Pascal Lamy took over as director-general of the World Trade Organization in 2005. Ever since, Lamy has been labouring the cause for an early conclusion of the Doha round of trade negotiations. On his third visit in as many months, Lamy spoke to Monica Gupta of Mint. Edited excerpts:
What are the negatives for developing, emerging and least developing economies if the Doha round fails?
First, what’s on the table will disappear and there is really quite a substantial amount. Starting with agriculture in terms of export subsidy elimination—which is something many countries have been pitching for 20-25 years; in terms of industrial tariffs reduction; in terms of subsidy reduction. We are yet not there, but a 60-70% reduction has been offered compared to 20-30% in the last round.
I think for countries like India all this is a plus, not to talk about trade in services, where it has offensive interests. Given the sort of mood in the EU and the US, the erosion of the WTO system of discipline will be very bad for countries like India and China. India is now progressively opening its economy—it has created a situation where benefits flowing from a stable international trading system are much greater than what it had 10-12 years ago.
India has more eggs in this basket—just by the way technology has improved, the way it has built comparative advantage in some areas makes it very important. It is like making friends—the more friends you have, the more vulnerable you become, because friends may become non-friends and then you have a problem. The cost of failure is inevitably bigger for the elephants which benefit from the system and I think India now is among them.
If the talks don’t proceed as planned, at what stage would you intervene to save the talks?
I have always said that option-A is the normal bottoms-up procedure and I will do everything I can to support it. If that was not to work, I have also said that I would not like a patient to die without a last surgery attempt.
There is a view that the US is not giving any numbers. Even the EU agriculture commissioner Mariann Fischer Boel, who was in Delhi last week, said the talks are hinged on the US giving numbers?
If you were her, what would you be saying? Would you say the round rests on my shoulders? Surely you wouldn’t. That is a tactical position. Reality is that they all have to move from the official position which they have tabled. And in what proportion is what they are testing. We know that given the window that we have, given what we have on the table, given the time spent on these negotiations and the impatience of the membership, chairs of the negotiating groups are now under pressure.
Is this because there are no numbers on the table?
You have a natural process in which you have a point of convergence and a window of opportunity. The point of convergence could be within the window of opportunity or outside. If people don’t change the pace of negotiations, the convergence will happen I am sure in the future, but, it will be outside the window of opportunity, which then doesn’t really matter.
The template of the text is there on the table, what needs to be put in are the numbers, that is what is being discussed all the time. Each of them will deny that he has put any different numbers on the table compared to what has been put out in the public. This is understandable since they don’t want to go back to their constituency with numbers which they have not tested with the others.
The US recently said the problem is not with the US but with India which is not fully engaging.
As far as the big elephants (the US, the EU, India and Brazil) are concerned, they have to move. It is not for me to say. I am not the negotiator-in-chief. If I do, I would be taking sides, which I shouldn’t. I don’t hold back from saying what the US, the EU, Brazil and India have to do. Have been quite outspoken on that and it has sometimes brought me flak from all of them. And again negotiators have their own way of putting the burden on what should be done, usually outside of their own government. It is also true that in terms of domestic and political complexities—Washington, Brussels and New Delhi are three complex places notably because of the farming issue.
What is the mood you sense in New Delhi?
India has been on the forefront for specific flexibilities. It has been included in the framework of discussions. Simultaneously, it has been accepted that the cuts in higher tariff bindings would have to be more than that for lower tariffs.
Given where bound tariffs are in India, this means that some of these cuts might bite into applied (effective import duty) and as a consequence of that India negotiated flexibilities on behalf of the developing countries. The US would need more market access to convince its constituency about subsidy reduction.