India-EU summit did little to further Doha cause

EXIM MATTERS

If one message came out rather clearly during the India-EU summit last week, it is that little progress can be expected in the ongoing multilateral trade negotiations at the World Trade Organisation.

EU Trade Commissioner Peter Mandelson and Commerce Minister Kamal Nath used the summit to reiterate well-known positions and did little to find common ground, even as they talked about the need for Doha Development Round to succeed. Any positive sound bites were reserved for bilateral cooperation between the EU and India.

The EU is an important trade block that speaks for 25 countries in Europe, even if the individual countries do not agree on what is said. As a block it is significant, because it represents 500 million people with a combined GDP of about $9 trillion. Without positive efforts from the EU, the WTO negotiations have little chance of success.

India is not a significant player in global trade with barely 0.85 per cent of total world trade share.

However, India is a significant voice in a coalition of 20 developing countries (G-20) which share a common view that the rich countries, especially the EU, must reduce their subsidies to farmers, enabling the poorer countries to sell more of their farm produce in richer countries. If the G-20 holds together, there is little hope for agreements on critical issues at the WTO.

The EU is simply unable to take on the farm lobbies, especially in France. As recent events showed, the EU is unable to take on even the lobbies of textile manufacturers. Much of this inability is inherent in the nature of the loose and fragmented coalition that the EU represents.

Given this ground reality, the onus was on Kamal Nath to push for common ground on the other points in the Doha Development Agenda.

Similarly, the onus was on Mandelson to appreciate the ground reality in India and work towards agreements on rather less contentious areas that would lead to at least some progress in the Doha negotiations.

There was little point in openly pushing a government supported by recalcitrant Left groups towards further opening up.

The situation called for careful and diligent behind-the-scene homework before Nath and Mandelson decided to speak out at the summit on trade barriers that must be dismantled by the other.

As it turned out, Nath complained about farm subsidies and non-tariff barriers in EU and Mandelson complained about India's policies in regard to market access in services and foreign direct investment. Both had convenient sticks to beat each other with and used them under full glare of the media.

Despite its inability to arrive at quick decisions, the WTO is the best forum to arrive at binding multilateral trade agreements and resolving trade disputes. For restoring its credibility, the WTO members have to show greater imagination and flexibility.

At present, the will and the energy to see the Doha Development Round through to success seems non-existent. The bilateral agreements seem the easy way out, but that they will lead to all-round benefits is far from established.

The best hope for the WTO is its new director-general, Pascal Lamy, who can use his experience and credibility as former EU trade commissioner to persuade France and other obstinate EU members to hear the voices of poorer countries and reduce farm subsidies.

tncr@sify.com