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Post Potsdam blues

The failure of the G-4 countries — the U.S., the EU, India and Brazil — at Potsdam (Germany) to break the deadlock in certain critical areas of the Doha development round was not unexpected. Agricultural trade related issues continue to be intractable.

India’s well-known position of protecting its small and marginal farmers by retaining its tariff walls (one of the highest in the world) and through special products provisions was not up for bargaining. Commerce Minister Kamal Nath who dramatically walked out of the meeting seemed to suggest that the impasse was there to stay, never mind that the latest failure to reach an accord brings the entire Doha Round to the brink of collapse.

However, as the dust settles down, questions are being raised over the appropriateness of India’s strident stand. Can the inherently complex negotiations be expressed in stark terms as “Them versus U.S., the prosperity of farmers (in the U.S. and the EU) versus livelihood issues of Indian farmers? Besides, even the veneer of a united approach by all developing countries seems to be wearing thin. There has been some criticism in Brazil to siding with India.

It has been pointed out that China, with exports of over one trillion dollars and a 10 per cent share in world trade, has opted to be an interested spectator rather than grab a leadership role which it is entitled to. India’s merchandise exports are at $150 billion and its share in world trade is slowly creeping up to 1.3 per cent. India’s well-known strengths are in IT and other services exports. That would suggest that the policy on multilateral trade should be more flexible to reap some benefits such as in the movement of personnel.

After Potsdam, the prognosis for the Doha Round looks grim even as trade negotiations continue at Geneva. A breakthrough, however improbable, will strengthen the WTO and multilateral trade. Potsdam was probably the last chance for a smaller, but influential group of countries, to come up with an acceptable framework for an eventual wrap-up.

C. R. L. NARASIMHAN

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