Limited Negotiating Capital Must Be Used Judiciously

The Financial Express, September 08, 2003

By Pradeep S Mehta

The WTO secretariat has circulated a revised draft declaration for the Cancun ministerial. However, entrenched positions among countries as well as a flurry of proposals in the interlude held up the release of the draft declaration, originally planned to be released on August 22. The 21-page text covers key areas of the Doha Agenda, and unlike the July 18 Draft, has more flesh on its bones. However, several developing countries have criticised the revised draft as being imbalanced and not taking into account development needs and their proposals in many areas. Nevertheless, the revised draft has tried to adopt a hybrid approach in some crucial issues like agriculture and

non-agricultural market access. Agriculture, along with TRIPs, public health and the four Singapore issues, has been the major contentious issues in the current Doha round of trade negotiations; non-agricultural market access could also claim a place on this list.

On TRIPs and public health, a deal has been struck. But its complexity will certainly add to the list of ‘implementation problematique’. The deal on TRIPs, however, has partially restored developing countries’ confidence that the Doha round has some links to a development agenda.

When the Doha Development Agenda was launched, many had questioned as to how it would enhance development. Proponents had claimed that not just TRIPs, but agriculture liberalisation and technical assistance on various issues too which would constitute a development agenda. Agriculture remains a hot potato, despite some movement. First, the EU’s compromise on Common Agricultural Policy, followed by the US-EU joint proposal, have paved the way for a deal on agriculture at Cancun. As already mentioned, the revised text proposes a hybrid formula for tariff reduction, i.e., between the “Swiss” and “Uruguay Round” formulae, though many developing countries are not happy with it. India, along with China and Brazil, has joined the grand alliance against the US-EC joint proposal. But I am not sure how far India is going to benefit out of it. Clearly, at present India is not a major farm exporter. Perhaps India is howling only because agriculture is a politically sensitive subject at home.

Next, the most contentious issues: the four Singapore issues, especially competition and investment. The revised draft carries the language of both protagonists and antagonists. But, I don’t see how either of the two sets of proposals will be acceptable to all Members. In all probability, some deal will be struck and a middle path adopted. The US has just launched a new proposal on Singapore issues, which has perhaps surprised the EU. The US is ready for negotiations on trade facilitation and transparency in government procurement, and also amenable to a peer review system on competition. It is willing to drop investment knowing fully well that countries are opposed to it. At Doha, the former commerce minister, Murasoli Maran, had succeeded in delaying the launch of negotiations. But, this time it is unlikely that after the US move, the EU will settle for anything less than the launching of negotiations, even with soft law options. The EU has been asking for simultaneous progress on the four Singaporeans as a sort of quid pro quo against what it will be giving up in agriculture. As part of a wider deal, the EU is likely to push US to give more on competition. It already has the support of Japan and Canada for all the four issues. Thus, the EU will push hard for the Singapore issues at Cancun.

What should we do then? We should see the writing on the wall. We have a deal on TRIPs and public health, which will benefit the poor, and the domestic pharmaceutical industry in India, Brazil and South Africa immensely. Secondly, it will also prove that the iron-clad TRIPs agreement can be assailed. This will come in handy when other more critical issues, such as seeds will come up in future. Another, crucial area of developing countries’ interest is Temporary Movement of Natural Persons (Mode 4 of GATS).

Therefore, ideally, India should bargain for better market access for professionals in developed countries. In this area, we can also have an alliance of more than 50 developing countries, including Pakistan, Bangladesh, Sri Lanka and Nepal. This could become a quid pro quo with some Singapore issues.

Quite clearly, the rich countries would not like to see a failure at Cancun and will do everything possible to ensure that it succeeds. However, in pushing their own interests forward they would not give much in substance. Thus, the poor countries, including India, will need to see how they can capitalise on a situation in which the dice is clearly loaded against them. We have limited negotiating capital. Therefore, it is necessary we should use it judiciously. Diplomacy requires that we define our negotiating positions positively, rather than negatively. Further, and most importantly, prior to defining our negotiating position, we must think hard about the end-game. For example, on agriculture, joining hands with China and Brazil will not bear much fruit, as unlike them, India is not a major farm exporter.

Secondly, we need to do a huge amount on our domestic front before we can become a net agriculture exporter. Thus even on the limited deal on agriculture, which will most likely be hammered out at Cancun, the rich will have garnered enough support from their allies in both the poor and rich countries. In such a situation, we will probably be isolated once again.

Whether, it was the URA or the Singapore or the Doha ministerials, we have repeatedly staked very hardline positions and retreated, thereby losing credibility and have been isolated repeatedly. This risk has increased manifold after the entry of China into the WTO.