Business Today

WTO gets talking again

Sops to developing countries could break the Doha deadlock.

     Print Edition: March 9, 2008

Kamal Nath
Kamal Nath
It’s another attempt to evolve a consensus between the rich and the poor nations at the WTO on the thorny issues of cutting agricultural subsidies and industrial tariffs. Ambassador Crawford Falconer, Chairperson of the Agriculture Negotiation, and Non-Agricultural Market Access (NAMA) Chairperson Don Stephenson have circulated their latest draft “modalities”. The two documents are revisions of drafts previously circulated in July 2007 and are based on WTO member governments’ latest positions in the discussions since September, one of the most intensive periods of negotiations since the Doha Round talks began in 2001.

The revised negotiating text for industrial goods seeks to break deadlock on the cuts within the WTO by setting no fixed limits for the exceptions that developing countries would enjoy. Clearly, Canada’s WTO Ambassador, Don Stephenson, who chairs the industry talks and has put forward the suggestion, is hoping this would find favour with the third world, which want industrialised countries to take bigger commitments than developing countries in cutting industrial tariffs based on the principle of “less-thanfull reciprocity”.

There is a broad consensus on how to open up trade in industrial goods, which account for 74 per cent of world trade. Tariff cuts will be based on a formula using a variable or coefficient. The lower the number of the coefficient, the bigger the cut in tariffs, and the lower the resulting tariff ceiling. Stephenson proposed in July a coefficient range of 8-9 for developed countries and 19-23 for developing nations.

Several developing countries have called for a bigger gap between the coefficients for rich and poor, but that has been resisted by developed nations. While the latest draft proposals make no change in the coefficient levels, they suggest that the issue could be debated further to reach a middle ground. Industry bodies in India, though, object to the present formula as they feel that it’s discriminatory. Says Amit Mitra, Secretary General, FICCI: “This set of coefficients, if applied in tariff reduction formula, would result in relatively large tariff cuts for India and other developing members, compared with developed economies like the US and the EU.”

In the draft on agriculture, an attempt has been made to reflect the concerns of the developing countries, particularly on special safeguard mechanisms and special products. The draft also brings back the original G-20 proposals for discussion that had suggested a minimum 54 per cent cut in agricultural tariff by developed countries and maximum tariff cut of 36 per cent for developing countries—this was one of the demands by India. Says T.S. Vishwanath, Senior Director, CII: “The views of the developing world are reflected better in the new document, making it a good starting point for further negotiations.”

However, the draft has proposed the same range of cuts for US agricultural subsidies or Overall Trade Distorting Support (OTDS). The proposed numbers would reduce the US OTDS to the level of $13-16.4 billion from the existing levels of $48 billion. The developing countries want sharper agriculture subsidy cuts by the US.

India has already cautiously welcomed the revised WTO proposals. Minister for Commerce and Industry Kamal Nath has said the revised texts can form the basis for negotiation in the coming weeks. But this could just be the beginning of another round of hard-nosed lobbying at the WTO. Let’s hope that this time a middle ground can be found.

Rishi Joshi

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