Commerce minister Kamal Nath said the attempts by the G-4 to find a solution to the Doha Round of World Trade Organization negotiations ended because there was no common ground on agricultural subsidies and tariff reduction.
“It’s the end of the day for (the) G-4 (talks),” said Nath on Friday at a press conference held to explain India’s stand on the reasons for the collapse of talks in Potsdam, Germany on 21 June. Nath was India’s representative at the talks.
G-4 is a grouping of two emerging nations, Brazil and India, and two developed blocs, the European Union and the US, which have interests that cover a large part of the Doha agenda. The G-4 meeting, which was meant to break the deadlock on the Doha Round of negotiations, was to have lasted four days. The talks broke down at the end of the second day.
Nath felt the Doha Round could still reach a successful conclusion by the 31 July deadline provided developed countries recognized that strengthening the economies in developing countries benefits everyone.
The Doha Round of discussions began in late 2001 and aim to create a new global trade order that benefits all countries.
“The failure of four main trading partners to arrive at a consensus is definitely a setback for the trade liberalization process,” said D.H. Pai Panandiker, president at RPG Foundation, an economic policy group in New Delhi. “It’s not an end of the WTO, but yesterday’s development means that the trade negotiations will be delayed indefinitely as the main players refuse to arrive at any compromise.”
The primary reason for the breakdown in G-4 talks was that the $17 billion figure put forward by the US as its spending limit on domestic support for agriculture was unacceptable to Brazil and India. The US currently provides $10.8 billion as domestic subsidies.
The G-20 (a grouping of advanced developing countries that seek greater agricultural market access from developed countries), of which Brazil and India are leaders, wanted the US to cap its domestic support for agriculture, which is trade-distorting, at $12.2 billion, but were willing to extend the number up to $14 billion at the negotiating table, said a senior official at the commerce ministry, who did not wish to be identified.
A $17 billion US subsidy primarily to crops such as wheat, rice and corn would have an adverse impact on India’s farmers, he added.
“The promises made by the developed nations in the (earlier) Uruguay Round have not been kept or followed. They broke it,” said Baba Saheb Takwale, general secretary of the Bharatiya Kisan Sangh, one of India’s largest farmer groups.
On the issue of industrial tariffs, developed countries had proposed a package that would have resulted in an average tariff cut in their industrial products at just over 30%, while developing countries would have had to reduce their tariffs by more than 60% on average, said a release from the commerce ministry. The implication of the proposal would have been increased unemployment among the workforce of developing countries, the release added.
A joint statement put out by US trade representative Susan C. Schwab and US Department of Agriculture secretary Mike Johanns on the Doha Round said: “Not even minimal additional market access was put on the table.”
The fundamental difference between the approach of US and EU and others in G-4, said Nath, was that the former tried to protect prosperity, while the latter tried to protect livelihoods. The meeting ground cannot be at the point where the search for market access displaces farmers, he added.
Bloomberg contributed to this story.