Column The end, for now

Written by Bibek Debroy | Updated: Jul 31 2008, 06:03am hrs
The boy stood on the burning deck, whence all but he had fled. This is Felicia Hemans (1793-1835) Casabianca, the thirteen-year old son of the Admiral of the Orient, who went down with the ship in Battle of the Nile. Ignore the part about going down with the ship. One wonders if Casabiancas image flashed through the minds of Murasoli Maran in 2001 or Kamal Nath in 2008. WTO negotiations are about reciprocity. Arguments about unilateral trade liberalisation bringing welfare gains are neither here nor there. In any event, welfare gains are greater if the trading partner also liberalises. That apart, less-than-full-reciprocity is also built into the WTO system, the special and differential treatment clause. Developed countries should proportionately liberalise more than developing ones. Doha Development Round (DDR) has been on the rocks since 2001, barring some success in and around the Hong Kong Ministerial Conference in 2005. There are several reasons for continued uncertainty. First, there are US presidential elections. Any trade agreement will have to go to Congress, or fast-track negotiating authority permitted to the new president (present one expired in July 2007). This is compounded by possibility of a different trade policy focus under non-Republican administration.

Second, in EU, no substantial revamp of Common Agricultural Policy (CAP) is possible before 2012. Thus, any agro liberalisation will be capped by a French letter. Third, with global food price inflation and agro export curbs in many countries, this is not the best of times to mention agricultural liberalisation. Net agro exporters are a trifle more reluctant. So are net agro importers, since elimination of developed country subsidies will increase global prices. Fourth, India is in election mode and agriculture is politically sensitive. No cabinet will be keen to touch it. Casabianca wouldnt move without his fathers word. The flames rolled onhe would not go, without his Fathers word; That father, faint in death below, His voice no longer heard. True, there is an argument that with domestic political economy of agricultural reforms proving intractable, an international commitment might provide the catalytic trigger. But this isnt an argument that will find takers. The only person keen to broker consensus is Pascal Lamy, whose term expires in 2009. Lamy apart, why should anyone be interested in premature delivery of DDR before 2010, with agreements that bite before 2013 That doesnt spell death for WTO. It continues to administer Uruguay Round (1986-94) agreements and the multilateral system has faced such rocky patches earlier.

However, there is a fundamental concern. Barring instances of accession, WTO hasnt been successful in pushing liberalisation. That has happened unilaterally or regionally. It is difficult to push consensus with 153 members, when in principle, a single country can block agreements through a veto. In practice, whatever WTO agreements may say about democracy, all countries arent equal. Consequently, during the Uruguay Round, the US and EU agreed on the Blair House Accord in 1992 and rammed it down throats of other countries. The maligned green-room processes, to which not all countries were invited, were no different. Since then, what has changed across coalitions like Nama-11, G-20, G-33 and so on, is increasing economic clout of some developing countries (India, Brazil, China, South Africa, Argentina) and their collective unity, despite carrots and sticks. At the current Geneva high table, the G-7 includes India, Brazil and China, in addition to the US, EU, Japan and Australia. The other 35 countries assembled in Geneva serve by standing and waiting. If G-7 agrees, so do they, and so do all WTO members. In agriculture, India, Brazil and China dont have similar interests. Unity in demanding market access in developed countries is easy.

But that unity breaks when it comes to liberalising in developing countries. It is true that US/EU/Japan offers on reducing subsidies and agro tariffs arent enough, especially because they work on capped levels rather than actuals. It is also true that present Nama coefficients amount to less-than-full-reciprocity for developed countries, rather than developing ones. However, Brazil seems to have been weaned away, less by Nama and probably more by winning a cotton subsidy dispute with the US, extension of the EUs ACP (Africa-Caribbean-Pacific) preferences to Latin America and agro barriers in developing countries (soyabean in China). It is odd that the EU should protect bananas, when no bananas are produced anywhere in the EU. They are only produced in former EU colonies. Americans are right in blaming India and China. India was offered the banana-carrot of more service sector visas. But having voted in favour of a trust motion in Delhi, Kamal Nath didnt ditto it in Geneva. At one point, China was almost weaned away. That would have left India in the familiar Casabianca status. Since India is unlikely to agree, the Geneva meeting will probably amount to nothing. But a question remains about Indias PR and coalition-building exercise. Why were Brazil and China weaned away

The author is a noted economist