The Hindu : Opinion / Editorials : MOVEMENT IN DOHA ROUND

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Saturday, Jun 19, 2004

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MOVEMENT IN DOHA ROUND

A MEASURE OF scepticism may be warranted about yet another claim of a breakthrough in the deadlocked Doha round of the World Trade Organisation. However, there does seem a new political resolve among the most important players to agree by the end of next month on the framework for liberalisation of trade in agriculture. After meeting in Sao Paulo on the occasion of the United Nations Conference on Trade and Development, Ministers from India, Brazil, Australia, the United States and the European Commission (who in WTO-speak constitute the non-group of five or NG5) feel they now share a broad enough understanding for government officials to be able to fill in the details ahead of a make-or-break meeting in July. Of course, the new achievement has to be seen in perspective. First, the so-called breakthrough is only in agriculture and there are at least half a dozen other issues on the WTO agenda where the gaps are as wide as before. Secondly, nobody expects a treaty on agriculture to be finalised next month; the modest goal is to draw up a framework for a future agreement. But considering that divisions over agriculture brought all the problems in the Doha round out into the open, the indication of contours of an eventual pact in this sector will remove the biggest obstacle to revival of the larger WTO negotiations.

The NG5 Ministers claim that they have agreed that export subsidies should be gradually eliminated and domestic support significantly reduced, and that there must be a meeting of minds on market access. In all areas, the special concerns of the developing countries would be borne in mind. Bald as the new understanding looks, it represents a definite departure from the pre-2004 positions of both the rich and poor countries. The abolition of export subsidies is a major concession the E.C. and, to a lesser extent, the U.S., has had to make. Likewise, both trading powers have been extremely reluctant until now to make deep cuts in domestic farm support. Clearly, the two most powerful members of the WTO have realised that they cannot hope for any progress in the Doha round without making commitments on these two sets of farm issues. The last stumbling block was market access, or import duties: A consensus now seems to be emerging that a recent proposal of the group of 20 (G-20) developing countries is more likely to find widespread acceptance than a E.C.-U.S. package that would have made the poor countries cut tariffs far more than the developed nations.

India's foremost interest in the WTO talks has been to protect agriculture from a flood of imports. This appears to be reflected in the G-20 proposal, which simultaneously makes a modest provision for larger market access. It is based on three important criteria. One is that all countries will reduce import duties but the burden will not fall disproportionately on the developing economies. The second is that the poor countries will be entitled to exemptions and a longer time frame for implementation. Finally, additional market access will be provided in the form of tariff rate quotas (TRQs) under which a limited amount of imports will be allowed at lower duties. This would apply to both developed and developing countries. It is a small concession intended for the U.S., which has made market access a central demand in the negotiations. The tariff reduction formula that countries will follow, the spread and size of the TRQs, and the implementation period will together decide whether the framework will satisfy all countries to a reasonable degree or go the way of most other global trade agreements in benefiting only the developed economies.

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