New momentum

When the World Trade Organisation's director-general, Supachai Panitchpakdi, supported the Indian stand on contentious global trade issues during his recent visit to Delhi, he was not making a casual remark.

It was a reflection of the fast paced developments since May, leading to better appreciation of the developing countries' concerns with regard to livelihood, food security and development. He might have also had in his mind the perceptible softening of their stands on major issues like market access and subsidies, by both the developed and developing countries.

This has raised hopes about the resumption of the stalled negotiations and of salvaging the Doha Development Agenda. Though it is difficult to foresee at this stage whether or not a new consensus-oriented draft for negotiations can be drawn up before the forthcoming WTO general council meeting at Geneva towards the end of this month, the situation now looks less bleak than before.

The genesis of these positive developments can be traced to the EU trade commissioner, Pascal Lamy, and agriculture commissioner, Franz Fischler, who expressed for the first time their readiness to "show flexibility" on export subsidies, albeit subjecting such action to conditions like a "balanced deal" on market access, domestic support and parallelism on export competition. Significantly, similar noises were also made by the US.

On the part of the developing countries, the G-20 along with some major agricultural exporters like Brazil and Argentina, revised their stand, shedding their total opposition to discussing issues like market access and tariff reduction.

The proposals put up by this group "" which have evoked favourable comments from Supachai and paved the way for ending the deadlock "" reflect a willingness to go in for formula-based tariff reductions, ensuring progressivity in tariff decreases through deeper cuts in higher tariffs.

But, at the same time, it seeks to protect the food security and rural development interests of the developing countries and provides total exemption from cuts for the least developed countries.

Notably, it proposes special safeguards for developing counties, instead of the developed ones as had been provided in the original agreement.

It may be too much to expect the developed countries to agree to all that the G-20 wants, but the new set of proposals provide ample room for taking the negotiations further and shifting the focus back to the Doha agenda.

Fortunately, the initial reaction from the EU and US to these proposals is not negative. They have not only re-affirmed their offer to move forward decisively on export subsidies but also agreed on special and differential treatment for the developing countries.

Of course, the imminent lapse at the end of 2004 of the Peace Clause "" which would enable developing countries to impose countervailing duties to offset the effect of export subsidies "" might be one of the reasons why the rich nations have decided to relent on export subsidies. Whatever the reason, the new momentum to trade talks is welcome.