July 07, 2006

Has the political reality finally taken over trade ambitions?

By SANJAYA DHAKAL

After much ballyhooed Hong Kong Ministerial, the ongoing Geneva process seems to be heading towards a dead-end. The Geneva process was earlier initiated with the aim of ironing out existing differences on domestic support, export subsidy and market access among developed and developing countries after Hong Kong ministerial could not reach consensus on them.

Agriculture Food security is important for LDCs

However, on July 1, Indian Commerce Minister Kamal Nath threatened to walk out of the crucial mini-ministerial in Geneva. Media reports said Kamal Nath was furious after being unable to “thrash out thorny agriculture and industrial tariff issues, with the United States refusing to agree for wider cuts in farm subsidies.”

Kamal Nath said that there was no need to ‘pretend’ that this round of the talks is not a failure. “We came here to negotiate, but there is no space for negotiations. We (India) are on 8 to 9 percent growth. I’ve come here looking for a trade deal which helps me to reach 10 to 11 percent,” he said.

Although earlier the Geneva process was initiated with the aim of sealing the deal within April, this deadline has now been stretched up to August. However, going by the way the talks are going on in Geneva, there is hardly any room for optimism. Trade ministers from about 60 countries including India had began the mini-ministerial meetings in Geneva to find out ways to cut agricultural subsidies and industrial tariffs.

The standoff in Geneva, however, reflects a larger problem that has started haunting the WTO process. “The Doha Development Round has started suffering from the political realities,” stated Amir Khosru, former Commerce Minister of Bangladesh, who was recently in Kathmandu to take part in a Regional Meeting on “South Asia and Doha Round Negotiations” organized by South Asia Watch on Trade, Environment and Economics (SAWTEE). “Realities have surfaced now and things have started to grind to halt because for politicians, whether from South Asia or United States, at the end of the day what matters most is another election,” he said.

Consequently, in recent months, the US or European leaders have not been able to meet the demands made by developing countries on slashing domestic farm subsidies as they have to confront their constituencies. Initially, the trade issues got the prominence and everyone started making promises, but now when the time to deliver or as WTO general Secretary Pascal Lamy likes to call “moment of truth” has come, the politicians have developed weak knees. “Politicians must realize that they need to sacrifice. Those from developed countries must sacrifice more and those from developing must sacrifice less and both of them must take on board the LDCs and integrate them into the mainstream of global economic development,” added Khosru.

However, if the Geneva process does, indeed, gets derailed, that would mean that all the earlier commitments made by developed countries in Hong Kong Ministerial including providing duty and quota free access to 97 percent of products from LDCs could come under review.

Meanwhile, speaking at the program organized by SAWTEE experts from the region said that the difference of opinion on trade issues were prevalent not only at WTO level but also at the regional level. In the South Asian region also there are two different sets of countries with varying trade interests. India, Pakistan and Sri Lanka as developing countries have particular interest whereas Nepal, Bangladesh, Bhutan and Maldives as LDCs have quite different interests.

Presenting her paper on South Asian common position in WTO negotiations, Rashmi Banga of UNCTAD-India, however, pointed out that the SAARC countries do have complimentary interests like in common development levels and goals; common food security and livelihood concerns; and the benefit of working as a bloc. Likewise, they also have constraints to common agenda such as conflicting interests between developing and LDCs; conflict of interest between net food importing and net food exporting countries and so on.

As there is no alternative to working together for extracting maximum benefit out of global trading regime, the countries of South Asia need to first come together as regional and/or issue-specific blocs for collective bargaining. Since WTO is nothing more than a set of trade-offs, getting together in a bloc makes a lot of sense.