Pallavi Aiyar

Need to implement measures that will remove trade distortions

BEIJING: India and China, two of the world's fastest growing economies, issued a joint statement on Monday reiterating their commitment to placing "the development dimension at the heart" of the World Trade OrganiZation's (WTO) ongoing Doha Round of negotiations.

The statement followed a meeting between Indian Commerce Minister Kamal Nath and his Chinese counterpart Bo Xilai HERE on Monday. It is one of the clearest indications yet of a serious effort on the part of the two countries to harmonise a common position in the WTO.

During their discussions, the two ministers emphasised that the economic and trade relationship between India and China is of "global and strategic significance." They thus concluded that "an increased participation and a constructive role of the two countries in all key issues, including issues of international trade, can further strengthen their partnership for international efforts to deal with global challenges and threats."

Mr. Kamal Nath briefed Mr Bo Xilai on the recently concluded talks in New Delhi between the trade ministers of the G-4 group of countries that include India, Brazil, the U.S. and the European Union. A year-end deadline for concluding the Doha Round of trade talks was set at that meeting.

Since its launch in 2001, however, the Doha Round, has missed deadline after deadline with negotiators struggling to find common ground on thorny issues such as agricultural subsidies as well as market access for industrial goods and services.

Meeting an end-year deadline would mean that some kind of a breakthrough is needed within weeks.

Key sticking points have been how far developed countries are prepared to go in cutting farming subsidies and in turn how far developing nations will allow access to their markets in agriculture and industrial products.

According to the joint statement, the two ministers agreed that the major issue impeding the progress of the Doha Round was "the lack of movement by developed countries in terms of early removal of distortions, caused by huge subsidies and significant market access barriers in developed countries.''

They thus "urged the developed member countries to realise that they bear a special and specific responsibility for the outcome of the Doha Round'' by showing a readiness to implement measures that would remove trade distortions and by significantly opening up their markets. The joint statement concluded that the current positions of the developed countries did not provide an adequate basis for successful negotiations on agriculture and called for an "improvement" of these positions in particular in what it called "the two crucial areas of domestic support and agricultural market access.''

Although India has been aggressive in taking the leadership of the group of developing countries that are party to the Doha negotiations, China is known to be comparatively reticent. The joint statement's significance, thus, also lies in that China too is willing to actively support the position of the developing country bloc.