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Thursday, July 27, 2006
Failed Doha round of WTO Trade Talks - Is India gaining or losing ? OffStumped For All Things Right of Center, Bringing a Right of Centre Reality Check to Indian Politics, News Media Reporting and Opinion through Blogs and Podcasts. -- The Doha round of World Trade Organizatio, WTO Trade Talks on a Global Trade Deal collapsed with no agreement between the developed world North America, EU and major developing countries Brazil, India and China. The New York Times reports that Trade in the wake of the failure this week, there will be a proliferation of nasty disputes in the World Trade Organization and that the momentum for growth of trade might slow from its period of recent growth, expanding to $9.12 trillion in 2004 from $6.45 trillion in 2000. Closer home in India, the opposition BJP lead NDA raised serious questions on the conduct of its Commerce Minister Kamal Nath. Briefing reporters ahead of the parliamentary session last friday, the deputy leader of the Lok Sabha and BJP MP VK Malhotra posed a pointed question at the Manmohan Singh lead Congress UPA Government on why Mr. Kamal Nath walked out of the WTO meeting despite majority support. This failed round of trade talks begun in Doha, Qatar in the aftermath of the September 11th attacks with the central idea of helping poor farmers in Asia, Africa and Latin America export their products to richer countries while also opening developing markets to more goods and services from the developed world. According to the New York Times the collapse of the trade talks is best explained by the political clout of farmers. The unwillingness by the Americans and Europeans to make further concessions has triggered a bitter finger pointing between the U.S. Trade Representative and the European Union Chief Negotiator. From election year politics in the U.S. to deceptive concessions, have all been blamed for the Americans and Europeans not going far enough on the negotiating table. So the question is what really happened, what were India's objectives, what compelled the Indian Commerce Minister to walk out and what does it all mean to Indian Strategic Interests. Is India gaining or losing ? The Commerce Minister Kamal Nath in the immideate aftermath of the collapse blamed it on the U.S. demand to provide market access to subsidised agricultural products from the developed world. Kamal Nath went even further to claim that if these proposals were accepted the Indian economy would have decelerated to a growth rate of 4% to 5% from the present 8% to 9%. Indian Industry orgainizations like the Federation of Indian Exports Organisation FIEO have supported the stand taken by Commerce Minister Kamal Nath on farm subsidies and industrial tariffs. Indian Industry quite expectedly is keen on protecting its interests and preventing market access to MNCs rather than compete with them on an even keel. The BJP response is rather curious and a little muddled. Speaking in the aftermath of the collapse of trade talks the BJP's Arun Jaitley backed the Government's stand on agriculture-related issues at the World Trade Organisation (WTO) negotiations but criticised "impulsive reactions" such as the recent walkout by Commerce Minister Kamal Nath. Mr. Jaitley also criticised the July 2004 Framework Agreement at Geneva as "disastrous" for the country, although Indian negotiators hailed it as a "victory." In what is becoming increasingly clear a strong political and commercial consensus around refusing market access to subsdised agricultural products from the West trumped over Indian needs to sell its products in Western Markets. We are more worried about our farmers being uncompetitive in our domestic market than for our farmers to compete in the American Market or so it would seem for it is this market access that has been blamed for the collapse. But the FICCI's Vivek Bharati, national policy advisor blames domestic subsidies in the U.S. as well for agricultural commodities from India being uncompetitive in the US. According to Kamal Nath India is now seeking alternatives to talks at the WTO in bilateral trade agreements with various groups of nations. Alliances with like-minded developing countries, including the G20 (Group of 20 developing countries) on agriculture and the G33 on special products and the special safeguard mechanism, and the NAMA-11 (or the 11 countries involved in negotiations on Non-Agricultural Market Access) on industrial tariffs. So where does India go from here. India's position on farm subsidies is a consequence of the current crisis in the country's agriculture sector. More than half of India's one billion-plus population depends on agriculture though the sector's share in the national GDP has declined to 20 percent from 40 percent over the last decade. In recent years, India's agricultural production has been increasing by less than two percent a year whereas the economy as a whole has been growing by eight percent. So while holding out on the developed country's demand for market access to subsidized agricultural products makes sense, it may perhaps also be important for India to consider the lost opportunity. At the core of the agricultural problem in India is the uncompetitiveness of the Indian Farmer reflected in the spate of recent suicides in Vidarbha. While farm production in Europe and North America enjoys scale and greater productivity, we India have a situation where nearly 600 million people depend on Agriculture for their livelihood. There in perhaps lies the problem. In all the public pronouncements of the government and the opposition all we hear are defensive protectionist positions, what we dont hear are the strategic objectives. What are the aspirations of our farm sector, what goals have we set for ourselves and how do we plan to achieve them. While negotiating from a defensive position is one thing, India needs to think about making its agriculture competitive and strengthening it. The West needs market access and will sooner or later wilt on subsidies. What then, will India bite the bullet and reciprocate with market access or will we be in the same situation debating the same issue. What can India do in the interim to strengthen the agriculture sector to become more competitive and view the world as its market when we are still addressing basic issues of how to keep the Vidarbha farmer alive tomorrow ? Offstumped Bottomline: The collective chest thumping and back patting apart India has proven its negotiating strength. That strength stems from the size of the market that India holds out to the west. Sooner or later the promise of the market will trump domestic considerations and the West will wilt on subsidies. Does India have the aspiration, vision and strategy to be prepared for to exploit that opportunity ? Blogger News Network is advertiser-supported, and your visits to our advertisers help BNN to meet its expenses. Help keep us afloat! posted by Yossarin at 12:41 PM |
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