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Endgame on Doha?

   Endgame on Doha? The Doha round of trade negotiations of the World Trade Organisation (WTO) has faced many an impasse before. But never before has the deadlock sought to be resolved with a patently one-sided deal that the WTO now seems to be readying to thrust down the throats of the larger membership. The package, if accepted, would strip from the round any right it may still have of being described as the Doha Development Agenda. The next few days will crucially decide whether the 60-odd trade ministers who are gathered in Geneva can overcome unbridgeable differences in finalising the socalled negotiating modalities in agriculture and nonagricultural market access (NAMA). (The modalities indicate the depth of cuts in tariffs and subsidies in agriculture and reduction of tariffs on industrial products, as well as disciplines for different subsidy payments.) Ahead of the ministerial meeting, the chairs overseeing negotiations in agriculture and NAMA have circulated the draft texts that are replete with square brackets

June 30, 2006 E L L WEEKLY
Endgame on Doha? The Doha round of trade negotiations of the World Trade Organisation (WTO) has faced many an impasse before. But never before has the deadlock sought to be resolved with a patently one-sided deal that the WTO now seems to be readying to thrust down the throats of the larger membership. The package, if accepted, would strip from the round any right it may still have of being described as the Doha Development Agenda. The next few days will crucially decide whether the 60-odd trade ministers who are gathered in Geneva can overcome unbridgeable differences in finalising the socalled negotiating modalities in agriculture and nonagricultural market access (NAMA). (The modalities indicate the depth of cuts in tariffs and subsidies in agriculture and reduction of tariffs on industrial products, as well as disciplines for different subsidy payments.) Ahead of the ministerial meeting, the chairs overseeing negotiations in agriculture and NAMA have circulated the draft texts that are replete with square brackets – areas where no agreement is possible. The number of outstanding issues in the three pillars of the Doha agriculture package – market access, domestic subsidies, and export competition – are by any reckoning huge. They are all essentially about how far the heavily farm subsidising countries such as the European Union, the US, Japan, Norway, Switzerland, among others, are prepared to move in correcting existing imbalances. Approaching all the issues contained in the square brackets in agriculture – which is reckoned as the engine of the round – is a Herculean task. In fact, the WTO ministerials in Seattle (1999) and Cancun (2003) had clearly showed that it was next to impossible to resolve hundreds of issues in a matter of four or five days in a pressure cooker-like atmosphere. However, the tenacious director-general of the WTO, Pascal Lamy, who was at the helm of trade policy in the European Commission in 1999-2004, has never been short of solutions to break the current impasse. First, he devised what is called a triangle formula which requires the EU to substantially improve its market access offer for farm products from a level of 41 per cent increase to somewhere around 54 per cent as suggested by the group of 20 (G-20) developing countries. The second side of the triangle requires the US to cut back its egregious subsidy programmes from $ 22 billion to $ 20 billion. And the third side of the triangle involves Brazil and India accepting a coefficient of 20 in what is referred to as the Swiss formula to cut industrial tariffs. In India’s case, a coefficient of 19 will bring down its current average bound import tariffs from around 38 per cent to a little over 12 per cent. This is what Lamy called 20-20-20. Should these four big players deliver on the three sides of the triangle, then the rest will fall in place. So goes Lamy’s reasoning. This is a dubious formula from Pascal Lamy, who, many developing countries argue, has clearly shown whose interests he is pursuing. After all, the developing countries were roped into what was called a “development round” in Doha in 2001, on the promise that the historical development deficit in the global trading system would be removed in the new WTO negotiations. In fact, as the round progressed, many of the development issues that were raised as part of the “implementation” agenda of the Uruguay round and special and differential treatment flexibilities have all been given short shrift. Ironically, Lamy has turned the talks into a pure and simple mercantilist market access round in which developing countries are now being asked to bring both their farm tariffs and duties on industrial products down to a level close to what rich countries took over five decades to do! Worse still, Pascal Lamy is playing all his cards to ensure that the US is part of the final deal. Can there be a more outrageous proposal from the director-general of the WTO than to suggest that Washington’s mounting farm subsidies be merely brought down by $ 2 billion – from $ 22 billion to $ 20 billion? In the Uruguay round, the US had committed itself to maintain its farm subsidies at $ 9 billion. Now in the so-called development

round, the US wants to keep them at well over $ 20 billion. In exchange for the limited reduction in their subsidies, the US wants substantial market access in developing countries, especially India and Indonesia. The world is being held hostage to the dictates of the US Congress, which, more than the Bush presidency, seems to be dictating trade policy. And Pascal Lamy is a party to such an endgame.

Geneva 2006 comes up just six months after Hong Kong 2005, where Kamal Nath, India’s commerce minister, made grand claims of a victory and of defending the country’s interest. But the endgame has arrived quicker than the minister must have hoped for. Can Kamal Nath show this time that the words of defiance will be matched by deeds? m

Economic and Political Weekly June 30, 2006

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