Timely warning

Even as the trade negotiators at Geneva strive to put together an agreed draft for consideration at the World Trade Organisation's ministerial meeting that is likely next month, a note of caution has been issued by the United Nations Economic and Social Commission for Asia and the Pacific (Escap), which states in its 60th report released last week that the freeing up of agricultural trade will not help many developing countries, including India, in reducing poverty. On the contrary, it says, poverty levels might increase in India, Bangladesh, Russia and Sri Lanka due to the negative impact of trade liberalisation on real wages. This may make trade negotiators from these countries wary about what they are getting at the negotiating table, but it is important to note that Escap itself has appended a significant rider to its conclusion. According to this, the impact on poverty alleviation can be turned positive if "" and this, of course, is a formidable if "" the world goes beyond the Doha reforms and undertakes comprehensive agricultural liberalisation, eliminating all tariffs, export subsidies and domestic support for agricultural and food products. About 12 million people in India and many more elsewhere can, in that case, come out of the poverty bracket.

What the argument boils down to is that global trade needs to be fair and free of distortion, besides being on a level playing field between developed and developing countries. In other words, half-hearted liberalisation can harm the poor in the developing countries while total liberalisation and elimination of protection and support (in the developed countries) can be a real bonanza for them. This much is perhaps self-evident; still, it is a timely warning against coming away from Doha with an imperfect agreement that causes more problems than it solves.

Taking that to be so, it would seem that the developing countries are doing the right thing in being fastidious while viewing the offers made, and the demands raised, at the Doha negotiation table. Of course, the anxiety of the WTO director-general, Pascal Lamy, to bring the protracted parleys to an early conclusion is understandable because, otherwise, they will have to be put on hold till the US presidential election is over and a new administration assumes office next January. But this urgency should not push the developing countries into agreeing to a half-baked deal which might ultimately boomerang on them, as earlier deals under the auspices of the General Agreement on Tariffs and Trade (GATT) have done. The conditional offer made by the US president late last week, to consider serious concessions in agriculture in return for other countries opening up their markets to more US exports of manufactures and services, is in line with similar signals from other developed countries, and they do not indicate much headway in the talks or any softening of positions. Though India and several other developing countries may gain from liberalisation of trade in the services sector, this cannot be at the cost of the core issues that have so far prevented a deal in the Doha Round. In that sense, the Escap warning is a timely one.