They can reopen another round of talks: Jagdish Bhagwati
CHENNAI: Both India and the United States should settle for what is possible in the current Doha round of negotiations and reopen a later round of talks, if necessary, so as not to undermine the World Trade Organisation (WTO), Jagdish N. Bhagwati, free trade economist and professor at Columbia University, said on Saturday.
Speaking to journalists at The Hindu here, Dr. Bhagwati said India could also take the lead by, for instance, agreeing to settle for the relaxation of its demands on special safeguard mechanisms in exchange for the Americans giving up on their stand on agricultural subsidies. India could “give without effectively giving” while protecting its own rights through other WTO safeguards.
On the current economic crisis, Dr. Bhagwati said a recovery was being predicted in the near future. However, he cautioned that worries over future inflationary trends should not result in a premature rollback of the financial stimulus.
Conceding that no one would want to talk about liberalisation at a time of macro-economic crisis, Dr. Bhagwati said protectionism in its different forms should be avoided.
Many countries were adhering to the WTO rules, but there was still protectionism in the form of safeguard actions such as imposition of tariffs and the use of incentives based on the country of origin of the goods of manufacture, and this would only hurt the operations of the market in the long term, he said.
About Indian concerns over the effect of liberalisation on farmers, he said liberalisation could be effected gradually without exposing farmers to too much risk. Just as the manufacturing sector had liberalised slowly post-1991 (tariffs had fallen from 75 per cent in 1991 to 11 per cent now), Dr. Bhagwati said massive disruptions could be avoided while liberalisation took place slowly.
The phenomenon of farmers’ suicides represented the asymmetry between the time of the Green Revolution when richer farmers took risks while poorer farmers, who did not, were absorbed by the richer farmers, he said. At present, in contrast, there was a sub-prime mortgage-like situation in India owing to excessive borrowing by poorer farmers, who were ready to take risks and make big bets. Seeds were being sold by salesmen without any concern for the farmers’ ability to pay, he said.
Dr. Bhagwati said India was being perceived as a “rejectionist power” by developed countries for its stand on climate change. He said India had negotiated its position well, but it could be further improved.