The Hindu Business Line : The Pascal pressure

The WTO Director-General, Mr Pascal Lamy's visit to New Delhi can be seen as a concerted effort to make India concede ground in the sphere of industrial tariff negotiations, the burden of his message being that India would stand to lose if such concessions are not made. Briefly, what Mr Lamy has emphasised is that India has gained substantially from the opening up of the international trading system under the World Trade Organisation auspices and that it would, therefore, stand to lose greatly if the WTO system was affected by a failure of its 150-odd members to successfully conclude the ongoing Doha Round of multilateral trade negotiations.

Holding the position he does, Mr Lamy is expected to be fair in his appreciation of the current state of the Doha Round, which is one reason why his message cannot be ignored. Clearly, his feeling is that on the issue of domestic farm support and agriculture tariffs, New Delhi has scored impressive gains in the negotiations. Further, the gradual opening up of the Indian economy to foreign manufactures through a carefully calibrated lowering of Customs duties over the years has sent a strong message to the world — especially industrial goods exporters — that the reform of Indian trade policy is on and that concessions are being made to the interests of the country's trading partners. What Mr Lamy would like New Delhi to do now is to "try to trade these self-serving reductions against concessions in this or other areas in the WTO".

Reports indicate that Washington and Brussels would like countries such as India and Brazil to reduce their bound rates on industrial import tariffs by around half as a quid pro quo for the agriculture-related concessions they have reportedly offered. Seen from their point of view, neither the US nor the EU can be faulted for adopting this stance. But how New Delhi responds will depend on how the concessions demanded will affect Indian industrial interests, the present assessment being that accepting the demands (which would lower the bound rates and bring them closer to the currently applied rates) would constrict New Delhi's ability to protect domestic industrial interests should the need to do so arise.

The Indian response — that the looming April-end deadline cannot be used to pry concessions from the developing world — has been unambiguous, the underlying argument being that the demand is not consistent with the overall `development' orientation of the Doha Round. And yet, as Mr Lamy has rightly emphasised, it would not be in India's interests to threaten the very existence of the WTO by its perceived intransigence. Clearly, judicious flexibility is the need of the hour — something Indian negotiators can do ably.

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India has big stake in Doha Round: Lamy

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