The Doha Round of the World Trade Organisation, that has not delivered results despite 12 years of negotiations, may throw up some agreements in the year-end ministerial meet in Bali.

WTO Director-General Pascal Lamy, the person steering the deliberations over the last eight years, spoke to Business Line about what went wrong and what lies ahead. Excerpts:

Why did the Doha development round, which was supposed to bring more benefits to poorer countries, fail to deliver results so far?

I think the emergence of emerging countries (like India and China) led to reshuffle of the basic name of the game, which was reciprocity for the rich and flexibility for poor. This is simple to follow when it is clear who is rich and poor. Emerging countries blur this traditional view and finding a new balance is difficult. The concept of Doha being a development round remains. But the question is how developing a country should be (to qualify for benefits).

The second factor behind the delay is the economic crisis that has re-focussed governments in their domestic social and economic agenda leaving less attention and less political energy available for international trade deals which are huge policy energy consumers.

Are you saying that it is time to re-define classification of economies?

I think for the future, to be more sophisticated, the binary architecture we have had –developed or developing (countries) – has to be replaced by something simple. It should be more on the lines of three speed than two speed.

Since it has already been decided to conclude the Doha Round in phases, what are your expectations from the Bali ministerial in December?

I think, like the ministers discussed it in Davos, a set of issues which include trade facilitation, some agriculture related issues, some LDC specific issues like waiver on services for instance, are potential deliverables in Bali. I think members agree that Bali cannot just be business as usual. Not delivering one bit of amendment to the rule book in Bali would certainly be a set back.

Why has trade facilitation emerged as one of the key deliverables in Bali?

One of the reasons it has become priority is because it is much more important than before since you just don’t cross one border when you produce something, you cross five to six borders. And secondly, we have inbuilt reciprocity and flexibility into the agreement.

So, this difficult problem of how you treat countries depending on level of development has been served in principle in the trade facilitation agreement. This means now it is more about details.

However, in other areas such as industrial tariff reduction, the level of reciprocity and flexibility has not been agreed upon. The US on one side says emerging countries have emerged while emerging countries say we are emerging but we have not yet emerged. This is where the difficulty lies.

India and others have argued that trade facilitation would place an economic burden on developing countries and should not be mandatory.

It all depends on which country you consider. India has an advanced customs system thanks to rapid introduction of IT in its operations. Getting rid of red tape is not costly.

What is costly is digitizing your system. For this, India is quite ahead of the curve compared to poorer developing countries. Secondly there is availability of technical assistance and support for poorer countries.

Where does India stand in the global scheme of things?

India is an elephant of world trade even if its trade to GDP ratio is lower than China. If you measure trade in value addition, instead of growth, India’s trade to GDP ratio is about 15 per cent. It is 30 per cent for China and less than 10 per cent for US. That tells you that India remains a very big player, not least because of its growing size of market but because it is a very big exporting and importing country.

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