A number of potentially contentious issues still remain unresolved but any one of them can be a deal-breaker
The recent two-day meeting of trade ministers and negotiators from 35-odd countries in New Delhi under the aegis of the World Trade Organization ended with an agreement to resume high level talks to further the Doha development round. It was decided to begin trade negotiations in right earnest in ten days — by mid-September — at the WTO headquarters in Geneva.
A detailed agenda for the negotiations will be prepared by senior trade officials. Very significantly, it was decided to try and wrap up the Doha round by 2010. By orchestrating the revival of the Doha Round talks, the Delhi ministerial meet broke the deadlock that had followed the July 2008 meeting of trade ministers which ended abruptly.
Fruitful Delhi meet
This achievement apart, it is good to note that there were very few other expectations from the Delhi ministerial meet. It had a limited objective. Since nothing spectacular was possible or expected at the meet, there was no chance of a failure.
Many observers have pointed out that the Delhi meet has succeeded in refurbishing India’s image. In July 2008, trade talks at Geneva, which seemed poised for a breakthrough, collapsed at the last minute over differences between the U.S. and India over a relatively arcane issue in agriculture. The talks tripped on the special safeguards mechanism, a method to raise tariffs against a sudden surge in imports of specified agricultural products. India and the U.S. differed over the level of tariffs.
India’s Commerce Minister Kamal Nath was blamed in western media for the failure of the talks. India’s ‘intransigence’ in the other weighty global issue of the day, climate change, has come to be simultaneously cited. A more balanced view of the causes for the July 2008 talks failure was that both India and the U.S. had their eyes on their national elections.
As far as India is concerned, there is continuity in politics: the new United Progressive Alliance’s (UPA) trade policy objectives cannot be different from the one pursued by its predecessor. In the U.S., the new democratic government has been expected to be less enthusiastic to open trade than the earlier Republican administration. So far there has been no dramatic reversal. But there is ‘creeping protectionism’ in the U.S. and other advanced countries. That is however viewed more as a response to the recession, especially to the job losses in its wake, than to any change in ideology.
After Delhi, what?
Even granting a breakthrough at Delhi, it is difficult to be optimistic about the outcome at Geneva. The chequered history of the Doha Round over the past eight years does not warrant a swift conclusion.
There have been more failures than successes. After the failure at Geneva last year, the WTO Director General temporarily suspended the talks. However, talks continued at the ambassadors’ level. The drafts on both agriculture and Non-Agricultural Market Access (NAMA) were revised and new drafts issued in December. These will form the basis for negotiations now.
The trade talks have always been guided by substance rather than by processes. The Delhi meet has helped speed up the process. But there are major differences still in the draft texts on agriculture and NAMA. A number of potentially contentious issues remain unresolved. Any one of them can be a deal-breaker. Some of them are given here. The design of the special safeguard mechanism in agriculture has yet to be worked out. There is also a demand for deeper cuts in domestic support for cotton.
In NAMA, the major area of discord is the demand that India, China and other developing countries should be required to adhere to sector agreements for elimination or harmonisation of tariff. India has not been able to bring trade issues in services to the centre-stage of negotiations on a par with agriculture and NAMA.