Anil K Kanungo: Level playing field and market access

These are the two issues that top the WTO agenda and unless they are addressed, the round is going nowhere.

A fresh round of initiative was taken by India on March 12, 2007 in New Delhi to revive the Doha negotiations suspended since July 2006. The WTO Director General Pascal Lamy along with Union Minister for Commerce and Industry Kamal Nath and other important ministers and dignitaries from Zambia and other parts of the world gave a kick start to the impending Doha talks. Many important issues were deliberated at length to restart the negotiations. Among the key issues, agriculture again undoubtedly held the centre stage of discussions. Experts of all hues believe that the success of the Doha round is critically dependent on the core issue ""a level playing field which is yet to be addressed or implemented. In any system or organisation where participation of all members is desired to benefit each one, the system must treat everybody equally and fairly. That is what is missing at the moment in the multilateral trade regime governed under the WTO.

The Doha round of talks is almost six years old, having started in 2001. The core issue hasn't been adequately addressed to arrive at a practical solution. If agriculture is considered the core issue with more than three-fourths of the population dependent on it, the ideal solution would be the removal of huge subsidies given to the developed countries' farmers. Such an exercise is essential for creating a level playing field which would foster a true spirit of competition. At least, an atmosphere to compete would be created for people who are in a position to compete.

It is further argued that the Doha round of negotiations is not about the complete elimination of subsidies given to farmers in developed countries; it's rather about a reduction in subsidies. If that is so, an appropriate action should have been taken to do the needful. No such serious attempt has been undertaken. Developed countries promise that they would go for reductions in subsidies provided developing countries undertake the commitments proposed by them. Such unilateral concerns are further obstructing the smooth process of the Doha implementation programme.

Currently, the issue of market access in agriculture has occupied priority. It is important to understand the issue in detail. That is what all developing countries are trying to emphasise while pursuing trade negotiations at different fora. This issue became the focal point at the recent negotiations in New Delhi as well.

Market access in agricultural negotiations continues to be an area of conflict in the ongoing Doha Round of negotiations. The major differences persist because a formal and detailed approach to effecting tariff cuts hasn't been finalised. The Hong Kong Ministerial, however, made some progress where a four-band approach to tariff cuts was broadly agreed upon""countries having higher levels of tariffs are being subjected to steeper cuts.

In the course of subsequent negotiations, another dimension to market access emerged, that is, the average tariffs which the member countries are willing to take in agricultural products while they follow the banded approach. The inclusion of this dimension could have a positive impact for it could indicate the levels of ambition the various groups of WTO members have set for themselves. In doing so, there is a possibility of making the negotiating process more complicated as members seek to calibrate the thresholds for the tariff bands to match their averages in respect of tariff reductions.

From a developing country's perspective, the key issues that need to be settled are the designation of Special Products (SPs) and the agreement over the coverage of the Special Safeguard Mechanism (SSM). Developing countries propose that they may be allowed to designate a set of SPs which are critical from the viewpoint of their food security, livelihood and rural development. In addition, SSM may be available to them as a defence against a sudden surge in imports or fall in international commodity prices.

WTO members agreed to these demands in Hong Kong, with the Declaration admitting the developing countries "will have the flexibility to self-designate an appropriate number of tariff lines as SPs based on the criteria of food security, livelihood and rural development". The Declaration added that developing countries "will also have the right to have recourse to an SSM based on import quantity and price triggers, with precise arrangement to be further defined". Developing countries now insist SPs and SSM should form an integral part of modalities and outcome of ongoing negotiations.

G-33""the key proponent of SPs and SSM""argues that developing countries will have the right to self-designate "at least 20 per cent of the tariff lines" as SPs. It further suggests that 20 per cent of identified SPs will not be subjected to any tariff cuts, with the remaining 50 per cent being subjected to a tariff cut of not more than 10 per cent. But the US has argued that "SP designation" should be "limited to no more than 5 per cent tariff lines at the detailed duty level." Interestingly the US argument for limiting the number of SPs has been supported by one of the G-20 members, viz Thailand. This development makes it imperative for countries like India to adopt measures for strengthening the G-33 alliance. The group that maintains the SPs and SSM should serve the purpose of providing developing countries with policy flexibilities.

The author is with the Indian Institute of Foreign Trade