The Hindu Business Line : Doha Round must have level field

A fresh set of initiative has been taken to revive the Doha Round, suspended since July 2006. Earlier this month, the World Trade Organisation Director-General, Mr Pascal Lamy, along with the Commerce Minister, Mr Kamal Nath, and ministers and dignitaries from other parts of the world cranked the wheel to restart the Doha Round talks. Many important issues were deliberated upon at length.

Among the key issues, agriculture again undoubtedly held the centre-stage. Experts of all hues believe that the success of the Doha Round is critically dependent on the core issue — that is, a level-playing field that is yet to be created. In any system or organisation where participation of all members is the key, everybody must be treated equally and fairly. That is what is missing at the moment in a multilateral trade regime governed under the WTO.

Core issues

The Doha Round is almost six years old, starting off in 2001. The core issue has not been adequately addressed to arrive at a practical solution. If agriculture is indeed the core issue and on which more than three-fourths of the people of the developing world are dependent, the ideal solution would be removal of the huge subsidies given to the developed countries' farmers. This is essential to create a level-playing field which would foster a true spirit of competition. At least, an atmosphere gets created to compete.

It is further argued that the Doha Round is not seeking the elimination of subsidies given to agriculture in developed countries; rather it is about the reduction of the subsidies. But no serious attempt has been made even for this. Developed countries promise to reduce subsidies provided the developing nations open up their markets, to the extent desired by the former.

Market access in agriculture is another issue at the core of the Doha Round deadlock. It is important to understand the issue. Major differences persist because a formal and detailed approach to effecting tariff cuts has not been finalised. The Hong Kong Ministerial had made some progress where a four-band approach to tariff cuts was broadly agreed upon; countries with higher levels of tariffs to make steeper cuts.

In the course of subsequent negotiations, another dimension to market access emerged the average tariffs which the member-countries are willing to take in agricultural products while they follow the banded approach. This dimension could have a positive impact as it could indicate the ambition levels of various groups of WTO members. But there is also the possibility of the negotiating process becoming more complicated as members seek to calibrate the thresholds for the tariff bands to match their averages in respect of tariff reductions.

From a developing country's perspective, the key issues that need to be settled are the designation of Special Products (SPs) and the agreement over the coverage of Special Safeguard Mechanism (SSM). Developing countries propose that they be allowed to designate a set of SPs that are critical from the viewpoint of their food security, livelihood and rural development. In addition, SSM may be available to them as a defence against any sudden surge in imports or a fall in international commodity prices.

WTO members agreed to the demands in Hong Kong that the developing countries "will have the flexibility to self-designate an appropriate number of tariff lines as SPs based on the criteria of food security, livelihood and rural development." The Declaration added that developing countries "will also have the right to have recourse to a SSM based on import quantity and price triggers, with precise arrangement to be further defined." Developing countries now insist that SPs and SSM should form an integral part of modalities and outcome of ongoing negotiations.

Tariff line issue

G-33, the key proponent of SPS and SSM, argues that developing countries will have the right to self-designate "at least 20 per cent of the tariff lines" as SPs. It further suggests that 20 per cent of the identified SPs will not be subjected to any tariff cuts, with 50 per cent being subjected to a tariff cut of not more than 10 per cent.

But the US has argued that "SP designation" should be "limited to no more than 5 per cent tariff lines at the detailed duty level." Interestingly, the US' argument for limiting the number of SPs has been supported by one of the G-20 members — Thailand. This development makes it imperative for countries like India to adopt measures to strengthen the G-33 alliance; the group that maintains the SPs and SSM should serve the purpose of providing developing countries with policy flexibilities.

(The author is with the Indian Institute of Foreign Trade.)