• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

G. Srinivasan

The WTO Fifth Ministerial aims to set a framework for putting the Doha trade talks back on track. But given the contrasting demands and aspirations of the members and with activists pitching for a development-oriented round, the outcome of the meeting is anybody's guess, reports G. Srinivasan from Cancun.

AS THE fifth ministerial of the World Trade Organisation gets underway at the picturesque sea resort on the Gulf of Mexico amid the hype generated by political and social activists on the ill-effects of globalisation, the basic remit of the meeting, which seeks to setthe negotiating framework for attaining the grandiose goals of the Doha Development Agenda (DDA), appears to be bypassed. Even in the run-up to the Ministerial, the divide between the developed North and the developing South was palpably clear.

The Union Commerce Minister, Mr Arun Jaitley, who leads the Indian delegation, lost no time in seizing the opportunity to emerge as one of the few who could stand up and be counted for espousing the cause of development, in general, and of farmers, in particular.

Right from the run-up to the meeting, Mr Jaitley has been castigating the rich nations for the huge subsidies they give their farmers which distorts the global grain market, depressing farm product prices for the poor countries seeking to cash in on their crop(s).

In his interaction with the US Trade Representative, Mr Robert Zoellick, just ahead of the plenary that began on Wednesday, Mr Jaitley highlighted the hiatus between the wealthy and poor farmers.

"The average family farm size is 1.5 hectares in a developing country while developed countries have corporate land-holdings of hundreds of hectares. How can farmers who earn one dollar a day compare with those in OECD countries receiving $1 billion a day as subsidy?" asked Mr Jaitley.

Going beyond the inequities in the system, Mr Jaitley is of the view that food security and livelihood concerns of farmers in developing countries, in general, and some 650 million people in India whose livelihood is tied to the farm economy, ought to be incorporated in market access commitments for developing countries.

Thus, at a dinner he hosted for a group of ministers from some 10 developing and least developed (LDC) countries on September 8 in Cancun, he was emphatic that "it remains our duty to ensure that special and differential treatment for developing countries and policy space to deal with special products remain an integral part of all elements of negotiations."

Mr Jaitley was not wide off the mark when he asserted that "our commitments in market access are essentially linked to the commitments the US and the EU would take in domestic support and export competition. It is only when the developed countries agree to take five steps forward in the removal of trade distorting subsidies that the developing countries can take one step forward in the area of market access."

If tariff reduction commitment is inevitable, India is of the view that adequate protection should be ensured for all farm products, besides special safeguard mechanism for sensitive items. India would also resist attempts towards minimum access commitments and in export subsidy insist on retaining the right to provide transport/marketing subsidies. India is also pitching for the Uruguay Round of tariff reductions which entail lesser reduction commitments, as against the Swiss formula.

Noteworthy is India's insistence that any cuts in tariffs by developing countries should be such that the overall average reduction in bound rates for them is significantly lower than (at least half) that for developed countries.

Besides, no minimum reduction should be specified on each tariff line and developing countries should be allowed to raise bindings on products bound at relatively lower levels in earlier negotiations, without offering compensation. This is important because tariff peaks and escalation remain pronounced in advanced countries and for some agricultural exports of specific interest to developing countries.

No wonder, non-governmental bodies and pro-poor groups have joined the bandwagon in pleading for a better access to farm product exports of the developing countries, with Mr Jaitley throwing his weight behind the demand for drastic cuts in subsidies and secure market access for the farm product exports of developing countries. Moments produce men, and Mr Jaitley sees his defining moment at the Cancun ministerial by taking on the rich nations.

That Mr Jaitley has made an impact on the thinking of even Western trade policy-makers was amply borne out by the open article Mr Zoellick wrote in the Wall Street Journal in which he said that the "WTO should customise solutions to address particular problems of development. India needs to reassure its millions of subsistence farmers... "

Mr Zoellick argued that some developed countries seek cuts for manufactured goods, but not for agriculture. Some developing countries call for the reverse. But successful movement in negotiations demands mixing ambition and compromise. There is a grain of truth in what Mr Zoellick advocates but developing countries do not have the patience to give in any further as their past compromises and negligence and ignorance in negotiations had led them to blind alley where they see strident opposition from their domestic constituency hit hard by any such "too much give away with no matching advantage accruing to them".

This is also a point forcibly made by ActionAid which in one of its provocative monographs prior to Cancun stated that during the Uruguay Round developing countries had to `pay' for the inclusion of multilateral rules on agriculture by allowing Agreement on Intellectual Property Rights and services. Since then rich countries exploited ambiguities in the Agreement on Agriculture (AoA) to step up subsidies and maintain protectionism, which ended up in a bad bargain. Hence, the caution that in Cancun, similar deals pertaining to agriculture may be offered in relation to the introduction of negotiations on the new issues. It is against this gloomy scenario that Mr Jaitley has plumped for steep and substantial reduction in farm subsidies and domestic support extended to agriculture and export credit in rich countries so that the developing world is not conned into signing away in new areas without getting something substantive and substantial in return. The ongoing ministerial must tackle the issue of market access to non-agricultural products or industrial goods so that the negotiation can be wrapped up by the end of 2004.

This issue saw more than 40 papers being submitted to the debate, dealing with the modalities for the negotiations, covering tariff reductions, how to deal with non-tariff barriers, how to give developing countries special and differential treatment and the possible ill-effects of the reduction in tariffs on the development policies of some countries and on their fiscal revenues. Worrisome is that the modalities include the criteria to be used to define environmental goods, since the Doha Declaration includes a mandate to negotiate the reduction of tariffs in this particular sector of goods, a subject made over from the Trade and Environment Committee to this negotiating group.

An area of concern in the draft is the proposal for eliminating tariffs in seven sectors — gems and jewellery, fish and fish products, leather garments, electronics and electrical goods, automobile components, non-leather footwear, and textiles and clothing.

As these sectors are deemed important for the exports of developing and least-developed countries, India is willing to go in for zero tariffs on the first three categories, while it is less certain about the last four where resistance from small and medium players had unnerved the Government.

Even on tariff bindings for industrial products, India has entertained valid reservations because currently only 68 per cent of the tariff lines are bound, leaving the remaining pertaining to products manufactured by small scale industries and sensitive products where India is unwilling to bind for the adverse fallout this might provoke.

On the Singapore issues of investment, competition, transparency in government procurement and trade facilitation, Mr Jaitley has thrown enough hints during his interaction with mediapersons both in India and here that New Delhi is willing to show some flexibility on trade facilitation and government procurement, provided there is some satisfactory outcome on implementation issues.

On investment, Mr Jaitley is unequivocally against evolving any rules for agreement at a time when the clarificatory process sought by India and others had not been duly addressed. So, with major issues such as agriculture, non-agricultural products access or industrial goods and agreeing on modalities for Singapore issues remaining ticklish demanding the combined endeavour of both developed and developing countries, the outcome of the Fifth Ministerial is evenly poised.

Even as the Cancun meeting aims to set a framework for putting the Doha trade talks back on track for completion by the end of 2004, given the fireworks the varying demands of the members are sure to generate with activists adding to the din by pitching for a development-oriented Round, the outcome is anybody's guess.

Article E-Mail :: Comment :: Syndication

Stories in this Section
TAMP lines loosened

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line