The Hindu : Front Page : Large economies are isolated, says India

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Tuesday, Jul 29, 2008
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Large economies are isolated, says India

U.S. accuses India, China of jeopardising WTO talks

GENEVA: The U.S. criticised China and India on Monday saying they were threatening seven years of work on a new global commerce pact and using some of the strongest language yet at a crucial set of talks at the World Trade Organisation (WTO).

David Shark, a U.S. trade official, told the WTO’s 153 members the U.S. has “swallowed hard and accepted” a compromise proposal to open up trade in manufactured goods and agriculture. But he criticised India for rejecting the package laid out by WTO chief Pascal Lamy, and China for backing out of terms it committed to last week.

“Their actions have thrown the entire Doha Round into the gravest jeopardy of its nearly seven-year life,” said Mr. Shark. Rich and poor countries have clashed repeatedly since the round was launched in Qatar’s capital in 2001. The trade body is hoping for agreement this week on a deal that would lower tariffs and subsidies on agriculture and manufactured goods, setting the stage for an overall trade accord by the end of the year. Signs of a breakthrough last week were followed by more entrenchment over the weekend.

India said the stand-off was the result of unreasonable demands from the West.

“If blocking means not accepting whatever the developed countries say, so be it,” said Commerce Minister Kamal Nath, adding: “It’s not only India. We have 100 countries saying the same thing. It’s the large economies that are isolated.”

Mr. Shark said India and China are insisting on allowances to raise farm tariffs above even their current levels. The U.S. and other agricultural exporters argue this violates the spirit of the trade round as it is supposed to help poorer countries develop their economies by boosting their exports of farm produce.

Loopholes in laws

But China and India are not alone. Faced with rising food prices, a number of developing nations have sought wide loopholes against opening up their farm markets — either by blocking certain strategic products such as rice or grains or through rules that would allow them to spike tariffs if faced with a sudden flood of imports.

Mr. Shark accused China of trying to carve out cotton, sugar, rice and other commodities from any tariff cuts under a WTO deal. He said Beijing and New Delhi were working to protect their own interests by controlling a large group of even poorer nations. “Ironically, these policies would have their most serious detrimental effects on precisely those poorer developing countries that already have such limited agricultural export capabilities,” he said.

Cuba, Haiti, Indonesia, Philippines and Venezuela and are among over 30 WTO countries allied with India and China in agriculture negotiations. The group also includes richer countries like South Korea, and often works closely with other WTO coalitions of developing nations from Africa, the Caribbean and Latin America.

Developing countries have sought steeper cuts in rich-world farm subsidies, which they blame for distorting global commodities prices and hindering Third World development.

The U.S. and EU have demanded new market opportunities for their industrial goods and service providers in exchange. Washington also wants better conditions for farm exports.

After nearly a week of fruitless talks, a compromise proposal on Friday by Mr. Lamy finally cajoled major countries into making tough decisions.

It called for cutting limits on European farm subsides by 80 per cent and on U.S. payments by 70 per cent. That, however, would not entail a reduction in overall spending for the U.S., which paid out $9 billion last year in trade-distorting support to its farmers, but would still be allowed to increase that to about $14.5 billion. — AP

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