The Hindu Business Line : Doha Round: Onus on India?

India may need to concede ground on industrial tariffs if it is to attain its objective of getting tariff barriers lowered on both the farm and industrial fronts in the US and the EU. That is, the principle of quid pro quo should be applied if the Doha Round is to be saved. To what extent should India help when the beneficiaries would be the rich economies whose immediate interest is to protect inefficient sectors indirectly harming poor farmers in the developing world?

MR PASCAL LAMY, the WTO Director-General... More take than give.

The tone of the statements made by the WTO Director-General, Mr Pascal Lamy, suggests rather strongly that countries like India will have to bear the burden of criticism flowing from a failure to reach agreement on the Doha Round of multilateral negotiations. Let it be said at the very outset that this would be quite unfortunate because India does not hold the key to the response of the developing world to the pressures being exerted by the developed economies on the three most important segments of the ongoing negotiations — domestic farm support, agricultural market access and non-agricultural market access (NAMA).

DEVELOPING COUNTRY POSITION

Indeed, Mr Lamy himself had pointed to the fact (in an interview in October last year) that there is in fact "no such thing as a developing country position." He had added specifically: "Three-quarters of our membership are developing countries and their needs and concerns differ widely."

Citing examples, he had said that while India "was among the most ardent advocates of an enhanced services agreement," Brazil "wanted to export more agricultural products." He continued: "China wants more market access for industrial goods. Kenya wants to see adequate technical assistance available while Egypt worries about the impact of any deal on net food-importing developing countries." He added that there were of course "alliances among countries, but they change depending on the issue at hand."

If what the WTO chief said in October is correct, it follows that it would really not matter beyond a point (for the negotiations as a whole) whether India went the extra mile in conceding a point or two to the demands made by Brussels and Washington — mainly on the NAMA front — which, in a way, would kick the bottom out of the central plea made by Mr Lamy to New Delhi. Secondly, what exactly is the nature of the plea made by the WTO chief, who has rightly made clear his interest in the entire negotiating process by stating unambiguously that his sole objective is "to make the negotiations work". To this correspondent, the central appeal that Mr Lamy has made to Delhi is not to stay away from the Doha Round negotiations because in that event there would be no other option left for the negotiations but to fail.

LOSS FOR INDIA

In an effort to buttress his point rationally, he has also said that in the event the Round failed, India would stand to lose substantially because it has "benefited from a more open global trading environment and the healthy development of this system is very important for India's economic take-off and its efforts to become a global power." More positively, he has said that India "has a strong systemic interest in safeguarding and strengthening the multilateral trading system." Mr Lamy has gone a step further. On April 6, at a meeting in New Delhi, hesaid: "India has been a key player in the multilateral trading system for more than 50 years. It is in India's interests to fight for an open, stable and predictable global trading environment. India would be the first to suffer if protectionism prevails. Given what is at stake, I trust India will make its contribution to a win-win outcome."

What is this contribution that Mr Lamy is talking about? "EU and the US are being asked to bite into their existing subsidies. So India and Brazil, which have huge differences in their applied and bound tariffs, will have to see how much they can bite into their applied tariffs," he said on April 5.

THE QUID PRO QUO

In other words, India should concede ground on the industrial tariffs front if it is to attain its objective of getting tariff barriers lowered on both the farm and industrial fronts in the US and the EU. That is, the principle of quid pro quo should be applied at this stage of the negotiations if the Doha Round is to be saved. As an aseptic negotiating ploy, Mr Lamy's broad suggestion is acceptable, particularly so in view of the fact that a reduction in the bound rates would not affect the current average NAMA tariff level in India (because the applied rates are much below the bound rates), although it would most certainly affect future flexibility — when a need could arise to increase the tariff levels to protect domestic industry.

The more important point, however, is whether New Delhi should agree to accept the WTO chief's suggestion now, specially when the proposed quid pro quo has been around for some months and the Commerce Minister has repeatedly gone out of his way to rule it out firmly. To take one example, in the third week of October last year, when Ministerial trade talks collapsed in Geneva, New Delhi was reported to have "effectively blocked a move by the US-EU combine to widen the scope of the talks and establish linkages of agriculture with NAMA and services."

Mr Lamy is in a position to fathom the minds of the US and the EU as regards the Doha Round negotiations. He probably has arrived at the conclusion that unless the developing countries such as India and Brazil concede a point or two, the April deadline for modalities will be missed, which could spell disaster for the future of the Round itself. Thus his forceful plea while in India to give up some ground on the industrial tariffs front.

DANGEROUS BRINKMANSHIP

It is likely that, for the US and the EU, the continued existence of the WTO is not as important as it is for the developing countries, which explains their readiness to indulge in dangerous brinkmanship where the very future of the organisation is at stake. Mr Lamy wants to do his best to protect theinterests of the WTO. The question is: To what extent should India extend a helping hand when the beneficiaries would be the rich economies whose immediate interest is to protect inefficient sectors which are indirectly harming the interests of poor farmers in the developing world?