In seeking to balance the interests of the developed and developing countries, two recent proposals by WTO members evade the development objective
After declaring their intent to complete the Doha Round of the World Trade Organisation this year, member countries have been intensifying their participation at Geneva for the last few weeks.
The growing intensity of the negotiations is evident with Mexico tabling a proposal to take the Round forward as also with the release of an interim report by a group co-chaired by Jagdish Bhagwati and Peter Sutherland that provides suggestions for completing the Round this year. Interestingly, both the report and the Mexican proposal seem to be missing the core objective of development that is central to the Doha Round.
The Bhagwati-Sutherland report, which was sponsored by Germany, UK, Indonesia and Turkey, is comprehensive but it does not reflect a position that can be acceptable to developing countries like India. One area of concern for industry in India in the Mexican proposal and the Bhagwati-Sutherland report is the call for pursuing sectoral negotiations in the industrial goods pillar.
The sectoral negotiations have been central to the US and the Eurpean Union demand on moving forward in the negotiations on industrial goods. However, countries like India have been opposed to any sectoral negotiations, which, at present, is a voluntary initiative since that would take away the development dimension of the Round.
The Mexican proposal states that member countries should identify at least two “sectoral” liberalisation initiatives, among the many that have been tabled for sectors such as forest products, toys, chemicals, textiles and clothing, and auto parts.
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On agriculture, the Bhagwati-Sutherland report does not seek to put any extra pressure on the developed world to make any substantial proposal beyond what is already on the table. The Mexican proposal, however, calls for capping trade-distorting domestic subsidies by developed countries, which is an important first step if the least developed and developing countries are to achieve any meaningful access in global markets. The Bhagwati-Sutherland report needs to look at how some real market access can be provided to the poor countries for if to be taken seriously by all negotiators.
Since agriculture and industrial goods are the two key areas that are being negotiated seriously at present, it is important to note that neither the Mexican proposal nor the report puts any substantial pressure on the developed countries to open their markets beyond what is already on the table. On the other hand, there would be a lot that the developing countries will have to bring on the table if the non-agricultural market access (NAMA) proposals as suggested are to be taken seriously. Interestingly, the US is reportedly not in favour of the Mexican proposal since it calls for capping agricultural subsidies, which it does not support.
From a developing country perspective, the problem with both the Mexican proposal and the Bhagwati-Sutherland report is that they seek to balance the interests of the developed and the developing countries. This goes against the Doha Round’s core objective of providing the poorer countries higher market openings in the developed country markets to balance the inequity that exists in global trade today.
For the negotiations to go ahead, it is important for countries to keep a few specific principles in mind. To begin with, there has to be real market access for the least developed and developing countries in global agricultural trade. This can be achieved only if the sensitive list of products for the developed countries is kept at the minimum and there are some real cuts and capping of subsidies that will contain the current distortion in world agricultural trade.
Second, on industrial goods, developing and least developed countries should not be forced to eliminate tariffs in any sector. Instead, the focus has to shift in seeking substantial cuts in bound tariffs by some large developing countries which is matched by equally substantial cuts by the developed countries.
Even as the Bhagwati-Sutherland report and the Mexican proposal seek to balance ambition with pragmatism, they fail to deliver on the need to put forward a solution that will meet the development objective and, at the same time, provide market access opportunities for member countries. Hopefully, the final report from the Bhagwati and Sutherland group will bring to the table more substantial suggestions to conclude the Round in 2011. The Mexican proposal, too, will have to be changed substantially to incorporate the positions taken by developing countries if it has to be taken seriously.
The author is principal adviser, APJ-SLG Law Offices