Doha Development Round (DDR), to my mind, is still the most useful exercise that has been undertaken in the recent past by World Trade Organisation (WTO), as a part of Multi-lateral Trading Regime (MTR), and yet it is lying in a state of animated suspension. India cannot disown the responsibility of creating such a situation; thanks to our the then ebullient Commerce Minister, Kamal Nath, whose love for playing up to the gallery could supersede any thoughtful and responsible attitude at international fora.


It would be recalled that we had, at the last meeting on DDR, walked out of negotiations, as we could not brook any departure from our perception of our "national interests". The result is that the discussions under DDR have come a grinding halt.


Protectionist proclivity


In the meanwhile, the global economy has been overtaken by economic slowdown, manifesting itself in to an acknowledged recession for major economies of the world i.e. the EU and the US, apart from Japan. All other countries are feeling the heat. Even the mighty China is feeling the pinch of economic slowdown. The absence of a functional and operating MTR has driven many countries to go in for protectionist policies, which can only further accentuate the problems of garment exporters. Even the next best alternative of bi-lateral or even multi-lateral trade agreements are hardly a substitute to a MTR. As the experience shows, India's performance in bi-lateral or multi-lateral trade agreements has been anything but flattering and we continue to be one important player in the world trade, which has inked the smallest number of free trade agreements, both at bi-lateral and multi-lateral levels.


The impasse is broken


Now that a new Minister for Commerce and Industry Anand Sharma has taken over, there does appear on the horizon a new perspective of making DDR work. There is palpable sign of thaw on the kind of approach that India had shown so far under Kamal Nath. It is understood that there is a directive from the Prime Minister to review our stand on DDR and revive it, particularly in the context of world economic slowdown. Sharma has, therefore, a task cut out for him of making Doha Round work again. He has given enough indications for that, the latest reaffirmation has come while he was addressing a press conference at Washing. Comparing the Doha Round of WTO trade negotiations to a 25-mile marathon, Sharma said the talks are in its last lap and hoped that countries would show flexibility in arriving at an agreement. The need of the hour is a rule-based multilateral trading regime, which takes on board developmental aspirations of the poor countries and at the same time ensures better access for all. "That is what we shall be striving for."


He said Prime Minister Manmohan Singh has made commitments that the Doha trade talks, the latest round of which was stalled in July 2008, be concluded successfully. "That is the mandate I have from the Prime Minister, who feels that IN the present economic crisis, which the world is facing there should be a positive message for global trade barriers to be broken down further and global trade to move, which will help economies across the globe," Sharma said and added, "I am sure that President Obama wishes the same, and that's the feeling I got from (US Trade Representative) Ron Kirk. When political leaders discuss issues, they paint the larger canvass and not be bogged down by smaller details. If you have the larger picture in mind and you are committed to take it forward, the details can always be filled," he said.


Shadow of recession


In fact, there was no point on continuing with the stalemate that we had created. When Kamal Nath was looking after Commerce, there were growing signs of discomfort at the stand that we had taken while walking out of ministerial discussions at Geneva. The Geneva talks broke down as both India and the US refused to budge from their respective stands on Special Safeguard Mechanism (SSM). It would be recalled that while India wanted an import surge up to 110 per cent above a three-year base period to trigger SSM, the US wanted it to be 150 per cent. As a via media, Pascal Lamy, WTO Director General proposed a 140 per cent trigger. This was the major point of difference, which led to breakdown, setting at naught the advantage of "convergence" on 18 out of 20 issues set by Pascal Lamy at the WTO Inter-ministerial discussions. Almost everybody agreed that it was a classic case of "so near and yet so far" and the disappointment was apparent both in developing and developed countries. Looking back on the turn of events, everybody realized that the favourable and deserving consideration that this part of Doha Round in July, 2008 should have got, did not happen because all economies in the world including those of the developed world had come under stress.

 

Cost of "no deal"


Unfortunately for the world as a whole, more particularly the developing part of the world, suffered. To my mind, there is much greater need for us today to resuscitate DDR, before further damage is caused. If one were to get evaluation of the costs of "no deal"-a stance that we have had so far-or what has been perceived as a bad deal, one would come to the conclusion that "no deal" was a worse off scenario. In fact, it was not even a case of "bad deal", which it was make out to be. After Geneva Inter-ministerial discussions, the world witnessed world economic slowdown developing in to recession. More protectionism has come into force. As pointed out by me earlier, the number of protectionism has increased very significantly, as every country was primarily guided by the supremacy of their "national interests", which only excerberated the deceleration of world trade.


The new Minister has the advantage of not having any past baggage. He needs to formulate his broad views on the role of MTR in the world trade and how far is this MTR in consonance with the Indias trade interests. Any honest stock taking would help him to recognize the important role that MTR and DDR can play in promoting Indias export interests.


India's loss


Let us have a look at the impact on our garment exports. Had we continued with the negotiations at DDR, which was quite close to finalization in July, 2008 for sectors under NAMA, there would have been a lowering of bound tariffs of 15% under the agreed Swiss formulate with its co-efficients. Our average applied rates are already lower and even in sectors where applied rates are higher; these are protected under the Special Products dispensation. In return, we would have been benefited from reduction in peak tariffs in advanced country markets for our important exports like the textiles to below 7% instead of 30% or so that they face today. Clearly, conclusion of DDR would have served Indian interests better than otherwise.


Going by the newly acquired love and thrust for making DDR work, India might be willing to meet more than half way. There have been behind the scene moves that has tilted Indias stand. The change of portfolio of Kamal Nath from high flying Commerce to ground duty of highway construction certainly has to do with his stand at General Inter-ministerial confabulations.


Credibility hit to WTO


It is relevant to recall that recently, Pascal Lamy had rightly pointed out that the loss to the developing countries is far more serious than the developed countries, if the DDR fails to make progress. It is also clear that the credibility, legitimacy and ability of the WTO to enforce its decisions in dispute settlement cases will surely take a knock if DDR is abandoned. As a member, India has a responsibility to ensure that WTO does not suffer this fate. Everyone is agreeable that we are better off with a more robust and liberal MTR rather than having to negotiate a plethora of bilateral and regional free trade agreements. That every bilateral negotiation has the danger of being captured by narrow sectional domestic interest and is really painfully slow, which has generally been found to be difficult to manage.


Break-through attempts


The recent change in our stance on DDR is indeed welcome. Sharma's statement that "the impasse is over" is a favourable development. Even Pascal Lamy, who has worked hard for the success of Doha Round now sounds hopeful on the conclusion of DDR when he said "What I saw is Ron Kirk and Anand Sharma clearly engaging in a process that should lead to the conclusion of the Round sometime next year." The facilitators and well wishers at WTO Headquarters might be excited by the remarks of Anand Sharma, Indias Commerce Minister on "breaking the impasse" and have called for a fresh meeting in early July to deal with the contentious issues in agriculture.

 

Is it mere posturing both by US and India?


However, the moot point is at what point will these efforts break even? A new President of the United States of America has an opportunity on hand to take a fresh look at the present situation and undertake and conclude his review and return to the negotiating table, as soon as possible. It needs to be realized that there is greater relevance of MTR today when the world economy is still not out of woods of recession. However, the US does have its own "domestic compulsions". As is well known, a Democrat-dominated US Government is not known to be inclined towards making the kind of compromises necessary to facilitate the further opening up of the US economy to trade, particularly on the issues of agriculture, and now in the aftermath of the crisis, industrial subsidies. The US has shown its propensity to be overly "protective" and not inclined towards free trade.


However, there are indicators that neither India nor the US is really keen about the forthcoming WTO talks. According to a senior Commerce Ministry official, "The new Obama administration has neither appointed chief negotiators for industry or agriculture talks at WTO, nor an ambassador to Geneva even after six months of having taken over. The deputy US Trade Representative has only been appointed recently. It is pointless to send our negotiators to Geneva when there is no one to talk to, except some flunkeys who cant be expected to make any commitments." Says another official, "With its own economy in shambles and issues like healthcare reforms and climate change expected to take precedence in the US Congress agenda, the Doha Round will have to wait. Several US political representatives have already said that the Doha Round, in its current shape, is not acceptable to them."


And yet, neither the US nor India would like to be seen as stalling the talks so as to give further credence to the Pascal Lamy painting both India and the US as two key 'spoilers' of the Doha Round. It is in this context that the US Trade Representative Ron Kirks promised "fresh approach" to Doha negotiations made at global farm trade discussions at Bali. In the same way, even Anand Sharmas statement that "the impasse has been broken" need to be seen in that light and accepted with a pinch of salt.

So where do we stand today? At Square One. I ruefully conclude.



The views presented are author's personal views. Here 'I' refers to him.