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What development round?

What development round?
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First Published: Tue, Oct 23 2007. 10 12 PM IST
Updated: Tue, Oct 23 2007. 10 12 PM IST
The global trade talks that began in 2001 in Doha, Qatar, were sold as the “development round”, a chance to give the poorest countries a leg-up by making it easier for them to sell their goods around the world. Six years later, it looks like every other trade round—with the rules being written to benefit the rich nations and now also the big developing countries.
After their umpteenth seizure, the negotiations seem to have revived now, with Brazil, South Africa and India insisting they are committed to a deal and the US and Europe sounding positive. We wouldn’t bet on it, but there could be an agreement before the end of 2008. This is better than failure—which could produce a snap-back to protectionism and spur more regional trade pacts shutting others out. For all their limitations, the Doha talks would reduce farm tariffs and subsidies, and reduce barriers to industrial imports; all have hamstrung exporters around the world.
But, for the poorest countries— those without competitive export sectors—the gains are likely to be meagre. An analysis by the Carnegie Endowment for International Peace concluded that under the best circumstances, rich countries could gain more than $30 billion a year from a successful conclusion of the round, about $30 a head. Middle-income nations such as Brazil and South Africa could gain up to $20 billion, or about $6 per capita. Poor countries would gain at most $5 billion—about $2 a head.
The poorest countries would gain mainly from having the rich countries reduce or eliminate subsidies and drop import barriers to a few key farm products. That would allow them to sell their cotton at competitive rates. They would also gain if the rich countries followed through on their pledge to provide duty- and quota-free access for 97% of their exports. But, as ever, there are caveats. Rich countries have tentatively agreed to cut export and domestic subsidies for agriculture, but how deep and with what exceptions has yet to be defined. The offer of duty- and quota-free access to rich-country markets excludes the sectors in which the poorest countries are most competitive, notably textiles.
The poorest countries don’t have to make concessions. But they do face costs. Net food importers would see prices rise as the rich countries reduce or eliminate subsidies. A global deal would mean that these countries could lose the preferential access deals they now have with some rich-country markets.
The package for the poorest should be improved. At the very least, the duty- and quota-free access to markets in industrial countries should be extended to cover more of the poor countries’ most competitive exports, starting with textiles. Middle-income countries should also offer equivalent open access for exports from the least developed. And rich countries should tightly limit any exceptional subsidies and protections for agricultural products, such as sugar and cotton, that poor countries can export
There were good reasons to dedicate this round to promoting development, including the self-interest of the rich. In 1999, protesters stormed a trade meeting in Seattle, vowing to stop the march of globalization. And the terrorist attacks in 2001 were a potent reminder that there is no possibility of insulating (the US) from the rest of the world. If the big countries fail to deliver a package that provides real benefits to the poorest nations, the so-called development round will be exposed as a mere tactical ploy.
©2007/The New York Times
Edited excerpts. Comment at otherviews@livemint.com
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First Published: Tue, Oct 23 2007. 10 12 PM IST