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India may have to go along or face isolation

India may have to go along or face isolation
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First Published: Sun, Jun 08 2008. 11 31 PM IST

Seeking progress: A file photo of US trade representative Susan Schwab
Seeking progress: A file photo of US trade representative Susan Schwab
Updated: Sun, Jun 08 2008. 11 31 PM IST
New Delhi: With the pressure to conclude the Doha Round of trade talks mounting at the World Trade Organization, or WTO, some developed countries are seeking to corner India whereby it may be left with the option of either going along with an unfavourable deal or being branded as a “deal breaker” if it chooses to dig its heels in, a government official has said.
Seeking progress: A file photo of US trade representative Susan Schwab
The Doha Round of trade negotiations, which began in 2001 to remove tariff barriers and give a fillip to global trade, is yet to manage a consensus.
The fears of the Indian government come about in the the backdrop of expectations, in some quarters, that a meeting of world trade ministers may be convened in late June or early July to work out a deal.
“There is no date set for a ministerial but the hope is the officials will make enough progress for one in late June or early July,” US trade representative Susan Schwab said in a telephone interview to Reuters on Friday.
Matters have come to a head after the submission of the global body’s draft proposals—which detail the level and extent of cuts in tariffs and subsidies in agriculture and non-agricultural sectors—on 19 May and its subsequent rejection by India on the grounds that it was “violative of the Doha mandate” and aimed at “dividing the developing countries”.
Part of the dispute centres on the current state of talks in “rules”, which govern anti-dumping duties, and subsidies and countervailing measures and which is one of the key areas of negotiations in WTO apart from agriculture, non-agricultural market access, or Nama, and trade in services.
“There are clear indications that the EU and the US have been pressurising not just their own allies like Japan but also some of the main developing countries like China. The move is isolating India politically in the WTO. Increasingly, India will have to focus on shoring up more political support for itself,” said the official, who did not wish to be identified.
However, the office of EU’s trade representative, Peter Mandelson, denied that there was a concerted effort to isolate India. “The idea that the EU is trying to isolate India has no foundations whatsoever. It is the US that is isolated in ‘rules’ negotiations and not India,” said an EU official, who did not wish to be named.
Schwab’s office declined comment. “We do not have a comment on this,” said Sean M. Spicer, assistant US trade representative, in an e-mailed reply.
The EU official, however, hinted at their disappointment with India at the WTO negotiations. “India has yet to fully engage in serious negotiations...in the sense that India does not seem to be in any rush to conclude these talks... We don’t want to divide the developing world. We are offering average tariffs cuts of 54% in agriculture and should entice developing countries to engage seriously in Nama negotiations,” said the EU official.
The Indian government on the other hand cites instances in the negotiations over “rules” to back their case. “India is unhappy with the proposed provisions on fishery subsidies in the revised rules text. So are, for example, China and Indonesia. However, they are quiet due to pressure from the EU. Similarly, Japan, a key ally of the US, does not agree with the US method of ‘zeroing’ to impose anti-dumping duties. Yet, Japan has come out with a wishy-washy response to the issue,” said the official.
Under the so-called “zeroing” method of calculating anti-dumping duties adopted by the US, the penalty is assessed on the prices charged by exporters from a country who allegedly dump their products (or sell it at a lower price than the fair cost), and not as an average of the prices charged by all exporters. This results in a higher dumping duty being levied on all exporters from that country.
India says that the fishery subsidies given to small and traditional fishing community is a “livelihood” issue and it will not compromise on it.
Suparna Karmakar, senior fellow at the International Council for Research on International Economic Relations, does not agree India is being “sidelined deliberately” and feels India has come to be known as a “deal breaker” primarily because it appears more concerned about its “image as the leader of the developing world”.
“Multilateral trade negotiations are more political than economic. Ultimately, countries make a deal which suits their national interests. India’s problem is that it is trying to hold together an increasingly diverse set of developing countries. India should only speak for itself and get the best deal...even if it implies siding with the developed world,” said Karmakar.
Another trade expert, based in New Delhi and who did not wish to be identified, finds it “surprising” that India should feel isolated during the Doha round which saw it getting “unprecedented backing” from other developing countries. “If India feels despondent, it is time to introspect. Either we set the goals too high or overestimated our support. However, I believe India should use these negotiations to get the best deal in services trade, where India stands to gain in future, in return for some cuts in agriculture,” he added.
The official concedes that in agriculture negotiations, India’s interests are defensive. That is, India will end up giving up some protection without gaining much. In Nama, the tariffs in the developed world are already low hence there is not much to gain. The real gains for India lie in increased market openings in the developed countries for Indian service professionals.
Reuters in Washington contributed to this story.
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First Published: Sun, Jun 08 2008. 11 31 PM IST