The heads of the World Bank and International Monetary Fund (IMF) recently urged a quick conclusion to the long-running Doha trade talks, arguing that it was essential to help poor countries grow out of poverty. World Bank President Robert Zoellick said rich and poor countries had made considerable progress in negotiations since the start of the trade talks, which he helped launch six years ago in Doha as US trade representative. ?You have the elements of an excellent deal on the table. With political will?and a little courage?you have a package here that would be a lasting improvement for the trading system,? he told a World Trade Organization (WTO) conference on aid for trade.
IMF Managing Director Dominique Strauss-Kahn said export-orientated policies were necessary for growth, although a stable macroeconomic framework, where the Fund could help developing countries, was also essential. ?The prompt conclusion of the Doha Round is one of the conditions that will make it possible for all of us to take advantage of the growth opportunities in front of us,? he said.
Meanwhile, AWP Swiss News reports, ?WTO Director General Pascal Lamy called on donor countries to remove trade barriers that impede growth in developing countries. Aid for trade is expected to reach $30 billion a year by 2010. This aid, an increase of 6.8%, reached $21 billion last year, according to the first comprehensive review published by the WTO and the Organization for Economic Cooperation and Development (OECD).?
Pascal Lamy has indeed sounded a clarion call for the Doha Round. He said that ?the hour of truth is very rapidly approaching?, and that the ?next few weeks? would probably be the ?last chance? for governments to take the round to a successful conclusion. Lamy has been making such statements almost ritually over the past year, the deadlines passing time and again without any result of consequence. This time, too, the response is lukewarm, with the opposing sides waiting for the other camp to make concessions.
However, Lamy may well be correct, in view of the US Presidential election next year and the Indian Lok Sabha elections slated for 2009. At this point, even the smallest concessions will become difficult to make, which would effectively scupper chances of a successful conclusion to the Doha Round. As it is, there is little progress on issues of agriculture and industrial tariffs.
In late October, Union minister for commerce & industry Kamal Nath said that things had changed in the last two months, and ?there is much more convergence after the papers on agriculture and industrial products were circulated? by the chairmen of the two negotiating groups. This may be so, but the moot point is whether the ?concessions? made by the main players have been large enough to bridge the gap between the rich and poor which seems as wide as ever. In agriculture, on crucial issues such as future caps on farm subsidy spending on the part of the US, the differences continue. On industrial tariffs, there has not been much progress. Indeed, it is feared that even if an accord is finally hammered out on agriculture, it is in the non-agriculture market access (Nama) sphere that the talks will stall.
The latest twist in the Doha Round bargaining is that the Nama issues have suddenly taken centrestage, nudging agriculture to secondary position. Thus, New Delhi, which has played an important role in opposing farm subsidies in the US and Europe, has, in its latest negotiating stance, focused on the unacceptability of the draft circulated by the chairman of the Nama WTO negotiating committee. Its stand is that unless the draft is altered to take into account the interests of developing countries, there is little possibility of the talks producing results in a few weeks.
This is the big problem affecting the negotiations. The Doha Development Agenda calls for the rich making greater concessions than the poor in lowering trade barriers, which means that the developed countries will have to accept smaller industrial tariff reductions by poor economies in exchange for substantial cuts by Washington and Brussels in terms of farm subsidies and barriers to market access. Even at this late stage of the Doha talks, there are no indications that the rich economies will follow in letter and spirit the Doha Declaration of 2001. This probably means that, barring a miracle, the Round is as good as dead.
French finance minister Christine Lagarde recently said she did not see an amicable Doha settlement because ?the gap among the parties is too wide?. Briefly, the US has been asked by developing countries to cap its domestic support programme at around $11 billion, the amount spent last year, but Washington has formally pitched its support ceiling at $22.5 billion, with an informal figure of around $17 billion being mentioned (still unacceptably high to India and Brazil). However, the G-20 should continue striving for an equitable solution, and India still has an important role to play.
?The author is trade professor at Icfai Business School, Chandigarh. Email: vasu022@gmail.com