The walls of protectionism are not going to come crashing down anytime soon, if the message from the German town of Potsdam this week is any indication. Trade ministers of the European Union, the US, Brazil and India failed to agree on slashing agricultural subsidies to open up the world markets, dealing one more blow to the stalled Doha round of talks championed by the Word Trade Organisation (WTO). Commerce Minister Kamal Nath declared that India would not compromise on the issue. India and Brazil pressed that Washington limit support on subsidies that keep farm prices artificially low to $12 to 15 billion per year. The US does not want to budge below $17 billion. Kamal Nath says the talks are not dead, but we are not quite sure.
Time may not be on anybody’s side in making this round of WTO talks a success. Last July, the collapse of a similar round of talks had prompted WTO director-general Pascal Lamy to suspend talks. Tricky issues remain unresolved. Emerging economies like Brazil and India want market access to sell their competitive goods, especially because they have bravely embraced globalisation, a philosophy preached for long years by the Western establishment. However, when the boot is on the other foot, Western governments are known to pussyfoot on liberalisation. To be sure, India has its own defence in the case of farm subsidies and protection to the agriculture sector, but the government’s position is based on the needs of a country where millions live in rural areas. Livelihoods are a key issue, and any attempt to oversimplify the debate by ignoring India’s need for safeguards is bound to hit a brick wall. Indeed, that is what has happened. Brazil, Russia, India and China (BRIC), collectively, are influencing policies in a world that is embracing free trade. Developing countries, at least the emerging economies, are not going to rubber-stamp proposals championed by the EU or the US. At the same time, they cannot yet engage the world as titan economies.
The WTO must blend tactful negotiations with principled pushing of powerful nations to drive a consensus that would revive the forward march towards multilateral free trade. This is hardly the time for President George W. Bush, who faces an election soon, to bravely slash farm subsidies or to be seen supporting a regime that would. But it is clear that statesmen in the developed world must practise what they preach. What matters is the sincerity and the will to move forward. Timing could be of key essence in a world where democratic politics can eclipse the noble intentions of policy-makers. Developing nations must allow some political leeway to leaders of rich nations, which, in turn, must learn to live with a world in which emerging economies proffer a unique blend of development postures, market opportunities and competitive challenges.