India willing to close Doha Round..!!

As long as its farm sector is protected, meaningful liberalisation is secured in services and a fair deal on industrial goods is promised, India will be a deal-maker in the WTO talks, says Pradeep S Mehta

    THE jury is still out whether the Doha Round of the WTO is a development round or not, observed the Brazilian and US ambassadors at a recent workshop on the Doha Round of trade negotiations held in Geneva on November 2. At the concluding session moderated by WTO director-general Pascal Lamy, ambassadors from China, India and EU asserted that this is a development round. It was a candid assessment of the geopolitics of the trade and reflected the grim scenario that countries continue to speak to each other, with each looking in different directions. But, the workshop was not only about geopolitics; it was also about numbers. Many analysts opined that up to $200 billion could be added to global welfare by the current package of offers. More importantly, they contended that the world could see a 10% contraction in trade if the Doha Round fails.
    Jayant Dasgupta, the Indian ambassador, succinctly summarised the discussions by reminding the meeting of the old metaphor that it is time to enter a period of give-and-take negotiations and that it is no longer feasible to raise ambitions. This author was speaking at the workshop on rules and environment, not too easy but certainly, no hurdles in sewing up the Doha Round.
    India has been playing a leading role in the Doha Round negotiations. Indian commerce minister Anand Sharma was recently at Geneva to test the waters and reaffirm India’s willingness to negotiate. India has not only been a part of the complex variable geometry of delegations meeting to thrash out differences and pull the negotiations out of its decade-old quagmire, but it also has taken a lead to pull them along when required.
    India has contributed to the emergence of credible draft chair texts on agriculture and non-agriculture market access negotiations that led to the last two most hope-generating efforts in July and December 2008. The efforts failed, though Lamy gives it 80% marks. In the fall of 2009, when appetite for a trade liberalisation deal was minimal in the wake of the financial crisis, India hosted a mini-ministerial where Lamy unveiled a road map for intense negotiations with capital-based senior negotiators. That effort, too, fizzled out by the next spring, and the focus of Genevabased delegations shifted to more procedural and practical matters like the templates for making commitments, collection of data to determine base years and so on. In the meanwhile, political leaders continued to meet on the margins of various occasions, with this November seeing the Apec meeting in Yokohama that followed the G-20 meeting in Seoul. Another spring is coming, yet no deal appears on the horizon.
    In this pessimistic scenario, what can India do? As an engaged trading partner, it can reassess its offers for others to emulate. The critical decision area that needs attention is the ‘modalities’ on agriculture and non-agriculture market access (Nama): involving reduction of tariffs on agriculture products; elimination of export subsidies and reduction of domestic subsidies; and reduction of tariff and non-tariff barriers on industrial products.
    In Nama, the discussions focus on three issues — ‘coefficients’ for tariff reduction, the anti-concentration clause and ‘sectorals’. On the first two, while India may not accept blanket restriction on flexibility built into the December 2008 texts, it is not likely to block a deal. The issue of sectorals, where members may agree to undertake deeper tariff reduction commitments in selected sectors, is more sensitive. India has not shown any aversion to engage on the issue in its effort to get a deal through.
    DURING the last couple of rounds of talks, India has come out with more substantive economic arguments on the difficulties in sectors of interest to others and submitting joint proposals in sectors like chemicals. These contributions should enable its trading partners to make a balanced assessment of how far to push India. India has also been at the forefront of developing a mechanism to address non-tariff barriers, a joint proposal on which was discussed at length in the last round of negotiations in October.
    Agriculture negotiations are more important for India, with two-thirds of its population dependent on subsistence farming. Although a number of issues appear to be far from settled in these negotiations — like cuts in overall trade distorting support, percentage of products to be declared as sensitive and the connected issue of tariff rate quota expansion, tariff capping and special products — the critical issue that calls for innovative handling is the proposed special safeguards mechanism (SSM) for developing countries. The SSM would enable developing countries like India to take remedial action through higher tariffs in case of import surges or import-induced price declines. The main differences are between India and the US about the extent of increase in import volume (i.e., the volume trigger) required to cross the Uruguay Round (UR)-bound levels of tariffs and the extent to which these tariffs could be exceeded. Rather than try and reach a compromise, the waters are being muddied by some newly proposed instruments. However, the feeling is that India will agree on a new trigger benchmark, and the US should show flexibility on these new issues as well.
    The state of negotiations is unclear at present. The technical work in various committees appears to have moved forward, with the task on scheduling having progressed in parallel to the deliberations about commitments. Given the broad support to calibrated liberalisation accompanied by regulatory and institutional flanking policies among our political establishment, India will not be the deal-breaker. It will continue to sit on the high table as a deal-maker rather than a deal-breaker so long as its farm sector is protected, no commitment of a zero-for-zero in industrial goods sector is insisted upon, commercially meaningful liberalisation is secured in services and a commitment to accommodate the UN Convention on Biodiversity in TRIPs is agreed to...