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Doha round and global trade

The key findings of a recent WTO report on global trade are hardly surprising. During 2007, the growth in world trade moderated substantially to touch 5.5 per cent — the figure for 2006 was 8.5 per cent. It may slow down even further this year, recording around 4.5 per cent. The reason for the trade deceleration — the perceptible slowdown in the economic growth of developed countries not being fully offset by the strong performance of emerging economies — has already been highlighted by several other international organisations such as the IMF and the World Bank. The turbulence in the global financial markets has also made collation of trade data an extremely complex exercise. Protectionist tendencies are gaining ground in the United States and a few other developed countries. The WTO is right in emphasising the need for “a reinforced trading system as an essential anchor for economic stability and development.”

The WTO’s recommended solution — an early completion of the long delayed Doha development round — is unexceptionable. However, India and other developing countries which have played a leading role in the negotiations so far have to be wary of any arrangement that does not address their major, long-pending concerns. There has been a flurry of moves at Geneva suggesting that differences among major trading countries have been narrowed down. The chairperson of the negotiating group for non-agricultural market access (NAMA) has said that he is ready to enter the final round of negotiations. In agriculture, negotiators hope to iron out the differences over sensitive products, tropical products, and long-standing preferences within a week. An agreement on the modalities will specify the tariff cuts and subsidies in agriculture and on industrial products to be implemented by different countries. There is the danger that, along with some other developing countries, India might be pushed into an unequal bargain. Significantly, the other contentious issues of the Doha round such as services are being set aside for the time being. When the Doha round was launched in 2001, it was agreed that agriculture and other developmental issues would be addressed in a comprehensive manner and that, simultaneously, developing countries would gain additional market access for their industrial products. There are no indications that the effort for a consensus is proceeding on those lines. It is time the Government of India formulated a clear stand.

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