Business   

WTO talks: missed opportunity financial scene

— PHOTO: AP

FAILED TALKS: Union Commerce and Industry Minister Kamal Nath at the World Trade Organization headquarters in Geneva, Switzerland, where crucial trade talks collapsed during the WTO ministerial summit on trade liberalisation recently.

After nine days of intense discussions at the WTO secretariat in Geneva, the trade talks involving 30 odd trade ministers collapsed at the end of July. In its seven-year history, the Doha round has alternated between hope and despair. Despite some impressive progress on several fronts — the most important achievement might well have been keeping the negotiations going all these years — a successful conclusion by way of a broad agreement on the key issues of agr iculture and trade has proved elusive all these years.

The disappointment among those who support multilateral trade is acute. Considerable labour had gone into the texts on agriculture and non-agricultural market access (NAMA). Trade officials meeting continuously at Geneva over the past year or so had helped narrow the differences considerably. The latest discussions probably came closer to a breakthrough than on any previous occasion but in the end the outcome has been the same. In many ways, there is an air of finality about it. Deeper meanings are also read into the failure. Certainly the talks had raised hopes of a breakthrough.

According to reports, 18 of the 20 items on the agenda had been agreed upon. The nineteenth item, dealing with the arcane issue of the special safeguard mechanism, a right of developing countries to raise tariff to protect their farmers from an unexpected surge in imports, proved to be the deal-breaker. Ranged against the U.S. were India and China. The U.S. wanted to set the trigger — the point at which the tariff protection will kick in — at higher levels than what India and China would accept. The twentieth item dealing with cotton subsidies, a resolution of which would have benefited farmers in some of the poorest countries in West Africa, was not taken up at all.

Chances of reviving the Doha round appear slim although practically all those who participated in the Geneva talks say that they want to build on their considerable achievements there. In a practical sense, it is highly unlikely that such continuity can be maintained. It will not be possible to move ahead as if the talks had only stalled briefly.

Individual countries may harden their stance now that a deal has once again proved elusive. Many of them claim that they have laid all their cards on the table at Geneva. They may not get the same backing from their political masters in the future. There is a shift towards protectionism in the U.S. and the E.U. Already the U.S. Congress dominated by Democrats seems less well disposed towards free trade.

A new President will take charge next year and the chances of his pushing for a multilateral trade deal, ahead of other priorities, appear slim. There will be general elections in India next year. That is why the Geneva ministerial may well be the last chance attempt to fix the Doha round. Before its start, few expected the meeting to fare better than the numerous previous ones.

The development agenda in the Doha round was always relegated to the background. Without the rich countries, the U.S. and the E.U. making substantial concessions in agriculture and trade issues, the Doha round would not have gone forward. Apparently major concessions were made by the U.S and the E.U. but the talks tripped over a seemingly innocuous rule connected with agriculture.

Cynics would, of course, argue that with global prices of farm products being at a historic high, the question of subsidising the rich countries’ farmers should not arise. In other words, all the subsidy cuts agreed to in the negotiations have little practical relevance. India, especially, is in a peculiar position. Even as it was arguing strongly against subsidies by the U.S. and the E.U., India has been an importer of wheat besides oilseeds and pulses. Obviously it is in its interests to get them at a cheaper rate.

The other big difference this time has been the fact that while the WTO discussions are centred on protection for domestic agriculture from imports, India and a few other countries had stopped exports of non-basmati rice and a few other items in order to safeguard domestic consumers. That has been seen by many food importing countries to be another form of protectionism.

There have been criticisms over the conduct of the mini-ministerial. Just seven countries — Australia, Brazil, China, the E.U., India Japan and the U.S. — were given the task of negotiating for a breakthough. All other participants as well as many more not present at Geneva were expected to take the cues from the smaller number.

As a strategy, this arrangement might have worked. But it glosses over the fact the smaller group, though the most influential, are not necessarily representative of the whole group.

The WTO rules confer veto powers on a member, however small its stake may be in international trade. Besides, there is a need to redefine the interests of each group — the rich, the poor, the developing and so on. At previous meetings, developing countries broke ranks. This time too differences cropped up in the negotiating stance of countries that were earlier perceived to be in the same groups.

Finally, the significant roles of India and China in the recent trade negotiations suggest that the world has moved a long way since the start of the Doha round. An agenda for the 1990s cannot be relevant for the first and second decades of a new century.

Rich countries dominated all previous trade meets. For India, the new heightened role also calls for certain important responsibilities towards other countries looking to it for leadership besides its own trading interests.

India’s trade policy and its negotiating stance in future meetings may well have to balance these sometimes conflicting interests.

C. R. L. NARASIMHAN

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

WTO talks: missed opportunity financial scene
Now a cyber Silk Route
Climate change: industry’s lukewarm response
Guideline value: where it exceeds real value

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu