Doha Round stuck; Unctad's Sao Paulo Round does better

Developing country parties to the Global System of Trade Preferences (GSTP) today met at the minitrial level and agreed on “modalities” for cutting tariffs in trade between each other.

The decision paves the way for participating countries to offer reductions of at least 20 per cent on tariffs that apply to some 70 per cent of the goods exported within this group of nations. A schedule was set to conclude the details of the agreement by September 2010.

These negotiations, known as the ‘Sao Paulo Round’ were launched in 2004 on the occasion of Unctad’s conference in that Brazilian* city. It includes 22 countries, including India (and Iran, Pakistan, Sri Lanka, Malaysia and Indonesia). The GSTP, established in 1989, providesd a framework for preferential tariff concession talks and related measures to promote trade.

Union commerce and industry minister Anand Sharma hailed the modalities agreement, saying it would concretise “South-South cooperation through tangible initiatives”.

“The Draft Decision is a welcome and propitious shift from the earlier bilateral request-and-offer approach,” said the minister.

“Just at a time when the Doha Round of trade negotiations are mired in all kinds of problems, Unctad’s GSTP opens the gates for developing countries to persist with South-South trade liberalisation among them,” said an African trade envoy.

Sharma also expressed confidence that the United States "will demonstrate leadership" in accelerating the stalled Doha trade negotiations. He suggested that there will be a definite forward-movement early next year with "updated plans” (revised texts), as the tepid seventh ministerial meeting of the World Trade Organization came to a close yesterday.

Sharma who held a bilateral meeting with the US Trade Representative Ron Kirk on Tuesday, said the US will "remain engaged". The Indian minister, who has a good rapport with the USTR, said there is a "commitment to conclude the Doha trade negotiations next year”, insisting that the only way to ensure progress is by adhering to the December 2008, texts.

Sharma admitted that the seventh ministerial meeting was not meant for substantial negotiations, adding that India will never lower its bar on an effective and simple special safeguard mechanism and special products.

Privately, many participants told Business Standard there will be no progress in Doha trade negotiations, given the lack of engagement on the US' part. "We are not going to have an agreement in 2010 and the Doha negotiations will drag on to 2011, when there will be a new US Congress that will determine whether the Doha project can be resurrected or allowed to die," a senior European Union trade official told BS, preferring anonymity.

"There will be no progress this year and the only thing to do is to keep the talks alive by constantly engaging the US, instead of pushing them to a wall," the official said, suggesting that this is a bad time for any progress in Doha negotiations.

Despite reservations from the United States, a "stock-taking" meeting on the Doha Dvelopment Agenda negotiations will take place early next year, the World Trade Organization seventh ministerial meeting chair Andres Velasco of Chile told BS.