The Hindu Business Line : Doha Round end-game on

The rich economies want the developing countries to give more ground on industrial tariffs. The poor want the rich to lower farm trade barriers. With no prospect of either happening, the trade talks are locked in a vicious circle.

Ranabir Ray Choudhury

The clear message the recent meeting in Geneva of nearly 100 countries — belonging to the G-20, G-33 and other groupings — has sent to the world is that, as far as the Doha Round is concerned, there is not much scope for further progress unless the developed countries (led by the US) put a larger number of their cards on the table. What this means for the ongoing negotiations is that the prospects of a successful conclusion of the talks have become even bleak er.

Very briefly, the rich economies have said that there will be no progress in the negotiations unless the developing countries give more ground on industrial tariffs. The poor have countered with the argument that there will be little movement in this direction unless the developed economies agree to lower their farm trade barriers.

Clearly, this has become more like a vicious circle than anything else, the only solution being that one of the parties needs to take the initiative to break it at some point. But who will bell the cat, so to speak?

The US stance

In fact, presently, there are not many candidates around who can take that initiative. For instance, the Americans have made it clear upfront that unless the developing economies concede more ground on industrial tariffs, it will be difficult for the US Administration to make any progress on the Round because of the looming Presidential elections.

As the US Ambassador to the WTO, Peter Allgeier, said earlier this month, “we are going to have to make a very demonstrably strong case that we are going to benefit from the Doha Round” if US politicians are to be made to support it. And for this to happen, he said (as reported) that economies such as China, Brazil and India will have to show more flexibility on industrial tariffs and other forms of non-agricultural market access.

‘Open farm door’

On their part, the developing economies have made it abundantly clear that they will not take the first step (on the lowering of industrial tariffs) unless there is movement in the rich economies on the subject of increased access for farm products from the developing world.

The stand taken by the developing countries at the recently-held Geneva meeting was, in fact, the group’s answer to the stand of the rich focussing on more access for industrial goods.

The gist of the message was that the opening up of the rich-country farm markets was crucial to the success of the Doha Round negotiations, the inference being that nothing would move unless this aspect of the multilateral trade scenario was first sorted out.

The ‘package’ approach

There is, therefore, a deadlock in the talks, which is known to everyone, as also the "solution" to the impasse, which is not forthcoming. The problem is that the solution will not be easily forged in view of the fact that larger principles involving the negotiations as a whole are involved, namely, the indivisibility of the Round.

In other words, the Doha Round negotiations will have to be accepted as a package involving various facets of multilateral trade, the inference being that a trade-off between agriculture and industry cannot be arranged as a separate deal, and then be seen as the arbiter of the fate of the entire Round.

This is the real danger facing the Doha Round. While the developing countries have focussed on the pre-eminence of agriculture in getting the talks going, the rich have always had recourse to the stock argument that the ‘package’ concept of the multilateral talks must always be kept in mind.

At the Geneva meeting, the Brazilian Foreign Minister, Mr Celso Amorim, is reported to have said that the participants had agreed that agriculture was a central part of the Doha Round and that “any attempt to change this central fact that agriculture is the locomotive of the Round is of course bound to fail.”

However, a senior official of the USTR made it clear about the same time that “a successful result can only be achieved if we secure new meaningful trade flows in agriculture, industrial goods and services.”

This apart, the Union Commerce Minister, Mr Kamal Nath, cannot have endeared himself to Washington (if that is at all possible now) with his stand that “without a resolution on cotton, there cannot be a resolution in agriculture” (US cotton subsidies are ‘squeezing’ poor African farmers out of the market).

Impending US polls

The irony of it all is the fact that even if there is a breakthrough and, by some quirk of fate, the WTO members find themselves in agreement on the issues of agriculture and NAMA, there is no guarantee that a final Doha Round accord will see the light of day.

This is because of the impending US Presidential elections next year and the very tough schedule that will have to be followed by the WTO if it wants to give the Round half a chance to scrape through Capitol Hill.

Perhaps, this is one important reason behind the latest move of the developing countries seeking a clarification from the Americans about when the fast-track Trade Promotion Authority given to the US President will be extended (the PTA expired in July this year), for, without it, there would be total uncertainty about the fate of any accord which would then have to be approved by Congress.

Indeed, there is a point of view which holds that the extended negotiations on the Doha Round are being used by some developed countries to scuttle the entire WTO framework, as it exists today. It has been argued that this, in fact, is their principal agenda, the current harping on differences on farm and industrial tariffs being seen as the path through which to attain that larger goal.

Nothing can be more reprehensible than this surmised course of action, even if the objective is to ultimately get the WTO negotiations off the ‘single undertaking’ hook, which to many people may appear to be the only way in which the WTO can be saved.

Related Stories:
WTO talks: A standoff again?
No deal
It is end of the day for G-4: Kamal Nath