End of The Road - Economic & Political Weekly

Economic & Political Weekly: December 5, 2015

The 14-year-long tortured Doha Round may be effectively buried in Nairobi this month.

The run-up to the 10th ministerial meeting of the World Trade Organization (WTO) in Nairobi later this month has been anything but constructive. Kenya’s capital will see a battle that will decide whether the WTO can provide a few minimally credible developmental outcomes for its large membership of developing and the poorest countries. More likely, to suit the interests of the advanced countries the Doha Develop- ment Agenda (DDA) will be all but buried.

Attempts to finalise the Nairobi ministerial statement are currently mired in unbridgeable differences on several points, especially the future of the unresolved issues of the long- running DDA. A questionable package of outcomes that sidesteps the core issue of trade distorting domestic subsidies in agriculture is being pursued to suit only one country, the United States (US). At the heart of the divide is that the Triad of the three largest advanced economies—the US, European Union (EU) and Japan—seems determined to empty the Doha Round of all content. In 2001, immediately after the 9/11 terrorist attacks, the Triad launched the DDA negotiations in the face of intense opposition from developing countries. To make the round acceptable, the group agreed to address the fundamental inequi- ties of global trade arising from the previous Uruguay Round agreement. After 14 years of spasmodic negotiations, the Triad and some other developed countries now feel that the Doha Round is a costly undertaking because of the reforms that would be required in agriculture, especially for the US. Washington has passed a new farm bill that takes farm support to well beyond the Doha ceiling of $14.5 billion. Moreover, the Triad has already managed to pocket a binding WTO trade facilitation agreement (TFA) without having to pay anything for it. The TFA is the jewel in the crown that it fought so hard to retain in the DDA negotiations after it was initially stamped out by the developing countries at the Cancun ministerial meeting in 2003.

Against this backdrop, a small package of deliverables on not very important issues that would be agreed to in Nairobi was forced on the larger membership through a top-down approach. The Triad, along with Australia, Canada and Brazil, among others, has also ruled out any agreement in Nairobi on two major de- mands of the G-33 group of developing countries. The G-33 group, which includes Indonesia, India, China, Kenya and 43 other

developing countries, has all along demanded a special safeguard mechanism (SSM) and a permanent solution for public stockholding programmes of food security for resource-poor farmers in the developing countries. To worsen matters, the developing coun- tries will be asked to make a trade-off between continuation of the DDA in some form and the continuation of decades-long nego- tiating approaches, such as special and differential treatment and less-than-full reciprocity. If the latter were to be given up, India, China and South Africa will have to take almost identical commit- ments as the advanced economies to reduce agricultural tariffs to applied levels and subsidies; the US will otherwise not agree to return to the table and negotiate on agriculture.

In short, when trade ministers from the developing world congregate at Nairobi they will be fighting with their backs to the wall to preserve the Doha Round in its original form which they initially opposed but then into which they invested so much of their negotiating capital. The moot issue is, why many developing countries, particularly India, allowed things to come to such a pass, knowing well that losing leverage in a mercantile negotiating framework can have costly consequences. Since their failure to ram through a package at the Cancun ministerial meeting in 2003, the US and other members of the Triad have constantly weighed their gains in a multilateral round with benefits from bilateral/regional free trade agreements (FTAs). At the WTO, even as these countries agreed on the July

2004 framework agreement, the 2005 Hong Kong ministerial declaration, and the 2013 Bali agreement,   all negotiated to reach a comprehensive   package, they were simultaneously going ahead with concluding FTAs. But the turning point in the Doha Round negotiations was in 2008. That was the year when the US decided to set its sights on the Trans-Pacific Partnership (TPP) Agreement because at the TPP it would not have to address its trade-distorting agricultural subsidies.

Despite these changes occurring outside the WTO, the devel- oping countries went on offering concessions at Geneva in the hope that they would secure gains in other areas. As late as

2013, the Triad, led by the US, forced the TFA on the developing countries which did not ask for, nor were given, anything in return. At Bali in 2013, India agreed to the TFA in return for a weak and economically insignificant undertaking on public stockholding programmes for food security. Then, Prime Minister Narendra Modi had a chance to reverse that outcome but went ahead and agreed during a visit to the US in September 2014 to sign on to the TFA without securing a cast iron agreement on public stockholding programmes for food security.

In short, the developing world now finds that it has surrendered much of the leverage it had and will be unable to reverse things at Nairobi, except by naming and shaming the US for having effectively killed the Doha Round. If India and other developing countries fail to do even that, they would forgo whatever limited chance they have of securing a permanent solution for public stockholding programmes for food security, the SSM, and a credible result on cotton.

Last modified onMonday, 07 December 2015 14:55
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