Jun 19, 2009

India buckles, WTO Doha Round set to sail through

I wasn't wrong. When I said a few days back that Kamal Nath was shifted from Trade and Commerce under pressure from the United States and the WTO, I could see where we were heading towards. The new Commerce Minister Anand Sharma has spilled the beans even before he could learn to handle the intricacies of diplomacy. A few days back, before he left for the US, he told Reuters that the impasse between US-India on farm trade has been broken. And today's Times of India carries a report from Washington in which he is believed to have indicated that India may dilute its stand on market access for foreign products in an effort to breathe new life into the Doha Round.

Anand Sharma is merely doing what he has been asked to do.

As early as in March 2007, I had warned that India had taken a U-turn in its position and was actually looking for a face-saver ( See my analysis: Under pressure, India makes U-turn http://www.indiatogether.org/2007/mar/dsh-dohaindia.htm). What Kamal Nath had done in the last two years was to actually hold on and give an impression that India was not caving in. He did it deftly, and with a media which looks for exciting sound bytes he was able to get away. Brick by brick, India's position on agriculture had been diluted.

I would like Anand Sharma to tell the nation as to what would be the gain for India from the Agreement on Agriculture that has almost been concluded under the Doha Round of negotiations. You will be not only surprised but shocked to know that India actually does not even know as to what would be the gains and losses from the farm agreement.

When Anand Sharma said that he is willing to provide more market access, what probably we don't realise is that India has already gone in for an autonomous liberalisation and has opened up its market. This happened in Mar 2008 when George Bush wanted India to open up, before the US could reciprocate. The import tariffs for the most important farm commodities have already been brought down to zero. Wheat import tariff is zero, rice is at zero, maize is at zero, pulses is at zero, edible oils is practically zero (or 7.5 per cent as the case may be for some categories), what further reduction do we expect now.

India opened up, but the US did not reciprocate. The US in fact approved the US Farm Bill 2008 that makes a provision for an additional farm subsidy of $ 307 billion for the next five year.

What equally disappoints me is the bystander role the negotiators of the developing countries played all along. In my subsequent writings I have said that the real culprits are the developing country negotiators who are more keen to stay put in Geneva and enjoy the perks they are being endowed with by their respective governments. This is a chance of their lifetime and they are not willing to forgo it at any cost. If WTO fails, they will have to return back. They don't want to take that risk. And who is bothered as to what happens to food security and the livelihoods of the farming communities back home. What a shame.

Nevertheless, the few remaining hurdles before the upcoming 7th WTO Ministeral in November this year are being cleared expeditiously. With India throwing in the towel, I think the resistance that came from the developing countries to an unjust and inequal multi-lateral trade regime comes to an end. The world must do what the rich and industrialised countries want them to do.

India may dilute stand on farm product imports
19 Jun 2009, 0233 hrs IST, Chidanand Rajghatta, TNN


WASHINGTON: India has indicated that it may dilute its stand on market access for foreign farm products in an effort to breathe new life into the Doha Round of WTO trade talks that were stalled due to New Delhi's previously strong opposition on the issue.

India's new commerce minister, Anand Sharma, conveyed New Delhi's position to US interlocutors, including Secretary of State Hillary Clinton and Commerce Secretary Gary Locke, on Wednesday, telling them that "while a perfect solution may be elusive, it should be possible to find a fair solution acceptable to all parties, while keeping in mind that development was central to the Doha Round."


The US-India breakthrough on the issue sent ripples of excitement in trade circles where David Walker, New Zealand's ambassador to the WTO in Geneva, who steers its negotiations on agricultural goods, was quoted as saying the pledges were "very much music to my ears." But given the strong sentiments in the still largely agricultural India over the issue of foreign food imports, Sharma (and Prime Minister Manmohan Singh) may have to carefully caliberate the move.


In a statement following his meeting with Clinton, Sharma said he "briefed her about the programmes being undertaken by the Government to stimulate domestic demand while providing a social security net to the most vulnerable sections of the society, including through the successful implementation of the national Rural Employment Guarantee Program," — an euphemism really for "we still need to move slowly on farm imports and cannot simply throw open the door."


The statement was issued before Clinton had an unfortunate fall at the White House after her meeting with Sharma, resulting in a broken elbow that is expected to put her out of commission — and foreign travel — for at least three weeks. Doctors have said she may need surgery.


The Indian stand was anticipated in some quarters ever since the new government took office with a renewed mandate and the cabinet appointments saw Anand Sharma replace Kamal Nath as the commerce minister. Kamal Nath was credited with taking a strong, protectionist stand that did not go well with the Americans.


In effect, the scuttlebutt was that Kamal Nath was eased out because he had soured things with Washington over Doha, although in all other aspects, he forged closer trade ties with the US and counted many friends here.


Sharma also said New Delhi was looking forward to Clinton's forthcoming visit to India in July and expressed confidence that "her leadership would give a special impetus to the relations between the two countries."

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