Suspended WTO talks likely to bring fresh trouble

Financial Express, India, December 11, 2006

By Ashok B Sharma

Hoping to revive dying WTO negotiations, several think tanks are busy gauging the consequences of the situation. Talks regarding agriculture still remain a contentious and unresolved issue.

Several experts believe that there is not much chance of reviving the Doha Development Round as the political situation in the US has seen a dramatic change. The newly elected Democrats-dominated Congress will takeover from January 1, 2007. The Democrats, who are critical of the global trade regime, will dominate different committees and act as pressure groups to any move or policy of the present US administration.

The new Democratic chair of the Senate Agriculture Committee, Tom Harkin of Iowa, has also indicated that the WTO and Doha Agenda will not be a high priority, and he will focus much of his attention on expanding the Conservation Security Programme. US proposals on farm negotiations have come under fire from many developing countries, which have demanded cuts in farm subsidies.

In this context, experts believe that no positive movement in farm negotiations at the WTO will be possible at this stage and before the US fast track authority expires by July 2007. WTO director general Pascal Lamy has admitted, the “window of opportunity” has already passed. “I accept the WTO round will now not be completed before July next year… So this round will fail unless we get some sort of extension of the US Fast Track Authority.” In this situation many endorse the view expressed by commerce minister Kamal Nath who had earlier said, “No deal is better than a bad deal.” The developing countries should not rush for a deal, which is likely to place them at a disadvantage.

However, CUTS International has suggested that India should make efforts to revive and conclude the Doha negotiations as the country would gain from multilateral trade regime. It has said the cost of the suspension may have repercussions in terms of economic loss, negative impact on geo-politics, setback to economic reforms and increase in trade disputes. It added that with multilateral negotiations under suspension, countries are entering into preferential trading arrangements, which are not a substitute to multilateral trade regime.

CUTS also said since the launch of Doha Round in late 2001, exports from India have grown at a rate of more than 20% per annum. However, with its suspension, India may not be able to increase its exports, particularly in the farm sector, despite taking positive steps within the country, it said.

“High growth was seen in spite of the fact that new round did not result in significant trade liberalisation. However, our share in world trade has increased only by 0.1% during the last 5 years. Contrary to this, China has been able to increase its share in world trade from 4.3% in 2001 to 6.6% in 2004,” the India-based CUTS International said.

However CUTS views on India’s benefits under WTO regime are debatable. The country’s imports, too, have increased substantially. Whether India will be able to maintain its growth in exports in the suspension period is also debatable.

However, the view that countries will enter into prerential trading arrangement, leading to a WTO-plus regime seems logical and is already happening. The most important point made by CUTS is the possible increase in trade disputes. The process has already begun like US imposing anti-dumping measures on several commodities.

The CUTS study said rich countries have become more vulnerable to attract more disputes cases in the WTO in view of their huge farm subsidies and distorted trade practices.

The developing countries, in this situation, would be hiring legal professionals from developed countries to fight their cases at high cost-in the range of $500 to $1000 per hour plus other expenses like travel and stay. There is no provision in WTO for offering legal aid.

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