Can India afford to say no to an unacceptable WTO-driven Doha agreement? For several reasons, the answer is yes. First, unlike the late 1980s, India is no longer an outlier and with the core of Argentina, Brazil, China, India and South Africa united, major developing countries can afford to call the developed country bluff. Second, a plethora of RTAs (regional trade agreements) has pushed regional liberalisation, even if multilateral transaction costs are lower. Third, with supply-side constraints and little reform domestically, particularly in agriculture, a longer time-frame for Doha does no harm. Agriculture is also sensitive in the upcoming electoral cycle. Fourth, regardless of what transpires at the ministerial meeting in June, with the forthcoming US presidential elections, absence of fast-track authority and EU Common Agricultural Policy reform in 2013, no one except Pascal Lamy expects any headway before 2010. Having said this, new texts have surfaced on Nama (non-agricultural market access) and agriculture. These are really contentious negotiations and the closer one is to an acceptable compromise text before the ministerial, interpreted as a reduced number of square brackets, greater the likelihood of an agreement.
On agriculture, the traditional developing country position has been one of interpreting liberalisation as more than market access, by reducing domestic support and export subsidies in developed countries, while permitting flexibility to developing countries. Earlier, it was argued that agriculture was holding Doha up, because of developed country resistance in reducing domestic support and export subsidies. It is remarkable that the agriculture text has managed to reduce square brackets from 130 to 30. Given the high global food prices and higher prices after subsidy elimination, there is perhaps tacit, although shortsighted, acceptance of not pushing the developed country agro reform agenda too hard. Indian reservations about special safeguards and special products no longer seem that intractable. Paradoxically, Doha may now be held up because of Nama, where square brackets have increased from 15 to 97. The issue is not just the nitty-gritty of formulae, where present proposals require developing countries to reduce industrial tariffs proportionately more. In an evident attempt to splinter developing countries, formulae have been complicated even further, with diverse coefficients and slabs proposed. There is no reason for India to accept this. Nor is industry likely to accept this perverse outcome. The commerce minister?s decision should be clear.