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Doha Round: Undead, but not quite alive

August 19, 2008

As efforts begin to salvage a deal from the Doha Round of WTO trade talks, experts say the first task is to break the deadlock around farm safeguards that were the stumbling block in the latest, unsuccessful round of negotiations in Geneva recently.

Pascal Lamy and Kamal Nath
Pascal Lamy and Kamal Nath
Within a fortnight of the failure of those talks, WTO Director General Pascal Lamy, on a visit to India, said it was still possible to conclude negotiations by the end of this year. “The talks, now in their seventh year, were near an agreement on 90 per cent of the agenda, especially in the core areas of agriculture and industrial goods,” said Lamy who will visit Washington soon in order to assess the political mood there.

Pointing out the pluses, Lamy said that the deal will result in worldwide duty cuts of $150 billion (Rs 6,45,000 crore) a year of which two-thirds are expected from the rich nations. “This will help developing nations to gain market access,” said Lamy. He also warned that if the WTO talks don’t result in a deal, US agricultural subsidies could see a sharp jump to over $48 billion (Rs 2,06,400 crore) a year from a ceiling of $14.5 billion (Rs 62,350 crore), which the Bush administration had offered at the Geneva Mini-Ministerial Meeting.

 Deal basics

Is the Doha Round dead? No one can be sure at this point.

  • Developing countries like India and China want safeguards to let them raise tariffs to protect their farmers from a flood of subsidised imports

  • The US thinks safeguards will allow developing countries to hike tariffs in response to normal trade growth, rather than a sudden surge of imports

  • With the November presidential election looming, the US is not expected to make any concessions

  • With elections around the corner in India, Delhi, too, will not budge
However, not many people concur with Lamy. Says Rajeev Kumar, Director, Indian Council of Research in International Economic Relations (ICRIER), without mincing words: “Lamy is talking through his hat. I don’t see any sort of agreement happening between India and the US as elections are due in both countries in the next few months and neither of them wants to lose out on the confidence of their people.”

Adds Rajesh Chadha, Chief Economist, National Council for Applied Economic Research (NCAER): “There is a broad consensus on how to open up trade in industrial goods. However, agriculture has become the lynchpin of the agenda for both developing and developed countries. The deal has entered a make-orbreak phase where any further delays may prove to be corrosive for the global economy.”

Experts think Lamy’s visit is another attempt to evolve a consensus between the rich and the poor nations on the thorny issues of cutting agricultural subsidies and industrial tariffs. The negotiations collapsed in Geneva over disagreements between the US and India over a Special Safeguard Mechanism (SSM), which is designed to protect farmers in the developing world against surges in cut-price imports of cotton and rice. The US refused to agree to India’s proposal that developing nations should be allowed to hike duties by 25 per cent on farm products if imports surged 15 per cent, and insisted that additional duties should be imposed only if imports surged 40 per cent.

Chadha feels the rich countries should compromise on certain agenda points and work out some formula to protect the livelihoods of millions of subsistence farmers in developing countries such as India and China. “The future of the Doha Round is not clear at this stage. What is clear is that we must continue to bolster the multilateral trading system. If the deal goes through within the prescribed time, it will be a win-win situation for everyone,” he adds.

Whether the Doha Round concludes by the end of the year is not certain, but Lamy’s visit to India clearly shows that the WTO talks are not dead.

Manu Kaushik

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