WTO World Cup: 7 finals but no winners
This would probably best sum up the (ever) continuing discussions on the Doha round of trade negotiations kicked off in 2001. It was heralded as the next big thing for bringing to the developing world, the benefits of globalization.To take the unfinished business of Uruguay in 1986 to its inevitable conclusion. In this period (2001-present), we have seen 2 foot ball and cricket world cups reach their inevitable conclusion. However, in the WTO world cup, even 7 finals (minsterials and related negotiations) later, other than the 2 teams (US and EU v/s India and the developing world) no one seems to know who will lift the grand prize. In fact, no one is sure anymore if we even have a prize at the end of this near decade long tournament. A recent editorial in DNA suggested that delegates will be just as clueless in 2009 and beyond.
But, wait a minute. Why this talk of one country winning over others? Isn’t that against the spirit of multilateral negotiations? Isn’t that against everything the WTO stands for? Obviously the founding fathers underestimated the political hot potato of agriculture subsidies in developed and developing countries alike. Countries on both sides of the north-south divide have dug in their heels. The WTO's 152 member states remain mired in an impasse over the Doha round, which has failed to make significant headway since it was first launched in the Qatari capital in 2001. Talks are stuck because of disagreements between rich and poor countries over the removal of subsidies and trade barriers for agricultural and industrial products.
ISSUES
The issues are manifold. America is the highest-cost cotton producer in the world and yet the largest exporter. In 2005, US cotton farmers received $4 bn of subsidies for production worth $3 bn. Effectively, even if they sold their produce for free, they would have still made money. The effect on poor and marginal cotton farmers in Africa has been devastating. A similar story has played out in other commodities as well. The EU doesn’t have a better track record in this regard. Last year, under the CAP (Common Agricultural Policy), farmers in the EU, especially France and Germany received subsidies running into billions of Euros. Even if export subsidies are eliminated, domestic subsidies alone are more than sufficient to significantly distort the market against farmers from developing countries.
The current negotiations are hanging fire with the US and EU demanding their pound of flesh in the form of increased market access for industrial goods and services in developing countries in exchange for reductions in agricultural tariffs. The G-77 grouping of countries has alleged that the cuts offered are much too low on a very high base and frequently undone by America’s own domestic legislation. The Recent USD 209 Bn Farm bill is a case-in-point. Besides, any offers to increase market access for industrial goods and services must be matched by reciprocal gestures from the big 2 (US and EU). The latter (services) is of special significance for India’s IT/ITES industry. However, the possibility of the same happening is slim.
IMPLICATIONS & CONCLUSION
The failure in implementing the Doha agenda has raised serious questions about the relevance and effectiveness of multilateral trade institutions. While one might consider if agriculture could be dropped from the negotiating table, the mandate of the WTO means any negotiation has to be a package deal. So, does this mean that India should abandon the multilateral framework that WTO offers? Not really. It should be noted that issues like reduction of agricultural tariffs and removal of trade-distorting subsidies cannot be achieved through bilateral negotiations. Then same is only possible with a multilateral framework. This might be the best and last opportunity to push for agricultural market access in the developed countries.
If not, expect the world’s longest tournament to continue indefinitely.
(The author is working with Avalon Consulting, Mumbai as a consultant. Views expressed are personal).
But, wait a minute. Why this talk of one country winning over others? Isn’t that against the spirit of multilateral negotiations? Isn’t that against everything the WTO stands for? Obviously the founding fathers underestimated the political hot potato of agriculture subsidies in developed and developing countries alike. Countries on both sides of the north-south divide have dug in their heels. The WTO's 152 member states remain mired in an impasse over the Doha round, which has failed to make significant headway since it was first launched in the Qatari capital in 2001. Talks are stuck because of disagreements between rich and poor countries over the removal of subsidies and trade barriers for agricultural and industrial products.
ISSUES
The issues are manifold. America is the highest-cost cotton producer in the world and yet the largest exporter. In 2005, US cotton farmers received $4 bn of subsidies for production worth $3 bn. Effectively, even if they sold their produce for free, they would have still made money. The effect on poor and marginal cotton farmers in Africa has been devastating. A similar story has played out in other commodities as well. The EU doesn’t have a better track record in this regard. Last year, under the CAP (Common Agricultural Policy), farmers in the EU, especially France and Germany received subsidies running into billions of Euros. Even if export subsidies are eliminated, domestic subsidies alone are more than sufficient to significantly distort the market against farmers from developing countries.
The current negotiations are hanging fire with the US and EU demanding their pound of flesh in the form of increased market access for industrial goods and services in developing countries in exchange for reductions in agricultural tariffs. The G-77 grouping of countries has alleged that the cuts offered are much too low on a very high base and frequently undone by America’s own domestic legislation. The Recent USD 209 Bn Farm bill is a case-in-point. Besides, any offers to increase market access for industrial goods and services must be matched by reciprocal gestures from the big 2 (US and EU). The latter (services) is of special significance for India’s IT/ITES industry. However, the possibility of the same happening is slim.
IMPLICATIONS & CONCLUSION
The failure in implementing the Doha agenda has raised serious questions about the relevance and effectiveness of multilateral trade institutions. While one might consider if agriculture could be dropped from the negotiating table, the mandate of the WTO means any negotiation has to be a package deal. So, does this mean that India should abandon the multilateral framework that WTO offers? Not really. It should be noted that issues like reduction of agricultural tariffs and removal of trade-distorting subsidies cannot be achieved through bilateral negotiations. Then same is only possible with a multilateral framework. This might be the best and last opportunity to push for agricultural market access in the developed countries.
If not, expect the world’s longest tournament to continue indefinitely.
(The author is working with Avalon Consulting, Mumbai as a consultant. Views expressed are personal).
Labels: Agriculture, Doha, trade negotiations, WTO
posted by Vikram Poddar at 8:21 AM
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