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New life for Doha round

Given the track record of the six year old Doha development round of trade talks, it seems premature to visualise progress let alone a breakthrough in the talks that have been going on in Geneva among diplomats and trade negotiators of the major countries. However, most recent news reports give room for some guarded optimism. Commerce Minister Kamal Nath said recently that India and the European Union have reached convergence on certain critical issues and would find more common ground soon. The German Chancellor on a visit to the country has stressed the importance of completing the Doha round before the U.S. Presidential elections. Brazil is convening a meeting of ministers from developing countries, including from India, China and South Africa to devise a common strategy for reviving the talks. After a high level meeting of the G-4 countries comprising the U.S., the European Union, India and Brazil at Potsdam, Germany in June ended in a failure yet again, practically everyone gave up hopes on a revival. The key issues remained as intractable as ever. The developed countries would not countenance a substantial cut in trade distorting subsidies and support to the farming sector without the developing countries allowing greater market access for their products, both agricultural and industrial. What made an already bleak picture practically irretrievable has been the expiry of the U.S. President’s fast track authority to negotiate trade deals without reference to the U.S. Congress. However, all WTO members reiterated their commitment to multilateralism and agreed to continue negotiations at Geneva.

Although the precise contours of what has been agreed upon have not been made public, the negotiators are reported to have arrived at draft modalities for agriculture and non-agricultural market access which, by and large, seem to be a big improvement over the earlier positions. The proposals on agriculture, especially, seem to go far in narrowing the sharp differences among countries. For instance the U.S. would sharply reduce its level of subsidies to its farmers by between 66 and 73 per cent to a range of between $13 billion and $16.4 billion a year. The EU would also follow suit and reduce its overall trade distorting subsidies to euro 27.6 billion from euro 110.3 billion every year. While in agricultural market access too a reasonable compromise seems to have been worked out, it is the package on non-agricultural market access (NAMA) that is seen as a major stumbling block as it fails to address the concerns of the developing countries and the less developed ones. Within the next two or three weeks, it will become clear if the perceived deficiencies in the draft modalities are removed, paving the way at last for a wrap up of the Doha round.

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