Opinion	E-mail PagePrint Version

Business Standard of New Delhi, 12/22/08

All hope of a multilateral trade pact some time in the near future has been dashed after the failure of yet another bid by the World Trade Organisation’s (WTO) ever active director-general, Pascal Lamy, to get a breakthrough in the stalled Doha round negotiations.

The abandoning of plans to hold a fresh mini-ministerial meeting in Geneva later this month is the inevitable consequence of the lack of progress in narrowing the differences between the developed and the developing countries on the key issues of agricultural subsidies and non-agricultural marketing access (Nama), and some others.

That the Geneva talks were headed for doom had become clear on December 6, when the fresh drafts on agriculture and Nama circulated by the WTO secretariat were given the thumbs down by most negotiators.

These texts made the tactical mistake of bringing to the fore the demand by the US and other developed countries for tariff eliminations in sectors like chemicals, and electrical, electronics and industrial products without resolving the more critical (at least, from developing countries' viewpoint) livelihood-related issue of a special safeguards mechanism.

There was no way that, at this stage of their development, countries like India, China and others could accept sectoral tariff reduction, especially in the middle of an economic downturn. What was also missing in the fresh drafts were satisfactory solutions for numerous other contentious issues, concerning intellectual property rights, the rules governing services, the disputes settlement mechanism and trade-distorting subsidies, especially the US cotton subsidy.

On the issue of a special safeguards mechanism to check import surges in the developing countries, the new texts merely allowed imposition of higher import duties without going as far as to permit the additional duties to exceed the pre-Doha rates, if needed, to effectively prevent the dumping of cheap, mostly subsidised, products.

Unless all such issues are amicably settled to the satisfaction of India, China and other developing countries, it is futile to expect a final accord. Gone are the times when the US and the European Union could dictate the agenda and impose terms on semi-ignorant, even reluctant, developing nations.

Indeed, what began as a “development” round, with the premise that unfulfilled commitments from the Uruguay Round would get top billing, has morphed into an aggressive stance by the developed country bloc, in particular by the United States.

But with the emergence of India, China and Brazil as more significant players in the global system, the power dynamics in trade negotiations have changed. If the talks had any chance of success, it was when the world economy was doing well and rapidly growing countries could afford to make concessions.

Now that the developed countries are in recession and the developing countries have problems of their own, no one will be in a mood to make concessions, for fear of the domestic economic and political consequences.

If the Doha Round is to be salvaged from the present wreckage, it may be best to give everyone some breathing time, allow a new US president to take charge, and then get back to the negotiating table when the future does not look as bleak for many countries as it does now.

Go back, or read the latest opinions:

"Is the New President a Protectionist?"

Heather Stewart, The Observer, 1/25/09