WTO for Godot

The rigid stance adopted by the US and the EU has been blamed for last week?s dust-up in Geneva.

WTO chief Pascal Lamy’s warning to its 149 member-nations that failure to bring the current round of negotiations to a conclusion by the end of this year might lead to a permanent collapse of the Doha round are not entirely unfounded. Special powers mandated to the US president to negotiate on trade are set to expire in July next year, four months before the presidential elections there. Given this timing, there is a real chance that the current round of talks, the so-called Doha round, may fail to create a new world trade environment — cutting tariff and non-tariff barriers and improving market access in an equitable manner among wildly mismatched participants.

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The rigid stance adopted by the US and the EU has been blamed for last week’s dust-up in Geneva, where India’s Commerce Minister Kamal Nath threatened to abandon the talks and catch the next flight home. The US’s refusal to budge on the issue of reducing its domestic farm subsidies, while at the same time demanding much higher non-agricultural market access to emerging markets and a sharp reduction of the EU’s farm subsidies, countered by an equally adamant EU, virtually sealed the fate of the talks.

However, there is some light at the end of the tunnel. The G-20 — the 20-member group of rapidly emerging developing economies, led by India and Brazil — has emerged not only as a powerful voice, but as a bridge between the less-developed countries and the advanced ones. One of the G-20’s notable achievements has been to bring about a softening in the EU’s stance, which is now drifting closer to the G-20 position. The US, meanwhile, has reneged on its earlier offer and has said it might actually increase farm subsidies, while demanding greater access for US goods and services. This poses a dilemma for India, which is faced with a dual problem: on the agriculture front, it needs to balance measures to ensure food security and protection of its domestic agriculture, while ensuring greater access for its increasingly competitive manufacturing and services exports. The developed nations, the most vocal protagonists of a free trade regime, need to match rhetoric with action, if billions are to get a real chance to break free from the shackles of poverty.