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WTO Doha Round: India falls in line

By Devinder Sharma

India appears to be backtracking on its earlier tough stand of insisting that massive agricultural subsidies in developed countries be removed, in order to push through the stalled Doha Round of trade negotiations

The writing is on the wall. With India succumbing to pressure and the G33 group of developing countries unlikely to stand in the way, the controversial Doha Development Round of the World Trade Organisation (WTO) seems set to sail through.

At a two-day international seminar on 'Saving Doha and delivering on development', which concluded in New Delhi on March 13, 2007, India's Commerce Minister Kamal Nath provided ample evidence of India's willingness to go along with the rich and industrialised countries. In what appears to be a U-turn in India's position so far, Kamal Nath stated: "This round is not about removal but about reduction of distortions that lead to artificiality in prices."

This taken together with what Prime Minister Manmohan Singh said the same day, at another roundtable organised by The Economist in New Delhi: "India was committed to an early positive conclusion of the Doha Development Round," makes the underlying message crystal clear.

For a few months now, after the suspension of the Doha Round of negotiations in mid-2006, New Delhi has been under pressure to drop its opposition. WTO chief Pascal Lamy visited India several times and used every opportunity to negotiate on behalf of the developed countries. Knowing that Kamal Nath's 'tough' posturing was aimed only at the gullible media, Lamy made it abundantly clear that agreement on the Doha Round had to be reached before the US Trade Promotion Agreement expired in June.

The two-day conference in New Delhi was therefore an effort by the Ministry of Commerce to provide justification for a complete somersault in its official stand. The list of invitees and selected speakers and rapporteurs made the objective copiously clear. Keeping the real stakeholders away, and ensuring that voices of dissent were not present, 'Saving Doha' became the rallying point.

Henry Benfield Jeffrey, Guyana's Minister of Foreign Trade and International Cooperation, and Moudjaidou Soumanou, Benin's Minister for Industry and Commerce, were two speakers who said they were not in favour of a bad agreement. Most of the other speakers, and that included ambassadors from Brazil and Indonesia and the trade ministers of South Africa, Mexico and Argentina, only expressed concern but were more than willing to see the round go through. The Indian speakers, many of them retired bureaucrats, were, of course, all for a speedy conclusion.

Interestingly, the empirical evidence that Sandra Polaski of the US-based Carnegie Endowment for International Peace presented, showing the Doha Round to be heavily biased against developing countries, and the UNCTAD-India study on Green Box subsidies and the benefits to developing countries if the support were to be abolished, found few takers. As expected, the rapporteurs made only a passing reference to what was, in reality, the most substantial contribution to the deliberations. The rest was merely rhetoric.

For those who have been following the WTO negotiations, a turnaround by India at this crucial juncture is not new. Remember the failed Cancun WTO Ministerial in 2003? India's former Commerce Minister Arun Jaitley shouted from the rooftops that he was unwilling to accept any agreement with the massive farm subsidies of rich countries intact. And yet, at the concluding stages of the negotiations (which finally failed because of a walk-out by African countries), India accepted the unjust agreement!

Kamal Nath picked up from where his predecessor left off. After the hastily concluded July Framework 2004, which allowed rich countries to increase their agricultural support, he was against the re-opening of the agreement as it addressed the developmental issues of developing countries. I wonder what 'development' benefits Kamal Nath saw when even former US Trade Representative Charlene Barshefsky honestly admitted that the Doha Round had been launched on false pretences, including it being called a 'development' round.

Just before the Hong Kong Ministerial in December, Kamal Nath loudly proclaimed to a cheering media: "What the US proposed is not real cuts in agriculture subsidies. The real cuts would be when there is a decline in the support provided by the US treasury." He was referring to a US offer of reducing domestic support by 53% and the European Union following it up with another offer of 70%. Interestingly, post-Hong Kong, for some strange reason, the minister agreed to the same commitment.

We all know that whatever the US and EU may offer to keep the Doha Round is not going to translate into any actual reduction in the massive domestic support. The US$ 360 billion support to agriculture in the US, EU and Japan will remain intact. No wonder, the US has announced more support to agriculture in its new Farm Bill 2007.

In 2006, at a day-long meeting of trade negotiators in London, ahead of the G6 'Striptease' Summit on March 10-11, Kamal Nath stopped talking about agricultural subsidies. Senior trade officials from the US, EU, Brazil, India, Australia and Japan debated only on how to overcome differences in the market access pillar of the Doha farm trade negotiations. There was no mention of agricultural subsidy commitments.

India had, by then, shifted to identifying the number of 'special products' (SPs) for which there were to be no further tariff-reduction commitments. Subsequently, at the World Economic Forum 2007, at Davos, Kamal Nath was willing to provide 'flexibility' in the number of special products to be negotiated, which, in other words, meant that he was willing to reduce tariff lines that needed to be protected.

In any case, special products is not a long-term protection. Pascal Lamy had earlier explained: "The use of special products will be limited, and in the future it will shrink." As subsequent studies by the Carnegie Endowment for International Peace have shown, even with all SP and SSM (Special Safeguard Mechanism) measures intact, developed countries will gain the most. If the Doha Round succeeds, the gain in agriculture to the developing world would be to the tune of US$ 6.7 billion. This so-called 'gain' has to be shared between 110 developing countries. G20 countries must tell us what 'development' gains they have for each member country.

Not only India, but the G20, G33 and G90 group of developing countries have failed to get developed countries to reduce even one dollar in their massive support to agriculture. The tall claims of 'victory' at the conclusion of every WTO Ministerial and general council agreement speak volumes about the incompetence and failure of negotiators from the developing world. I don't know if any one of them has ever worked out the costs and benefits accruing from the Doha Round. The negotiators should be asked to openly spell out the benefits to their respective countries, after they have inked in an agreement. It's time trade negotiators were made accountable to society.

Meanwhile, Indian farmers and farmers in other developing countries must continue to pay the price, in blood, for this unseen 'development', which, in reality, means keeping agribusiness companies in western countries afloat.

InfoChange News & Features, March 2007