The Hindu Business Line : A milestone accord

MUCH IS BEING made of the accord reached by World Trade Organisation members at Geneva on the "framework" negotiations, with the progress being described as "significant" for the completion of the Doha Round. It is easy to agree with this view if the accord is seen a "movement" towards the goal of global trade liberalisation. But the agreement could turn out to be of little consequence if the developing countries relax the pressure on the developed economies which is what the latter are perhaps banking on. At Geneva the manoeuvrability of the developed countries was severely limited by domestic political compulsions (the presidential elections in the US, for instance). But with the deadline for the Doha Round pushed back by a year to end-2005, they may re-strategise, especially if pushed by the developing countries.

As for the agreement itself, the poor countries have been able to wring some concessions from the rich particularly on scaling down export subsidies and domestic support. It will be remembered that Brussels had taken a tough stand on the export subsidy issue, at one point saying that it was non-negotiable. The EU position changed after Mr Pascal Lamy introduced the concept of "parallelism", meaning the issue could be discussed only if other WTO members made concessions elsewhere. Even so, though a decision to "eliminate" export subsides was agreed upon by key WTO members, significantly no time limit was set; a clear victory for Brussels. On cotton, the rich have managed to force West African producers to withdraw their demand to treat the commodity as a separate issue, which would have placed the US in a spot. Three of the four Singapore issues have been dropped because there was no chance of their inclusion in the Doha Round given the stiff opposition from the developing world from the start of negotiations; hardly a success for the poor.

As the accord was reached on the principle of give and take, the poor economies also made some concessions. But only time will tell whether in the long run the developed economies gain more than the poor, especially vis-à-vis non-agriculture market access. This means as the negotiations progress from the general to specific, New Delhi and other like-minded capitals will have to remain alert and not rest on their win in the just-ended skirmish. Indeed, one wonders if the victory claims of New Delhi are justified, when even China has labelled the outcome as "not bad, though the developing countries are not fully satisfied". Brazil, a strong Indian ally in the WTO battle, described the accord as a "good deal for everybody," which can be interpreted as just making polite noises.

But the Union Commerce Ministry is reported to have described the accord as a "major victory", saying India had made "major gains and succeeded in fully protecting its interests in agriculture as well as in other key areas". This is clearly an over-reaction because the real battle will begin only with the talks on the modalities, when the "give and take" will translate into actual tariff cuts and so on. The US Trade Representative, Mr Robert Zoellick, perhaps hit the nail on the head when said that "There's a lot of work yet to be done. But today's framework is a milestone". That milestone could still turn out to be one on the road to failure.