The Hindu Business Line : Doha Round — Time to break the deadlock

IN A recent — dropped in for a brief while kind of — short visit to New Delhi, Dr Supachai Panitchpakdi, the WTO Director-General, met the Prime Minister, the Finance Minister, the Commerce Minister and, perhaps, a few more and then left in a hurry. One thinks that he flew back to Geneva where he has his hot seat. So far as the Doha negotiations are concerned, he alone is the most worried, if not hassled, man on earth.

His predecessor, Mr Mike Moore, had seen to it that the new round was started and taken the credit for launching a new round of negotiations. But Dr Supachai has to ensure the successful conclusion of it. For Mr Moore the task was simpler, but for Dr Supachai onerous.

The Doha negotiations are stuck in a difficult knot around agriculture. Attempts are being made to resolve the deadlock. Both the US and the EU have shown their cards, and now want the G-20 to show its. What they mean is that the G-20 has to show its commitment, especially on market access (tariffs). This is where the issue is most difficult.

The US and the EU are, as they say, ready to eliminate export subsidy and substantially reduce domestic support, but they wonder whether India, a prominent member of G-20, will make any significant commitment on market access.

There is a doubt that it is not so much the G-20 but India that is giving the developed nations a nightmare.

One feels that the objective of the quick trip by Dr Supachai was to understand the mindset and mood of the new United Progressive Alliance (UPA) Government. Once again, India is the cause of anxiety. Will India show enough flexibility on market access?

If one goes strictly by the letter and spirit of the Doha agenda, India can act difficult by insisting that (i) less than full reciprocity, and (ii) special needs and interests of developing countries are two principles that have to be honoured while negotiating market access.

This will be sufficient to keep the progress on agriculture stalled for a long time. Objectively, by insisting on safeguarding the food security interests and livelihood concerns of its 650 million small and marginal farmers, India is basically sticking to the spirit of Doha agenda. And this is the concern of the US and the EU.

The hope of a breakthrough in agricultural negotiations in the General Council meeting in July now hinges critically on India's willingness to show some flexibility.

Once again, it is India that matters. But this also has its implications, for India is not alone in the game and it has to carry along the rest of the G-20 nations.

Many are looking forward to a breakthrough.

It may be mentioned that an early breakthrough in agriculture negotiations is in India's interest as well. The deadlock in farm negotiations will also delay the gains to be had in other areas.

Further, India has to keep in mind that while protecting the food security of small and marginal farmers is important, it is equally important to secure access to agricultural markets in the developed countries. Only a balanced bargaining can give a mix of both objectives. It is now time for India to respond in clearer terms, especially with respect to market access.

As mentioned, the US and the EU have promised to accept India's demand for substantial reduction in domestic support and eliminate export subsidy.

They have also clarified that "substantial" means anything greater than 50 per cent. Now, if this is possible to achieve, then two things follow.

First, through reduction of domestic support India will get larger market access in the developed country markets, because this will make the country's products competitive.

Second, elimination of export subsidy will protect the domestic farmers, as the import prices are likely to go up. Given this, when it comes to market access, where India is expected to make some concessions, New Delhi should agree to a formula that should eliminate peak tariffs, and tariff escalation.

If it means that India too has to eliminate peak tariffs, it should have no problem. One way of doing that would be to make all members agree to bind tariffs at a less than three-digit level, that is, tariffs are to be bound at less than 100 per cent.

If this is agreed upon, then one can think of a suitable formula, which could be the Uruguay Round request-offer one. This way, negotiations can take care of "less than full reciprocity" requirement as specified in the Doha mandate.

It is possible to achieve the much-desired breakthrough in agriculture during the forthcoming meeting of the General Council. There is a mood to compromise and go beyond Cancun. All that is needed now is a sensible proposal on market access.

This opportunity should not be allowed to slip through. After all, at this moment one is only talking of a framework agreement.

Specific sectoral/product-specific concerns can be taken care of when it comes to making specific commitments.

On the caution side, however, India and other developing countries should make sure that they secure the right to special safeguard measures.

(The author is Senior Adviser, CII. The views are personal.)