There is no deal but I still love you,” US Trade Representative Susan Schwab is believed to have told Indian Commerce & Industry Minister Kamal Nath following the breakdown of the nine-day negotiations at the World Trade Organisation in Geneva last fortnight. Nath’s repartee: “But you don’t love me enough.”
Intractable positions underlying this banter put paid to the efforts of 153 countries to increase world trade by cutting agricultural subsidies and tariffs on industrial goods. Both sides later expressed deep disappointment in media briefings.
“I’m disappointed because we came so close to running the last mile,” said Nath in Delhi.
Dubbed the Development Round, the current round of negotiations began in 2001 in Doha, Qatar. The intent of the Doha Development Agenda was to make trade rules fairer for developing countries by stitching together a multilateral agreement between the 153 member states. The agreement was to include cuts in domestic farm subsidies by the developed nations in return for reduction in tariffs on industrial goods and the opening up of the services sector by the developing countries.The bone of contention between India and the US turned out to be an emergency measure known as Special Safeguard Mechanism (SSM)—that will come into play in the eventuality of a surge in farm imports. The two sides could not agree on the numbers. While the US demanded that developing countries should have the right to SSM in case of a 40 per cent increase in imports, India felt such a surge would wipe out the livelihoods of millions of farmers before it could be corrected. “We can’t have a provision that frustrates the remedy itself,” Nath said later.
The facts were again on the side of the developing countries. It was found that the US alone had used the SSM tool 28 times in three years against textile imports. Yet, the US did not budge.Since about 65 per cent of Indians depend on agriculture, the country cannot afford to give in to the US. Against this backdrop, agreements on industrial goods and services, too, were not reached.
Agriculture, agriculture, agriculture all the way
November 2001: WTO members meet in Qatar to launch the Doha Round of multilateral talks. Aim to close the round by January 1, 2005
September 2003: The US-EU agricultural proposal at a ministerial meeting in Cancun, Mexico, is criticised by developing countries who form the G20 block led by India and Brazil. The conference ends in rancour
December 2005: At the fifth ministerial meeting in Hong Kong, nations agree to end farm export subsidies by 2013, but again fail to reach a formula for cutting domestic farm subsidies and tariffs
July 2006: Negotiations suspended after the G6, comprising the United States, European Union, Brazil, India, Japan and Australia, fails to break the impasse on agriculture
June 2007: US, EU, Brazil and Indian ministers meet in Potsdam, Germany, to work out a solution. India and Brazil believe the US and the EU were demanding too much new manufacturing market access in exchange for cutting farm subsidies and tariffs.
July 2008: Select ministers meet in Geneva to work out a deal in agriculture and industrial goods, with the aim of completing the rest of the negotiations later in the year. The talks fail yet again
That seems like a clear signal towards agri-reforms. “It is an irony that India’s interest is at stake due to its own failure to shift people to off-the-farm activities,” says Subir Gokarn, Chief Economist, Standard & Poor’s Asia Pacific. Yet, as Nagesh Kumar, Director General, Research & Information System for Developing Countries (RIS), points out, no amount of reforms can really work when there are severe trade distorting subsides at work. Nath took a dig at the developed world, wondering aloud how European hens can lay cheaper eggs.
Will Doha be revived? Nath believes that the present hiatus is merely a “pause” and not a breakdown. However, S&P’s Gokarn points out that for the talks to resume, a significant change in the interests of the key negotiating parties has to occur. That seems unlikely in the short term.
—Shalini S. Dagar