To say that India has come back “empty-handed” or has “surrendered” at the recently-concluded tenth ministerial round of World Trade Organisation negotiations at Nairobi would be to take a narrow view of the multilateral trading process.
From India’s perspective, two proposals were important. The first was on public stockholding for food security purposes, to protect its policy of procuring and stocking for its food security programmes.
[India pays its farmers above market price for their grain harvests, which the US and EU countries have argued amounts to giving them an unfair advantage over foreign producers. India, however, maintains this is essential for its food security.]
The second was a proposal by the G33, a coalition of developing countries over agriculture issues, on a Special Safeguards Mechanism that allows developing countries to raise tariffs temporarily to protect farmers against surges in imports.
Although these concerns regarding public stockholding for food security and special safeguards mechanism are important, there was no urgency for India to clinch a solution on these matters. Already, through a “peace clause”, developing countries have been given open-ended immunity against disputes being raised against them on this matter.
[The "peace clause" is a temporary clause that provides protectection from being penalised even if the subsidies that India gives to its farmers breach the WTO limit.]
Also, at present, through its tariff levels, India has a lot of room to manoeuvre for protecting farmers again volatility in international prices.The status quo on the special safeguard mechanism and over the public stockholding issues were thus expected.
Multilateral versus mega-regional
The fundamental question before the conference was whether the Doha Round of 2001 should be continued to a conclusion, or closed.
[In 2001, WTO talks were held in Doha, Qatar, with a focus on the problems of developing countries. To level the playing field, which critics said was tilted in favour of the rich nations, the developing countries were allowed trade concessions.]
Developing countries unanimously said the Doha Round must continue, but the developed countries – the US, EU and Japan – were advocating its closure. Keeping it open or continuing would broadly mean continuing trying to implement what was agreed to in 2001 by all member countries in the negotiations at Doha.
The big disappointment about the Nairobi ministerial is that Doha Round was not given an endorsement. Not only that, but a disagreement on the Doha Round has been recorded in the Nairobi declaration, which undermines what was agreed to by consensus earlier in Doha.
The developed countries feel that in the period since the Doha Round, China has emerged as a world power, and one of the biggest exporters. India is not in the same place yet but is also among the largest exporters of agriculture commodities, for instance, in rice and sugar. India is the among the most efficient countries in its production of agriculture commodities. Developed countries feel that it is no longer fair to continue to treat countries like India and China as developing countries. Instead, rich countries say, these are rising powers.
The major developed countries want new trade-related issues such as investment and competition policy to be on the agenda. In the past few decades, instead of multilateral liberalisation involving all countries, the major developed entities – the US, EU, Japan, Canada – have instead been focusing on mega-regional trade agreements such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership for enhanced access to goods and services. For India, which is not a signatory to such mega-regional preferential trade agreements, this is a major worry as its agriculture exports will suffer from trade diversion.
Multilateral liberalisation ensures that citizens are able to buy from the cheapest market and sell to the dearest. Discriminatory liberalisation cannot guarantee such benefits. India and other developing countries should have focused on obtaining a commitment on multilateral liberalisation in the future by continuing the Doha Round.
Cuts in agriculture subsidies
In Nairobi, with a few exceptions, it was decided that members will phase out subsidies on agricultural goods – advanced countries immediately, and developing countries by 2018. This cut in export subsidies by all members will have only a small impact on India's export subsidies in sugar, dairy etc. But overall, it shows that WTO as a forum for multilateral liberalisation is alive.
India and other developing countries' will have to show readiness to discuss expanding the remit of the WTO to include topics such as investment and export competition among countries.
Covering new trade-related issues such as investment and competition policy will keep developed countries also interested in multilateralism.
As told to Anumeha Yadav.
Anwarul Hoda, a former civil servant, was the Chief Policy Coordinator in the government of India during the Uruguay Round (1986-'93) and Deputy Director General, World Trade Organisation till 1999. He is now Chair Professor, Indian Council for Research on International Economic Relations.
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From India’s perspective, two proposals were important. The first was on public stockholding for food security purposes, to protect its policy of procuring and stocking for its food security programmes.
[India pays its farmers above market price for their grain harvests, which the US and EU countries have argued amounts to giving them an unfair advantage over foreign producers. India, however, maintains this is essential for its food security.]
The second was a proposal by the G33, a coalition of developing countries over agriculture issues, on a Special Safeguards Mechanism that allows developing countries to raise tariffs temporarily to protect farmers against surges in imports.
Although these concerns regarding public stockholding for food security and special safeguards mechanism are important, there was no urgency for India to clinch a solution on these matters. Already, through a “peace clause”, developing countries have been given open-ended immunity against disputes being raised against them on this matter.
[The "peace clause" is a temporary clause that provides protectection from being penalised even if the subsidies that India gives to its farmers breach the WTO limit.]
Also, at present, through its tariff levels, India has a lot of room to manoeuvre for protecting farmers again volatility in international prices.The status quo on the special safeguard mechanism and over the public stockholding issues were thus expected.
Multilateral versus mega-regional
The fundamental question before the conference was whether the Doha Round of 2001 should be continued to a conclusion, or closed.
[In 2001, WTO talks were held in Doha, Qatar, with a focus on the problems of developing countries. To level the playing field, which critics said was tilted in favour of the rich nations, the developing countries were allowed trade concessions.]
Developing countries unanimously said the Doha Round must continue, but the developed countries – the US, EU and Japan – were advocating its closure. Keeping it open or continuing would broadly mean continuing trying to implement what was agreed to in 2001 by all member countries in the negotiations at Doha.
The big disappointment about the Nairobi ministerial is that Doha Round was not given an endorsement. Not only that, but a disagreement on the Doha Round has been recorded in the Nairobi declaration, which undermines what was agreed to by consensus earlier in Doha.
The developed countries feel that in the period since the Doha Round, China has emerged as a world power, and one of the biggest exporters. India is not in the same place yet but is also among the largest exporters of agriculture commodities, for instance, in rice and sugar. India is the among the most efficient countries in its production of agriculture commodities. Developed countries feel that it is no longer fair to continue to treat countries like India and China as developing countries. Instead, rich countries say, these are rising powers.
The major developed countries want new trade-related issues such as investment and competition policy to be on the agenda. In the past few decades, instead of multilateral liberalisation involving all countries, the major developed entities – the US, EU, Japan, Canada – have instead been focusing on mega-regional trade agreements such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership for enhanced access to goods and services. For India, which is not a signatory to such mega-regional preferential trade agreements, this is a major worry as its agriculture exports will suffer from trade diversion.
Multilateral liberalisation ensures that citizens are able to buy from the cheapest market and sell to the dearest. Discriminatory liberalisation cannot guarantee such benefits. India and other developing countries should have focused on obtaining a commitment on multilateral liberalisation in the future by continuing the Doha Round.
Cuts in agriculture subsidies
In Nairobi, with a few exceptions, it was decided that members will phase out subsidies on agricultural goods – advanced countries immediately, and developing countries by 2018. This cut in export subsidies by all members will have only a small impact on India's export subsidies in sugar, dairy etc. But overall, it shows that WTO as a forum for multilateral liberalisation is alive.
India and other developing countries' will have to show readiness to discuss expanding the remit of the WTO to include topics such as investment and export competition among countries.
Covering new trade-related issues such as investment and competition policy will keep developed countries also interested in multilateralism.
As told to Anumeha Yadav.
Anwarul Hoda, a former civil servant, was the Chief Policy Coordinator in the government of India during the Uruguay Round (1986-'93) and Deputy Director General, World Trade Organisation till 1999. He is now Chair Professor, Indian Council for Research on International Economic Relations.