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Death of the Doha Round bodes ill for WTO's future

The latest, perhaps the last, attempt to bring the Doha Round of trade negotiations to a successful conclusion has ended in dismal failure. After nine days of intense discussions, which seemed at one stage to have broken through to success, the assembled delegates found they had hit the wall and were obliged to pack up and leave Geneva. There is no agreement on when, or even whether, they are to resume their efforts. Understandably, so much work having been put in night and day, with the will o' the wisp of a breakthrough glimmering ahead, there is deep disappointment among those involved, and with it a readiness to blame each other for what went wrong. The West sees China and, especially, India as the ones that scuttled the deal at the eleventh hour. But Western countries also blame each other. The EU's chief negotiator described his US counterpart as too inflexible and hasty, and was in turn charged with adopting incomprehensible tactics at the talks: all this even while they took a dim view of India's role.



Unsurprisingly, India had a very different view of what was gained and achieved. The Indian trade minister certainly stood up to much pressure from powerful countries and ultimately was bold enough to let the Doha Round go into limbo rather than accept an agreement that he found fatally flawed. It seems that the EU and the US, both historically entrenched in subsidising their agriculture and protecting it against foreign imports, had shown readiness to accept some reduction of the subsidies they habitually provide to their farmers. These subsidies and demands for market access have been a great bone of contention between developed and developing countries where they affect very large numbers of small farmers who depend on agriculture for their livelihood. To ease the problem, it was agreed that developing countries would be permitted to raise special protective tariffs in the event of a sudden surge of agricultural imports into their countries. But no agreement could be found on when and to what extent such tariffs could be brought into effect. The issue was hotly discussed but eventually the Indian minister was forced to conclude that the concessions on offer were insufficient and would mean in effect that effective and timely remedial action to protect small farmers in developing countries would not be possible. Hence he felt obliged to pull out, even at the cost of the failure of the entire round of talks.

The critical importance of India's voice in this vast negotiation was recognised on all sides. This owed something to the initiative of the director-general of the World Trade Organisation (WTO) to set up an inner group of seven for the final negotiating effort. In this group were India, China and Brazil from the developing world, to join the quartet of developed countries that had more or less controlled and shaped previous WTO agreements. India's vocal stand within this small group sounded loud and clear, and its refusal to be pushed into an agreement ensured that the entire effort was brought to a halt. Yet India could claim, as it did, that its stand was not motivated by selfish interest alone but had the support of more than 100 others who were similarly affected but unable to raise their voices.

Even as the aftershocks of the failed negotiation are still dying away, concerns are being expressed about what comes next. The fact that the Geneva meeting did not indicate any sort of follow-up activity has added to the concerns. Some observers fear that the comprehensive, all-embracing sort of trade negotiations exemplified in the Doha Round may be impossible to revive. This is not only because nobody is keen to rush into another bruising encounter like the one just concluded, but, more crucially, because a global negotiation may no longer be the best way of solving the problems that demand an answer. Hence there is talk of moving on to regional and sectional negotiations, smaller in compass and less ambitious in scope. How this would affect international trade is unclear. Some fear that it could permit and encourage barriers to open trading, with incalculable consequences for the future. The relevance of the WTO itself would have to be reassessed: after all, it was created with the purpose of promoting open trading across the globe. Perhaps on account of these gloomy scenarios, some of the participants, including the Indian trade minister, have started calling for a return to the negotiating table before too long, to continue the task that could not be concluded in Geneva. After all, much was achieved in a number of areas and many who took part would not like to lose all the benefits that seemed within grasp at one stage.

Thus there are questions and apprehensions about the future. No individual country or group appears to have come back from Geneva with profit: India and others may have defended their essential interests but they, no more than anyone else, have not gained anything of note. Yet there is no doubt that the recent talks mark an important stage in the emergence of major developing countries on the larger stage of international economic give-and-take. India, China, Brazil and others are now of sufficient weight in international trade to make it impossible to set aside their views and interests when major issues are being decided. Already analysts of the talks are beginning to assess what this new factor may come to mean in WTO councils, and how it will affect the structure of the organisation itself. The large and fast-growing developing countries, as individuals and as a group, have forced themselves into the reckoning.

Especially striking is the way in which India and China were able to make common cause. This is the second time in recent major conferences that this has taken place, the earlier occasion being the meeting on climate change. Then as now, when their interests converged, these two large Asian countries were able to dig in and defend what they regarded as their legitimate rights. The powerful countries that may be accustomed to dominating such gatherings were unable to compel or cajole them out of the way.

There are issues on which India and China may not see eye-to-eye, and the common view remains that the two countries are fated to be rivals, constantly measuring up against each other, and unable to resolve some outstanding problems that place a limit on the growth of their relationship. Indeed, India's rise is deemed worthy of encouragement in some quarters as a means of checking the unrestrained progress of China. Yet the coming together of the two Asian countries as witnessed on these recent occasions can suggest another sort of relationship where cooperation between them is no less significant than rivalry, and which can have a significant impact in many fields and on Asia as a whole.

 


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