Consolidating G-20

Updated: Apr 28 2004, 05:30am hrs
The Committee of Agricultures meeting in Geneva has been inconclusive, in the sense of having failed to resolve Dohas impasse over agricultural liberalisation. Contrary to some impressions, this is more than a disagreement over formulae used for tariff reductions, since market access cannot be delinked from domestic or export subsidies that distort agricultural markets. The United States Trade Representative has called a mini-Ministerial later and other than the EU, Mexico, India, Brazil and South Africa have been invited to participate. However, the July deadline for resolving agricultural liberalisation modalities is unlikely to be attained and with Pascal Lamy retiring and possibly a new USTR replacing Robert Zoellick, the December 2004 deadline for Dohas agenda is fast disappearing. With the formation of the G-20 coalition of developing countries, the Cairns Group has lost its relevance as a force for agricultural liberalisation. If anything, the proposed Australia- US free trade agreement demonstrates that Australia is no longer that aggressive about agro liberalisation, although both Australia and New Zealand did support the developing-country position in Geneva.

Beyond the negative message of the Geneva meeting failing, there is however a positive signal and that is of the G-20 coalition holding together, despite the EUs attempts to break it. First, the EU offered preferential market access on agricultural exports (beef, dairy, sugar, coffee and orange juice) to Mercosur (Brazil, Argentina, Paraguay and Uruguay). Second, the EU has separate ongoing talks on cotton subsidies with the four African LDCs Chad, Benin, Mali and Burkina Faso. Third, China has been offered larger quotas for mushrooms and garlic to compensate for EUs expansion to 25 countries. Fourth, there is the promise of Director Generalship of WTO to South Africa. Notwithstanding these blandishments, the core of the G-20 coalition (India, Brazil, South Africa and China) has held for the moment. However, continued collective response is conditional on India working out bilateral relationships with these countries and this is a function of Indias willingness to accept bilateral liberalisation commitments. For instance, Brazil is crucial to IBSA (India, Brazil, South Africa) and a framework agreement for a preferential tariff arrangement with Mercosur was signed in January at Brazils goading. This should be implemented by June, provided India agrees to reduce tariffs on 450 agro products. The proposed free trade agreement (FTA) with South Africa has also been postponed to 2005 because India is not in a position to contemplate import liberalisation. And such resistance on manufactured imports is also responsible for FTA negotiations with China not getting off the ground. Despite some disagreement between the Union commerce and external affairs ministries, Indias new approach to trade policy seems to be one of regional FTAs with countries beyond the immediate South Asian region and this encompasses South-east Asia, Southern Africa and Latin America, if nothing else, as a countervailing pressure on the US and EU. If this approach is to work and G-20 forged as an important negotiating bloc, India needs to be more willing to accept regional liberalisation.