New Delhi: Negotiations over the Doha multilateral trade deal seem to have hit a dead end, with World Trade Organization (WTO) director general Pascal Lamy admitting there are unbridgeable differences between the US and emerging economies on industrial tariff cuts, and India making accusations of a bias towards developed countries in the revised texts. The WTO secretariat issued revised draft negotiating texts on the Doha Round on Thursday for the first time since December 2008.
India’s commerce secretary Rahul Khullar said the agriculture chair report is “tilted mildly” in favour of the developed world. However, his main objection was against the revised text of non-agricultural market access (Nama), which he said shows a “clear bias” towards the developed countries by shifting the goal posts. “The purpose in the revised Nama text seems to be equalizing tariffs between developed and developing countries. Where did that mandate come from? That is unfair and wrong,” Khullar said.
When asked where he sees the Doha Round moving from here, Khullar said he doesn’t know. “Everybody knows what is not happening at Geneva. There is effectively no movement (on contentious issues). Everybody now has to think about it very hard. Is it credible to conclude the deal by 2011; if not, what needs to be done?”
The Doha Round is named after the capital of Qatar where talks started in 2001. While negotiations broke down in July 2008 on differences between India and the US over farm tariff levels, the major bone of contention this time is the US demand for disproportionate tariff cuts by emerging economies. The US is demanding the complete elimination of tariffs by emerging economies such as India, China and Brazil in sectors such as chemicals, industrial machinery, and electric and electronic products. However, the emerging economies are resisting the demand citing unilateral tariff cuts that they have already undertaken and the Hong Kong declaration that categorizes sectoral negotiations as non-mandatory.
Admitting differences: WTO director general Pascal Lamy. Antoine Antoniol/Bloomberg
A high-level trade group, co-chaired by India-born trade economist Jagdish Bhagwati, recently argued that a conclusion to the deal could be achieved through a high-stakes gamble of announcing a date—such as the end of 2011—by which the negotiations are declared completed or the round declared dead.
However, Lamy said the answer to the current stalemate cannot be to “stop and reboot”, since the issues to be addressed in any new round would necessarily come back to the points blocking progress now. “We, therefore, need to reflect actively together as to the next steps,” he said.
The negotiating committee representing the full WTO membership is scheduled to discuss the revised texts on 29 April.
Lamy said those members seeking additional market access through sectorals indicated that areas such as chemicals, industrial machinery, electronics and electrical products, enhanced healthcare, forest products, raw materials, and gems and jewellery are priorities.
“China, India and Brazil indicated they were not seeking further market access through sectorals,” Lamy said. “Each of them indicated specific sensitivities over these sectors, with chemicals being of particular difficulty, and electric and electronics to a lesser extent. These members also indicated a number of sectors where they could envisage participation, depending on the specifics of the treatment.”
Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, said killing the Doha Round and starting a new one is not a good option. “It will not be easy to get a mandate for the next round. Everybody need to lower their ambitions to reach an agreement to the Doha deal,” he added.
Anwarul Hoda, a professor at the Indian Council for Research on International Economic Relations and an expert on WTO matters, said the US is trying to change the rules of the game midway.
“The US is opening up issues where agreement has already been reached. If they want to conclude the deal, then they need to be willing to negotiate,” he said.
Hoda said the US was ignoring the unprecedented tariff cuts that countries such as India have made. “In 2001, India’s peak tariffs were 35%; now it is 10%,” he said.
He said the changed political scenario in the US has led to the present deadlock. “US politics has moved in such a way that the US Congress now thinks developing countries like India and China are getting too many benefits under the existing mandate of the Doha deal.”
Hoda said he feels the differences may persist with US President Barack Obama announcing his candidature for the next election in 2012. “He cannot go to the elections agreeing to a deal which opens its markets more than others,” he added.
A commerce ministry official, speaking on condition of anonymity, said a series of bilateral meetings were held with the US on agriculture, Nama and services in March to resolve the deadlock. However, the US remained adamant in its demands for additional market access through sectoral initiatives and in services. India, however, conveyed that it did not have much to offer additionally in Nama as it has already taken substantial tariff cuts through the formula.