Some 'development round'!

Failures seem to have become routine at the World Trade Organisation's (WTO) talks on trade liberalisation. Deadlines, too, have lost their sanctity. As such, the failure of the latest bid by the WTO's informal trade negotiations committee at Geneva to evolve a compromise with the help of six key WTO members (G-6) may not automatically spell the death-knell for the Doha development agenda. Nor should it herald the collapse of the WTO itself, as feared by some. The failure only indicates that these talks, now in their fifth year, will take more time to fructify, as did the Uruguay Round, which took over eight years to conclude. However, the complication is that fresh talks will not start till early next year, after the mid-term US elections. And that rules out an agreement before the expiry of the US fast-track negotiating authority in June next year, and therefore perhaps before the US Presidential elections, which are more than two years away. Whether fresh momentum can be cranked up after such a time lag, and with possibly new players representing the different countries, is a big question. There is the risk, clearly, that the Doha Round is dead.

Many commentators have blamed the US squarely for the fiasco at Geneva, since domestic support to US agriculture would have gone up, and not down, on the basis of the American offer on the table, whereas Europe has proposed a 51 per cent cut. The Americans argue that European tariffs are much higher than US levels, as are European subsidies in their absolute total, and that if a better offer was coming from the Europeans, the US would have been flexible. But the US expectation that countries like India, with subsistence-level agriculture, would have to cut tariffs by 44 per cent was clearly unrealistic and definitely unreasonable. Indeed, it should not be assumed that the Geneva talks were taken seriously, since all the six negotiators""the US, the EU, Australia, Japan, Brazil and India""stuck to their positions on subsidies and tariffs, leaving little space for a breakthrough.

The delay in the conclusion of the Doha Round will mean loss of potential business that trade liberalisation could have generated. But the consequences of a bad deal done in a hurry would have been worse, especially for the developing countries. The extent to which the rich countries are currently manipulating global commerce to their advantage can be gauged from the 2006 World Trade Report released by the WTO. It reckons that 21 developed countries fork out a whopping $250 billion annually for trade-distorting subsidies, while all the remaining countries put together spend only $50 billion on such support. What is worse, subsidies are being given even to sectors like mining, coal, steel, forestry, fishing, shipbuilding and automobiles. Not only that, the report has also indicated, albeit on the basis of incomplete evidence, that support measures are in place even for transport, tourism, banking, telecommunications and the audio-visual sector. It is, therefore, wholly unreasonable for the developed countries to expect poorer nations to open their doors for these subsidised goods and services, to the disadvantage of their local players. It is, therefore, imperative for the developing countries to be vigilant while negotiating subsidies and market access.

What needs to be noted is that a sizable chunk of the growth in global trade in recent years has been due largely to bilateral and regional trade agreements, and this process is bound to gain further momentum now.