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India rejects market opening ideas in a setback to WTO

India rejects market opening ideas in a setback to WTO
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First Published: Tue, Mar 04 2008. 11 05 PM IST

Strong reply: Commerce secretary G.K. Pillai.
Strong reply: Commerce secretary G.K. Pillai.
Updated: Tue, Mar 04 2008. 11 05 PM IST
New Delhi: India has rejected the latest proposal on changes in import duties on industrial goods moved in the World Trade Organization, or WTO, and, in the process, also set back the prospects of an early resolution to the so-called Doha round of negotiations.
Pascal Lamy, the director general of WTO, and the European Union have been pushing for a quick conclusion of the Doha round by calling a full ministerial conference as early as 23 March.
Strong reply: Commerce secretary G.K. Pillai.
The Indian government’s response came after the revised draft on Non-Agricultural Market Access (NAMA) negotiations, which covers industrial tariffs, was presented in Geneva on 8 February. India also rejected the additional “list of possible ideas” released by the NAMA chair, Don Stephenson, on 27 February.
The NAMA negotiations are part of the Doha round, which started in 2001 and seeks to facilitate trade by lowering trade barriers across the world.
“We outrightly reject the new ideas shared by the NAMA chair. They are divisive in character and solely aimed at benefiting the developed world,” said G.K. Pillai, India’s commerce secretary.
According to the Indian negotiators, the revised draft on NAMA grossly violates the mandate of “less than full reciprocity (LTFR)”, under which the developing countries, in comparison to developed countries, need to undertake a lower reduction in import tariffs. “The latest list of new ideas floated by the NAMA chair has made the situation even more unacceptable for India,” said Pillai.
There are two crucial variables around which the negotiations happen. One is the “coefficients” which essentially means the degree to which a country can reduce tariffs; a lower coefficient implies a higher cut in tariffs. The other is “flexibilities” which refer to the number of products being traded as well as the time frame over which the tariff reduction will be done.
Indian negotiators explained that the “sliding scale”, suggested by the NAMA chair, which envisages a trade-off not within the flexibilities (for the protection of sensitive sectors) themselves, as in the previous approach, but between the flexibilities and the coefficients. This means that if a country needed higher flexibility to safeguard its sensitive sectors, it would have to undertake a larger tariff reduction.
“This idea defies economic logic. It will open a Pandora’s box and lend unpredictability by creating unnecessary complexities in the entire NAMA negotiations,” said Pillai
Yet another “idea” talks of using the “average percentage cuts” instead of the mandated cut in peak tariffs and high tariffs, especially on products of export interest for the developing countries.
India believes that such a regime would allow the developed countries to maintain high tariffs, not surprisingly, in areas like marine products, textiles and footwear, etc., which are of crucial importance for the export interests of the developing countries.
Experts say that while the resulting permutations and combinations could benefit some of the developing countries, on the whole any such move would compromise their overall position.
“These (the revised text and possible ideas) are not doable. The aim behind creating greater differentiation is give ‘carve-outs’ to some members and thus reach an early outcome,” said Bishwajit Dhar, who heads the centre for WTO studies at the Indian Institute of Foreign Trade.
“Taken together, the revised text and the new ‘ideas’, are a pugnacious attempt to break the NAMA-11 and reduce their bargaining power. The developing world must see through this game plan,” said Pillai.
NAMA-11 is a group of developing countries opposing the revised texts and incudes Brazil, South Africa, Argentina, Philippines and Egypt among others.
Dhar says the so-called NAMA draft has way too many undecided elements to even contemplate an early agreement and, “unless something drastic happens,” India should stick to its stand.
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First Published: Tue, Mar 04 2008. 11 05 PM IST
More Topics: Market | WTO | Commerce | Doha Round | European Union |