No end in sight

The Financial Express, April 19, 2009
By Pradeep S Mehta

One huge disappointment of the April 2 G-20 summit in London is the backtracking on the resolve to reach a conclusion of the Doha round of trade talks. On the other hand there was firmer resolve on taking measures to combat the adverse consequences of financial crisis, including providing a $250 bn package for trade finance. On their own the Doha talks may not have added to the rescue package but the confidence it would have generated in the depressed economic scenario cannot be judged in terms of dollars and cents. The Doha talks itself were launched in 2001 in the aftermath of the 9/11 tragedy in New York as a resolve to show the world that we are together. The current economic scenario too calls for a similar signal to buttress confidence in a shaky world, and once again the Doha round is the symbol.

In November, 2008 the G-20 proclaimed:

“… we shall strive to reach agreement this year on modalities that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. We instruct our Trade Ministers to achieve this objective and stand ready to assist directly, as necessary”.

Contrary to this, the April 2 Communiqué states, “We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round, which is urgently needed. This could boost the global economy by at least $150 bn per annum. To achieve this we are committed to building on the progress already made, including with regard to modalities.” No timeline for this hortatory statement.

This now only shows that for the rich countries, Doha is not a priority. The rich who always claimed to be champions of trade liberalisation and openness are confronted with the serious problem of rising unemployment in their own backyard. The US President began his press conference on the sidelines of G-20 meeting by underscoring the unprecedented rise in unemployment in his own country. Rising unemployment is a universally accepted politically sensitive issue, and it is the poor countries who are worse hit. While the poor cannot engage in suicidal protectionism, the rich and the bigger developing countries continue in spite of promises to not to do so.

In my article: “Multilateralism is the cure” (March, 22) I had argued that the current global crisis needs a solid global response — the protectionist response is definitely the wrong one. Reviving the Doha round constitutes an important element of the needed response, and hopefully the G-20 meeting will try and move it forward. I was quite disappointed.

The noted trade economist, Prof TN Srinivasan was equally disappointed as many other right thinking persons. In a paper for CUTS done before the summit, Professor Srinivasan writes: “The forthcoming London meeting of G-20 on April 2, 2009 is an appropriate forum to announce concrete steps to conclude the Doha round promptly starting with a reaffirmation of the commitments made by WTO members in November 2008. … To enable a speedy resolution of the differences on modalities G-20 leaders should announce specific shifts in their negotiating positions towards middle of their current differences and also instruct their trade ministers to resume negotiations with the changed negotiating positions as starting points.

“Though disagreement among developed and prominent emerging economies has whittled down the agenda of the Doha Development Round, consensus on even this abbreviated agenda has not been achieved”.

Alas, this was not heeded to. The world leaders appeared more concerned about stimulus package at the national level in order to bring the necessary boil in their own economy. While the G-20 in its global plan of recovery promises to treble resources at IMF’s disposal, to ensure additional lending to the tune of at least $1000 billion by the multilateral development banks (MDBs), given the past record all these are not easy to realise in practice. Moreover, lending from IMF and World Banks are tied with conditionalities, which have done more damage to economies of poor countries than providing any long-lasting help.

Reverting to the Doha talks, the question arises why world leaders are not keen to see early conclusion of Doha round? President Obama in his long press conference at London did not utter a word about Doha and its early conclusion. All through his press briefing he kept on emphasising America’s growing problem of unemployment and job losses. He sent across a clear message that for him the prime responsibility is to address his own constituents and make their lives better. For him a comprehensive reform of a failed regulatory system is a priority. He also hinted that in the short-term protectionist measures look unavoidable. On the other hand, each trading nation now finds it easier to get their interest through bilaterals, rather than through the multilateral route.

Given the situation, it is quite understandable why the Doha round is getting a short-shrift from the G-20 leaders. The WTO chief, Pascal Lamy is not the lone voice in this wilderness, but like many of us, he too needs to be optimistic on the Doha round.

The writer is Secretary General of CUTS International. Pranav Kumar of CUTS contributed to this article.

This article can also be viewed at: