The Hindu Business Line : WTO must survive — On the paradigm of give and take

The writing on the wall was clear as the Doha Development Agenda was conveniently ignored. The Doha Ministerial and the subsequent launch of the Doha Development Agenda was a landmark in the history of the WTO as for the first time developing countries took an active role in trade negotiations. Taking this cue, developed countries should have been more flexible in Cancun.

What did Cancun really intend to achieve? Cancun essentially was a stock taking exercise or a reality check on the Doha Development Agenda. It was aimed to endorse some viewpoints of the developing countries that were set out clearly in different agreements at Doha earlier. One must realise, and admit, that the development dimension of the developing countries was a key aspect of the Cancun Ministerial. Unfortunately, that did not take off. The clamour at Doha by the developing countries was well heard, and reverberated at Cancun at a much higher decibel.

What developing countries have been pitching so far, and have vehemently expressed at various fora, is a time bound commitment by the developed world to end farm subsidies so as to remove trade distortions.

There was simply no move forward to address the issue. Since the Uruguay Round which gave birth to the WTO, farm subsidies in the US and the EU, instead of being scaled down, have risen from $180 billion to over $300 billion.

In the name of free and fair trade, developing countries have been forced to liberalise their trade and open up markets. This, in turn, has brought millions of farmers to the brink of penury and starvation. The farm sector remains the biggest employer in the developing countries. Cancun, therefore, was a battle for survival, and this has definitely united the developing countries more. Even the US and the EU found this very hard to break.

Cancun witnessed two milestones. One, China's debut on the WTO stage. And, two, the developing countries' unity. India along with China and Brazil espoused the cause of the developing countries at Cancun, and firmly shifted the terms of the debate to farm subsidies.

Such firm, aggressive and convincing arguments put forth by India may have received many accolades from different quarters, but in the long run it can derail the momentum of the world trade. This is not to suggest that India had made up her mind to oppose every move of the WTO at Cancun. It only made the need and concerns of the developing countries loud and clear. Yet, for all the moral and emotional outburst, Cancun's collapse is a grave blow to world trade. In four years, three ministerial conferences have failed. Seattle and Doha being the earlier ones. Global trade with all its existing unfairness and inequities is still believed to be a long lasting hope for the world's poor. Therefore, the WTO's smooth functioning is far more desirable than creating obstacles. Of course, real politik is the name of the game. A rational and dispassionate analysis gives the impression that the WTO's functioning has more to do with power than wealth.

The US and the EU may not have such large stakes in the WTO compared to the developing countries. No doubt, the unity shown by the developing world at Cancun is exemplary, but how each individual country will protect its economic interest is a matter to be seriously looked at. At Cancun, it was a number game which outsmarted the North. To replicate this process will be hard for the entire South.

The impasse at Cancun is an anathema to free and fair trade. There is an urgent need to revive the failed process. After all, in an interdependent world, alliance is the order of the day, not alienation. If the issue of agriculture is paramount to the survival, or holds the key to the sustenance of the WTO, a quick, amicable and fair settlement to is necessary.

Everyone must realise that only give and take can break the present deadlock. And in an era of integration, such reciprocity is being realised as the new paradigm for the world trade to survive. The EU must come to terms with the fact that agriculture is the prime mover of the WTO negotiations and, therefore, must address the subsidies issue. The US must provide a healing touch to this contentious issue and win the trust of the developing countries. India and the developing camp must take initiatives to liberalise trade, reduce tariffs and become more open economies.

While the economically dominant North needs the burgeoning markets of the South, such as of India and China, to stimulate and maintain growth, the South too needs the technological prowess of the North.

The post-Cancun phase will, no doubt, witness the emergence of RTAs, and FTAs, but to believe this will hamper the process of multilateralism and the future prospects of the WTO is too immature, as one has seen the proliferation of RTAs and trade blocs even during the days of GATT.

The challenge before India is to translate this unity into building a consensus in the WTO and, for the North to accept the fact that free and fair trade is not a cacophony but a long-term economic necessity.

(The author is on the faculty of the Indian Institute of Foreign Trade, New Delhi.)

Article E-Mail :: Comment :: Syndication

Stories in this Section
Differential pricing

Farmers: Distanced by globalisation

Shakeup in NYSE

Public offers, not when bourses on a high

What next, after Cancun?

WTO must survive — On the paradigm of give and take

On building lasting institutions

Reducing poverty

GE Shipping clarifies