Not yet there

The fate of the Doha development agenda continues to hang in the balance as yet another round of high level talks to resolve the deadlock has ended in Zurich""with some progress made, but without a breakthrough.

After the failure of several earlier rounds of parleys, the hunt for the blueprint that could provide an acceptable accord on global agricultural trade is now being spearheaded by the US, the European Union, Australia, Brazil and India""a group that has come to be known as "five interested parties" (FIPs).

This group realises the urgency of achieving a breakthrough on the most controversial, and the most critical, issues of farm subsidy reduction and import tariff cuts before the next World Trade Organisation (WTO) summit gets under way at Hong Kong in December.

Failure of the Hong Kong ministerial may kill the Doha development agenda, which is rightly viewed by many as capable of giving a multi-billion dollar boost to the world economy and ameliorating the economic condition of millions of poor people.

It is no surprise, therefore, that the trade ministers of the FIPs have decided to meet again in Geneva next week.

The Zurich meet has not been devoid of progress, though there was no concrete outcome. Some forward movement has taken place, with the different groups getting down to hard bargaining. And, instead of firming up their respective stands as in the past, they have conceded some ground in order to try and arrive at a generally acceptable formula.

The US has offered bigger cuts in its farm subsidies and the EU has softened its stand on the market access formula. These are rightly being viewed by India and Brazil (representing the G-20 group in the FIPs) as a hard-fought victory, even as they too, on their part, have expressed willingness to mellow down on tariff cuts.

They have broadly indicated that they can consider a middle path between the US demand for steep tariff cuts and the relatively modest EU stance on this issue. These developments are significant as they have paved the way for further negotiations. As a result, one can still hope for success in Hong Kong.

The focus of negotiation has narrowed down to the extent to which the developed countries should reduce their farm subsidies, and the precise formula for tariff cuts to expand market access. Realism demands recognition of the fact that the differences over these issues are still sharp.

On the subsidies front, while the G-20 intends to maintain pressure on the US for deeper cuts than those already proposed, the US continues to insist on matching cuts by the EU.

Where the tariff cuts are concerned, the G-20 has turned down both the US proposal of "progressivity within a band" and the EU formula of a "pivot within each band" (the average rate of cut in each band).

Countries like India feel that the "pivot" approach could lead to denial of market access in products that are of export interest to the developing countries.

Fortunately, both the US and the EU have agreed to drop their respective proposals, leaving room for evolving a new formula or suitably amending any of those already tabled.

All that is needed to clinch the issue now is a little more flexibility on the part of the developed countries in order to address the legitimate concerns of the developing countries. That should not be impossible to achieve, when the objective is to save the Doha round.