Addressing the 78th Annual General Meeting of the India Chapter of the International Chamber of Commerce (ICC) on Friday, the Additional Secretary in the Commerce Ministry, MR Gopalan said the onus of successful completion of the Doha Round of negotiations in the WTO rested on the attitude of the developed world. The developed countries should be flexible to accommodate the concerns of the developing world, he said.
He said that the developing nations were in favour of a free and fair trade while the developed countries were unwilling to reduce their levels of high trade-distorting subsidies and tariff barriers.
Expressing concerns over the growing protectionism in trade, Gopalan quoted a latest World Bank study which states that since G-20 leaders signed a pledge in November 2008 to avoid protectionist measures, several countries, including 17 of the G-20, have implemented 47 measures that restrict trade at the expense of other countries.
The study notes that since the beginning of the global financial crisis, officials have proposed and/or implemented roughly 78 trade measures, according to the World Banks monitoring list of trade and trade-related measures. Of these, 66 involved trade restrictions, and 47 trade-restricting measures eventually took effect. The effects of these measures are likely minor relative to the size of unaffected markets but they have a significant negative effect on particular exporters shut out of markets.
The cost of inaction on the Doha Agenda is rising, the study cautions. To date most countries have not yet raised tariffs to bound levels or taken full advantage of headroom on agricultural subsidies. However, as the recession deepens, many countries may be tempted to do so. This threat underscores the importance of pushing forward with a rapid conclusion of the Doha round.
In this backdrop, Gopalan expressed concern and hoped that the protectionist measures would be a short term affair and not creep into the Doha round of multilateral negotiations.
His concern comes in the backdrop of the protectionist measures which are of considerable importance for particular exporters shut out of protected markets. Tariff increases comprise only about a third of these actions and a half for developing countries. For example, Russia raised tariffs on used autos, and Ecuador raised tariffs on more than 600 items. Non-tariff measures include such policies as Argentinas imposition of non-automatic licensing requirements on auto parts, textiles, TVs, toys, shoes, and leather goods, or Indonesias requirement that five categories of goods (including garments, footwear, toys, electronics, food and beverages) would be permitted in only five ports and airports.
In some countries, tightening standards have slowed import entry, notes the World Bank study. These include, for example, Chinas import ban on Irish pork as well as rejection of some Belgian chocolate, Italian brandy, British sauce, Dutch eggs and Spanish dairy products, and Indias ban on Chinese toys, Export subsidies are particularly egregious because they contravene the draft Doha modalities. The EU announced new export subsidies on butter, cheese, and milk powder. Less obviously, both China and India have increased the rebate on the duty drawback system for exporters, and, although the subsidy component is a matter of discussion, the timing of these measures raises questions.
President, ICC-India, RV Kanoria underlined the need for greater accountability of the participating countries in the multilateral system, greater transparency in the rules of the global financial sector, a strong push by world leaders to the multilateral trade talks, need for a long term energy plan and greater representation of the developing countries at international forums to ensure global stability.