility in agriculture.

The only change since Cancun has been the U.S. distancing itself from the E.U. on the so-called Singapore issues. In order to further its own agenda relating to agriculture and services, the U.S. no longer shows an interest in supporting the E.U. demand for new global treaties in foreign investment and domestic competition laws. If this differentiation leads to a formal deletion of these issues from the Doha agenda, it will do a lot to revive the larger WTO talks. But that will not be enough. Until the U.S. and the E.U. demonstrate that they are willing to reduce their protection of domestic agriculture, all of Mr. Zoellick's efforts will be in vain.

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