:: Paranjoy Guha Thakurta

Platitudes, not concessions, will dominate trade meet

By Paranjoy Guha Thakurta

Aug 30 : The informal meeting of over 35 trade ministers from across the globe that will take place in New Delhi on September 2-3 is India’s effort to resume the Doha round of negotiations at the World Trade Organisation (WTO) that had been stalled for more that a year. However, there are strong indications that most of the outstanding issues that have stalemated the WTO’s Doha round of talks (that started in the capital of Qatar in November 2001) would remain unresolved. In fact, there is a possibility that new issues linking climate change with trade would harden positions in both developed and developing countries, making it that much more difficult to conclude the negotiations in the foreseeable future.

India has been seen by some as a "spoiler" for the manner in which this country has articulated the views of close to a 100 developing countries that argue that sovereign nations have the right to protect livelihoods (and not just trade) by helping subsistence farmers (not giant agri-business corporations). In July 2008, the WTO talks at Geneva broke down on the issue of a special safeguards mechanism in the agreement on agriculture that allows a country to temporarily increase customs tariffs in response to a surge in import volumes or a sharp decline in prices. India and China wanted a 10 per cent import surge to be the cut-off point whereas the US wanted the proportion to be 40 per cent.

The other issue that led to a breakdown of talks related to the demand by four cotton growing West African nations (Mali, Benin, Burkina Faso and Chad — called the C4) for a sharp cut in US government subsidies to cotton farmers in that country. In October 2007, the WTO had ruled against the American government’s subsidies and export credit guarantees to its cotton farmers and categorically stated that these did not comply with WTO regulations. The C4 countries believe that American subsidies have destroyed the livelihoods of an estimated 20 million cotton farmers in Africa by pricing them out of the market.

In the Doha round, the concerns of the poor countries were sought to be addressed through "special and differential treatment" when it came to reduction of import tariffs. It was also stated that there would be "less than full reciprocity" between developed and developing countries when it came to cuts in import tariffs. In other words, rich countries were supposed to reduce duties relatively more than poor nations. None of this has either happened or is likely to take place after the Delhi talks.

To some extent, the Indian government is aware of challenges that lie ahead in resuming talks at the WTO. A note that has been circulated stated that "the road ahead would not be easy… there are a host of unresolved issues, not just in agriculture and non-agricultural market access (NAMA) but also in services, TRIPS (trade related intellectual property rights), rules…" Yet, the same note adds that "it is now time for (the 153 countries that are) members (of the WTO) to draw these separate threads together, weaving them into a response of solidarity to move the multilateral process forward…"

It is well known that the US and the European Union (EU) want to harmonise tariffs on chemicals, industrial machinery and electronic and electrical products across the globe to a level as close to zero as possible. It is now believed that the US and EU want to link trade with environmental issues by calling for the drawing up of a list of "environmentally friendly" products and arguing for the need to impose higher "carbon" tariffs on the products of countries that do meet emission targets. This is bound to be opposed by India, China and most developing countries.

On agricultural subsidies, the US and EU would agree to bring down these down drastically from the "bound" (or maximum) levels of roughly $48 billion and $100 billion respectively to $15 billion and $22 billion that would still provide scope for increasing farm subsidies substantially from current "applied" (or actual) levels of $7 billion and $15 billion. Once again, such proposals would not be acceptable to developing countries including India.

At one level, the Manmohan Singh government appears keen on "engaging" with the West and not confront the US and EU too hard on agricultural subsidies and NAMA. Yet, at a time when the international economic recession has not yet run its full course (despite a lot of optimism about so-called "green shoots of recovery" sprouting) and with world trade expected to fall by 10 per cent for the first time in living memory, despite the pro-West elements in the Third World, it appears unlikely that developed countries will be successful in following a "divide and rule" policy by offering "carve-out" lollipops to specific developing countries.

India’s commerce and industry minister Anand Sharma stated at a meeting of the Federation of Indian Chambers of Commerce and Industry on July 29 that "a quick closure (of the Doha round) is unlikely, given the large number of issues remaining unresolved… A lot of momentum has been generated to restart the Doha discussions but the road ahead is filled with challenges…"

He said there had been demands for a "new approach" to the negotiations, one that would skip the "modalities" stage and move straight to "notifying individual commitments" by specific countries. "These new approaches are all a euphemism for getting members to reveal where their sensitivities lie. This is not acceptable to India and the majority of the WTO members. There must first be agreement on modalities", Mr Sharma declared, adding that "…the Doha round has seen eight years of hard negotiating work. Selectively reopening issues can jeopardise this delicate balance".

Two earlier rounds of trade negotiations, the Tokyo round and the Uruguay round, had lasted six years and more than seven years respectively. It would be unrealistic to expect the Doha round to be concluded in a hurry, despite India’s best intentions. The impending Delhi meeting of trade ministers and representatives of over 50 countries, is unlikely to go beyond platitudes.

Paranjoy Guha Thakurta is an educator and commentator