Doha Development Round (DDR), to my mind, is still the mostuseful exercise that has been undertaken in the recent past by World TradeOrganisation (WTO), as a part of Multi-lateral Trading Regime (MTR), and yet itis lying in a state of animated suspension. India cannot disown theresponsibility of creating such a situation; thanks to our the then ebullientCommerce Minister, Kamal Nath, whose love for playing up to the gallery couldsupersede 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 ourperception of our "national interests". The result is that thediscussions under DDR have come a grinding halt.


Protectionist proclivity


In the meanwhile, the global economy has been overtaken byeconomic slowdown, manifesting itself in to an acknowledged recession for majoreconomies 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 ofeconomic slowdown. The absence of a functional and operating MTR has drivenmany countries to go in for protectionist policies, which can only furtheraccentuate the problems of garment exporters. Even the next best alternative ofbi-lateral or even multi-lateral trade agreements are hardly a substitute to aMTR. As the experience shows, India's performance in bi-lateral ormulti-lateral trade agreements has been anything but flattering and we continueto be one important player in the world trade, which has inked the smallestnumber 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 AnandSharma has taken over, there does appear on the horizon a new perspective ofmaking 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 fromthe Prime Minister to review our stand on DDR and revive it, particularly inthe context of world economic slowdown. Sharma has, therefore, a task cut outfor him of making Doha Round work again. He has given enough indications forthat, the latest reaffirmation has come while he was addressing a pressconference at Washing. Comparing the Doha Round ofWTO trade negotiations to a 25-mile marathon, Sharma said the talks are in itslast lap and hoped that countries would show flexibility in arriving at anagreement. The need of the hour is a rule-based multilateral trading regime,which takes on board developmental aspirations of the poor countries and at thesame time ensures better access for all. "That is what we shall bestriving for."


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


Shadow of recession


In fact, there was no point on continuing with the stalematethat we had created. When Kamal Nath was looking after Commerce, there weregrowing signs of discomfort at the stand that we had taken while walking out ofministerial 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 centabove a three-year base period to trigger SSM, the US wanted it to be 150 percent. As a via media, Pascal Lamy, WTO Director General proposed a 140 per centtrigger. This was the major point of difference, which led to breakdown,setting at naught the advantage of "convergence" on 18 out of 20issues set by Pascal Lamy at the WTO Inter-ministerial discussions. Almosteverybody 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 anddeserving consideration that this part of Doha Round in July, 2008 should havegot, did not happen because all economies in the world including those of thedeveloped 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.