Finance and economics | Trade

Afta Doha


Posted: Tuesday, Sep 09, 2008 at 2224 hrs IST
Updated: Tuesday, Sep 09, 2008 at 2224 hrs IST


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: cuts in a tariff were often followed by multilateral cuts in the same tariffs.

This may be the result of what Mr Baldwin calls the “juggernaut effect”. A trade deal, even a discriminatory one, should enlarge a country’s export sector and shrink domestic industries vulnerable to foreign competition. This will, in turn, change the country’s politics, strengthening the “mercantilist” lobby, which demands open markets overseas, and weakening the country’s protectionist constituencies. If the export lobby gets its way, freer trade will follow, further strengthening the mercantilists at the expense of the protectionists. The juggernaut, Mr Baldwin writes, is slow to start rolling, but hard to stop.

Will India’s ASEAN deal get the juggernaut rolling in India? Unfortunately, the agreement protected 489 politically sensitive items, mostly agricultural products. The deal thus gives India’s exporters a little of what they want, reducing their incentive to fight for a Doha round. But it still leaves the country’s farmers with every reason to resist a return to Geneva.

The word “juggernaut”, Mr Baldwin notes, has an Indian origin: it is a British mispronunciation of the Hindu deity, Jagannath. Each year, the deity is worshipped in a garlanded chariot, pulled through the streets by pilgrims. The caravans may be moving as Mr Mandelson predicted. Unfortunately, India’s free-trade chariot seems stuck somewhere between Singapore and Switzerland.

© The Economist Newspaper Limited 2008...

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