Moment of truth

It has become clear that the ongoing meeting of trade ministers and officials from 40 countries in Geneva is the last hope for salvaging the seven-year-old Doha round of multilateral trade talks. Since its launch in the Qatari capital in November 2001, amidst tensions caused by terrorist attacks and the dotcom bust, the Doha round has had a chequered record. Its original objective was to liberalise trade so that it could play a fuller role in promoting “recovery, growth and development.” Almost from the beginning, however, developing countries including India have complained that the trade agenda ignored the development aspects. In 2003, following the abrupt closure of a high level ministerial meeting at Cancun on a recriminatory note, few expected the Doha round to proceed further. In fact, some two years ago, the talks were suspended as there was very little progress. However, the member-countries of the WTO — now numbering over 150 — continued to espouse multilateralism even in the face of lengthening odds. The talks have already missed some important deadlines. The U.S. President’s fast track authority to approve a deal elapsed last year. A new President, whether Democrat or Republican, will have other priorities. Besides, protectionist sentiment has gained ground in the advanced countries. The world economy is slowing down. Inflation is a global phenomenon. The housing and the credit crises in the U.S. show no signs of abating even as their repercussions are being felt worldwide. With the oil shock continuing, the environment seems far less conducive than it has been over the last six years for an accord to materialise.

Yet that is precisely what the negotiators are hoping to achieve at Geneva during this week: a framework accord on reducing permissible farm subsidies and lowering tariff limits for both agricultural and industrial goods. Over the past year, trade officials have been working very hard to narrow down the seemingly intractable differences in agriculture and non-agricultural market access (NAMA). Revised drafts put up in quick succession by the WTO Secretariat show that differences have indeed been sorted out but, as the reactions of India prior to the meeting show, the core differences remain. It would require utmost negotiating skills as well as accommodation on the part of all countries to arrive at a consensus. It is one of the great ironies that a successful Doha round will not yield spectacular benefits at least immediately. A failure, however, will be extremely expensive, stoking the flames of protectionism further and perhaps permanently damaging the WTO and the principle of multilateral trade it represents.

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