T S Vishwanath: Development vs market access

Developing countries are worried that the focus of the Doha Round is once again shifting from development to market access in favour of the developed world.

The month of May 2011 is going to be busy for the followers of the Doha Round of the World Trade Organisation (WTO). After the release of the documents by the Negotiating Chairs in April, there has been a flurry of activity in Geneva. As has been the case after every hiatus, developing countries are once again under pressure to accept some market access proposals advanced by the developed world.

However, despite the frequent meetings in Geneva, member countries are still far from any breakthrough in the negotiations. A WTO analyst amplified this and said, “Let us not again mistake activity for any movement.” Some WTO regulars also indicate the possibility of the draft text of an agreement emerging from the Director General of the WTO, Pascal Lamy. However, such a text at this time could have ramifications. One, if it is imbalanced and lacks a genuine development dimension, it could stall the Round for a long time. And two, the contents may strain Mr Lamy’s self-projected image as a neutral player in the negotiations.

There have been texts from WTO chiefs in the past but the current environment may not be conducive to such a text. In the overall interest of the Round, Mr Lamy will need to ensure that the text is member-driven and not authored by the WTO secretariat.

Over the next few weeks, political pressure will build to take the Round forward. To begin with, some trade ministers would meet at the Asia-Pacific Economic Cooperation trade ministers’ meeting in Montana. Then some of them will meet again in Paris on the sidelines of the Organisation for Economic Co-operation and Development meeting. Also, the WTO’s Trade Negotiations Committee will meet again at the end of this month to chart a course of action over the next two months to take the Doha process forward.

A cause for concern for the developing world is that the focus of the negotiations has put developing countries like India, China and Brazil in the limelight again. The focal point of discussions over the next few weeks would be the reduction of tariffs on industrial goods. Rajeev Kher, the chief WTO negotiator for India, at a recent industry meeting stated that the issue now was the emergence of a perceptible paradigm shift in the negotiations. He was referring to the current discussion in Geneva, where some member countries are reiterating that the developed world has already unilaterally brought down tariffs and now the developing world will have to reciprocate by agreeing to participate in negotiations that could even eliminate tariffs in certain identified sectors like chemicals, industrial machinery and electronics and electrical.

The paradigm shift that Mr Kher is pointing to is that the current discussions in Geneva have moved away from the core of the Doha negotiations of making the Round development-oriented rather than market access-oriented.

This reflects a question raised by the CEO of a Malaysian company at a recent conference in Kuala Lumpur. He asked whether fast-growing developing countries need the WTO to improve their presence in global markets or whether the developed countries that are hit by the economic crisis need the multilateral trade organisation to meet their aspirations.

His question was based on the fact that there are currently over 500 bilateral and regional agreements either under negotiations or concluded in the Asia-Pacific region. Nearly 280 of these agreements have been concluded. Many of these are South-South agreements which help build value chains across the region. The India-Malaysia Comprehensive Economic Cooperation Agreement, for instance, along with the India-Asean agreement on goods, can provide some key sectors an important platform to build value chains across the region. These agreements, the Malaysian entrepreneur said, provide a win-win solution to the countries in the South and help them in the inclusive growth process.

The WTO cannot be replaced by regional and bilateral trade agreements. Such agreements can only supplement the WTO, which, still, remains the best platform to negotiate agreements that provide a larger access to global markets. However, there is an urgent need for member countries to understand that they should not undermine the sanctity of the Development Round currently under negotiation. Over the next three months member countries may decide the possible outcome of the Doha Round.

The author is principal adviser with APJ-SLG Law Offices