Events & Issues

New Delhi, 4 August 2008

DOHA Round Crucified

WHAT ABOUT FARMERS’ LIVELIHOOD?

By Dr. P. K. Vasudeva

The collapse of the Mini-Ministerial WTO meeting in Geneva on Doha Development Round after nine days of intense negotiations, confirms that the spirit of development among the developed and the developing countries is far from its legitimate objectives-- of level-playing field and accommodation.

Barring a salvage bid by WTO Director-General Pascal Lamy, this could well mean the end of the round — the first since World War II to have failed to produce a trade-enhancing package of measures. The reason for failure is probably quite simple: none of the major negotiating countries saw enough benefit coming their way, and the concessions that they were asked to shed would hurt their people economically in the midst of a global slowdown.  

The negotiations broke down as the United States rejected the demand made by India and China that developing countries should be allowed to make effective use of special safeguard measures (SSM) in order to insulate their farmers from the sudden decline in international prices or surge in import volumes of agricultural commodities.

One of the core issues that the developing countries have flogged in the Doha Round is that there should be adequate instruments available with them to protect vulnerable sections of farming communities from the uncertainties of global agricultural markets.

Besides the SSM, these countries argued that products that are vital for realising the objectives of food security, rural livelihoods and rural developments, i.e. special products, should be allowed an additional dose of protection. At the same time, these countries also demanded reining in of the large volumes of agricultural subsidies given by the developed countries to their farming sector.

Commerce Minister Kamal Nath summed up the substance of the deliberations succinctly when he said that while such countries as the US were trying to get the best commercial deal, economies like India and China were fighting to protect the livelihood of their farmers.

Squarely blaming the US for collapse of the WTO talks in Geneva, India said it can return to negotiations but will not compromise on protection to farmers in an open market. Describing the failure of the marathon talks between 30 trade ministers as a "serious setback to the developing countries," Nath said the US created the deadlock on an issue which was not trade but related to livelihood of farmers.

The mini-Ministerial Meeting was ‘crucified’ on July 29 when the US refused to agree to proposals from India and China that they should be allowed to impose extra 25 per cent duties, if imports are up 15 per cent on farm products.  However, the US said, the trigger for extra duty should be given only after imports surge by 40 per cent over the average of the preceding three years. "By the time we have 40 per cent surge in imports our farmers would have committed suicides," said Nath.

Interestingly, at least on the face of it, there was a convergence of views on the subjects of farm subsidies and non-agriculture market access (NAMA) issues, differences over which had plagued the Doha Round negotiations over the past eight years. Indeed, the “breakthrough” in these areas was considered so important that an overall agreement at the end of the meeting seemed very much on the cards.

However, as so often happens in such negotiations, the real, unpublicised ‘crunch points’ were kept for the closing stages, and the very first one succeeding in undoing all the “progress” made over nine days. Among these issues, the two in the forefront were SSM for developing countries in the event of a surge in imports and US cotton subsidies affecting mainly some African economies (Cancun Ministerial also collapsed due to US cotton subsidies). That the first of these would derail the entire negotiations underscores the fact that there is as yet no meaningful consensus on the “development orientation” of the Doha Round, which is unfortunate.

That the US was not inclined to reduce farm subsidies was clear from the developments in its domestic policy arena. Farm Bill 2008, which provides the blueprint for US agricultural policies until 2012, has promised additional doses of subsidies. Thus, the entire basis of WTO agriculture negotiations could be undermined if the current Farm Bill proposals are accepted as the law of the land.

These demands were unveiled by NAMA negotiating group chairman Don Stephenson in the draft modalities paper. Besides a steep reduction in tariffs on non-agricultural products, the Stephenson paper included contentious issues such as elimination of tariffs in a wide range of sectors within a stipulated period and liberalisation of trade in ‘remanufactured’ products.

The Indian industry has argued that the last-named issue would tantamount to giving unhindered access to used products largely from the developed countries, which could sound the death knell for domestic producers. There were thus a number of contentious issues in the NAMA negotiations, which would have been difficult to resolve.  

The negotiations have therefore, turned out to be as hardnosed as any, with pressure being focused on China and India to make more concessions. The difference between the Doha round and the previous (Kennedy, Tokyo and Uruguay) rounds is that on all those occasions the US, Europe and Japan would agree on a deal and shove it down the throats of the rest; this time, the rest too have a say in what happens.

It is unusual that the talks got bogged down on the single issue of safeguards for farm goods, undermining equally important issues concerning subsidies on cotton (where the US is the offending party and other products, NMA), and services.  

Given the election season that lies ahead for India and the US, there is now little chance of the Doha Round being resurrected till at least the end of next year. Even then, there could be little progress unless the development concerns of the Round are given due importance especially by the developed countries.--- INFA

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