D Ravi Kanth: Development Round?

TRADING THOUGHTS

Robert Zoellick and Pascal Lamy, the venerable chiefs of the World Bank and the WTO respectively, have worked hand in glove to launch this Round from day one, and never tire of chanting the mantra of a crisis or benefits to developing countries to close it. Being its progenitors, they want to establish its existence by hook or by crook. Otherwise, it is difficult to explain why it cannot end on its own merits if it is good for all members? Unlike the previous eight rounds, Doha is christened as a Developmental Round with the avowed goal of securing adequate market access for developing and the poorest countries.

Unless there is an unbridgeable gap between the promises made in the mandate when it was adopted in 2001 and the actual results flowing from the seven-year-old negotiations now, it must be palatable to the members at large. Unfortunately, the Doha Round is held hostage to the demands of the lame duck Bush administration and all efforts are geared towards preparing a menu that can satisfy the US Congress. Consequently, many fundamental norms that ought to govern the Round are given a short shrift.

Over the last couple of weeks, the WTO's director general held a series of green room meetings to prepare the ground for convening a ministerial meeting soon to decide just two issues out of some dozen unresolved problems. These green room meetings, in which only some select trade envoys can take part, are convened not to move things in a collegial fashion but only to advance certain agenda for the so-called horizontal meetings to be chaired by Lamy.

Consider, for example, the argument that members must sign on the benchmarks (modalities) for cutting agriculture tariffs and subsidies and industrial tariffs, and the rest would follow as part of the Single Undertaking. While it is true that nothing is agreed until everything is okayed in a Single Undertaking, powerful members often walk away by pocketing gains in areas of their interest without addressing the concerns of others. At the heart of this modalities deal is an attempt to secure a hefty payment from developing countries in both agricultural and industrial market access for whatever limited payment Washington would pay in cutting down its farm subsidies. Though Washington spent about $7 billion on its farm subsidies last year, it wants to maintain more than two times that amount as insurance. At the same time, the US insists that developing countries must provide real market access, implying bringing their current bound tariffs below their applied rates. The underlying goal of the modalities agreement is to enable the Bush administration to initial an agreement. "There is no question of the administration securing a trade promotion authority in the next couple of months," a former Bush administration trade official told Business Standard. "But it can initiate work on an agreement in Geneva," he added.

More disturbingly, trying to bring linkages between agriculture and industrial products