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The Round that went in circles

The Round that went in circles
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First Published: Mon, Apr 25 2011. 07 59 PM IST

Jayachandran/Min
Jayachandran/Min
Updated: Mon, Apr 25 2011. 07 59 PM IST
Assessments made by chairpersons of the major negotiating groups indicate that the beleaguered Doha Round is fast reaching a dead end. Documents unveiled last week provide, for the first time, a view of the differences between major countries. The chairpersons have pointed to the almost unbridgeable differences on some of the key issues, and even the ever-optimistic director general of the World Trade Organization (WTO), Pascal Lamy, has surmised that the Round will not conclude this year. If that happens, then the next window for a Doha deal would open only after a new administration assumes office in the US in 2013.
Jayachandran/Min
The cost of WTO’s failure on this count is likely to be considerable. Besides the loss of additional income from unshackling some key areas such as services and agriculture, the failure to conclude the Round would deal a body blow not only to WTO’s credibility, but also to the multilateral system that has provided the institutional structure for the orderly governance of the global economy. With most multilateral institutions struggling to establish their credibility, the threat to the WTO’s future could not have come at a worse time.
It is, therefore, imperative that members of the organization dwell on the reasons for the Doha Round impasse with an honesty of purpose. This is crucial, since the Round has been littered with false intents. The mandate for the negotiations, the Doha Development Agenda, included issues essential for addressing the development needs of the developing and least developed countries. But the negotiating process became hostage to the dominant interest groups in the major economies. Thus, as the negotiations progressed, all attempts to reduce the imbalances in the global economy, which the WTO disciplines could have addressed, were cast aside.
Take, for example, the problem of access to medicines. This had arisen essentially because the market power of pharmaceutical majors increased after the WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) strengthened the patent rights enjoyed by these firms. The Doha Ministerial Conference took note of this problem, and ensuing negotiations were expected to address it, in particular for countries that lacked local capabilities to produce such medicines. Four years of intense negotiations led to a system that these disadvantaged countries could use to import affordable medicines. But it was so fraught with problems that it was used only once since it was established.
Negotiations in agriculture, too, were intended to make big strides towards reducing distortions in global agricultural markets. The sources of the distortions were the high subsidies, tariffs and quotas that the US and the European Union (EU), in particular, had put in place. By using these instruments, the US and the EU have been able to control world agricultural markets. At the receiving end have been some of the poorest countries, including the four least developed countries from Africa— Benin, Burkina Faso, Chad and Mali. Exports of cotton from these countries have suffered in the face of severe challenges from the US’ subsidised cotton exports. And yet, the Doha negotiations were not able to get firm assurances from the US and the EU that their farm subsidies would be whittled down within a finite time frame.
Negotiations on agriculture were also expected to provide mechanisms that developing countries could use to protect vulnerable farmers from unfair competition, which they would otherwise have faced from large players in agricultural markets. Most developing countries argued that such mechanisms were essential for ensuring food and livelihood security besides development of rural areas. But despite putting forth such a persuasive rationale for adopting these mechanisms, developing countries have met with intense resistance from their developed country partners.
Unlike in agriculture, where their vulnerabilities prevented developing countries to fast-track liberalisation, lowering tariff protection on non-agricultural products was much less contentious. Unilateral liberalisation undertaken by most developing countries since the beginning of the Doha Round allowed them to offer much larger doses of tariff cuts. Not to be satisfied with this, developed countries pushed for additional market access, to be achieved by eliminating tariffs on several key product groups, including chemicals, textiles and automobiles. These so-called sectoral negotiations have brought talks on non-agricultural products to the brink, with major developing countries such as India, China and Brazil unwilling to play ball. Such is the divergence on this issue in the negotiating positions of developing and developed countries that Lamy has reported that there “is a fundamental gap in expectations in sectorals”. He has added that the perceived “gap is not a technical one that one could bridge through adjustments in the architecture of sectorals”, but is a “clear political gap … [which is] unbridgeable today”.
It is this “political gap” that has caused the Doha logjam. Developed countries find it politically unacceptable to agree to a more equitable trading system, one in which the developing and the least developed countries can realise their development potential.
Biswajit Dhar is director general at Research and Information System for Developing Countries, New Delhi
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First Published: Mon, Apr 25 2011. 07 59 PM IST
More Topics: Doha Round | WTO | Pascal Lamy | Global Economy | TRIPS |