Back on the road

Doha Round may re-start, but don't expect early conclusion

The “informal ministerial” meeting of key members of the World Trade Organisation (WTO), held in the capital last week, has been declared a success because it has paved the way for fresh, formal negotiations to re-start at the WTO headquarters in Geneva. In the process, India has played the role of successful host and shown itself to be a member in good standing, intent on making the Doha Round of trade negotiations come to a successful end. This was a useful purpose to achieve because many developed countries had blamed India and its commerce minister of the time for the talks being stalled in the summer of 2008. While Kamal Nath may have had an abrasive style and rubbed some of his counterparts the wrong way, the “blame” cap did not fit India; more correctly, it should have sat on the US negotiator’s head—as Europe’s negotiators too felt at the time. President Bush had become a lame-duck president in an election year, and it was clear that he had no mandate to undertake serious negotiations. That situation does not seem to have changed even now, under President Obama, as the comments by the new US negotiator made clear in New Delhi last week. So, while the New Delhi meeting can be considered a success (because, tactically, it focused not on the substance of the negotiations but the process by which to move things forward), it does not spell any quick conclusion to the Doha Round. Both the US negotiator as well as Pascal Lamy of WTO seem to be pointing to a fairly distant deadline as being realistic.

That underlines the difficulties involved in extracting concessions when national economies are going through a rough patch. World trade is still shrinking, and the different economic agents (companies, farmers, traders, etc) are already struggling to cope with the adjustments forced on them by the worldwide recession of the past year. Any further adjustments provoked by trade negotiations would be unpalatable and therefore politically not feasible. Placing a maximalist agenda before the trade ministers assembled in New Delhi would therefore have been an invitation to disaster. The wisdom of focusing on achieving what was feasible shows through clearly.

India needs to continue its twin-track approach to the rules governing its international trade. On the one hand, it must continue pressing for the multilateral forum to become functional and to stay relevant; on the other, it should continue to focus on bilateral trade pacts of the kind signed recently with Asean and South Korea. These latter demonstrate that India is not anti-trade reform (it would not have escaped notice that the European Union is even now unable to conclude its bilateral trade agreement with South Korea). They also encourage a push for greater domestic competitiveness, through the pressure applied by bilateral trade concessions.