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Tuesday, Sep 27, 2022
Outlook.com
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Opinion

No Give, Only Take

How valid is the Left's paranoia regarding WTO and its concerns about a bad deal for India during the current Doha round of negotiations? Can India without budging an inch ask the US and EU to reduce farm subsidies and tariffs?

No Give, Only Take
No Give, Only Take
outlookindia.com
-0001-11-30T00:00:00+05:53

The Left’s pressure on these matters has, of course, been a hardy perennial for whichever government has been in power in recent times. But this time round, its support to the UPA government is crucial to the latter’s survival. Which is one reason why commerce minister Kamal Nath, who is leading India’s negotiations at the WTO, simply can’t afford to "return to Delhi and have people say that his pocket has been pinched", as a story in The Financial Times eloquently puts it.

Such opposition naturally puts the government on the defensive so that it is not open to the charge of a sell-out. The Left has also been telling the government that India’s abandonment of a key role in articulating developing countries’ interests was a key reason for the incorporation of several iniquitous provisions in the WTO agreement that favoured the developed countries. How valid is the Left’s paranoia regarding WTO and its concerns about a bad deal for India during the current Doha round of negotiations?

True, the reality of asymmetric global economic power asserts itself in the WTO where decisions are supposedly reached by consensus with every one of the 148 members having a voice. Negotiations often take place between small and influential rich country groupings behind closed doors -- the so-called green room discussions. Well, if this continues to be the state of affairs, why can’t the rich countries wrap up the Doha round among themselves and thrust the agreement on developing countries as a fait accompli?

The reality is that this cannot happen anymore. After the failure of the Cancun ministerial in 2003, there is no way that US and the European Union can ignore the demands of India, Brazil and South Africa who have begun to assert themselves as leaders of the Group of 20 developing countries. Reflecting the new equilibrium in the world economy, Brazil and India comprise the so-called five interested parties together with US, EU and Australia as the core-negotiating group for agriculture in the Doha round.

Brazil and India are at the high table as they represent the G-20, although it must be mentioned that some WTO members from the developing world harbour suspicions whether these countries are truly representative of their interests. The truth is that developing countries are far from homogenous and have diverse interests at the WTO. But it is a sign of the changing times that G-20 proposals on agriculture form the basis to resolve the highly contentious talks on agriculture.

These talks were, in fact, deadlocked at the meeting of the five interested parties in Geneva on October 19-20. The US and others blamed EU for failing to come up with new concessions on reducing subsidies and cutting tariffs in agriculture. Unlike Brazil and Australia who are efficient exporters of agricultural goods, India’s interests in liberalising agriculture are defensive in nature as it feels that it’ll adversely impact small farmers who comprise the majority of farm holdings in the countryside.

Considering the Left’s pressure on the UPA government, there is no way that India will agree to change this negotiating track. India may be a fast expanding and prospective economic power. Yet, it remains a very closed economy with some of the highest agricultural tariffs in the world. Citing food security concerns, any developing country can be exempt from any reduction commitments in terms of domestic support and from the obligation to provide any minimum market access in agricultural goods.

But in a negotiation entailing give and take, how can India without budging an inch ask the US and EU to reduce farm subsidies and tariffs? Asking the latter to make all the concessions while keeping one’s own tariffs high to protect millions of its small farmers might well be a nonstarter -- as has been pointed out by economists like Professor TN Srinivasan of Yale University. Unlike India, Brazil is a major exporter of agricultural produce and aggressively seeks greater access to markets such as the US and EU.

India’s edge is mainly in services. Unlike many developing countries, it has, in fact, taken offensive positions in this area as it has export interests in IT and business services. The country also seeks greater access to EU and US in terms of the movement of natural persons or what is termed as mode 4 in cross-border supply of services. But if this route is blocked due to opposition by the US and EU, it may well affect India’s ability to offer concessions in agriculture and industrial tariffs.

By contrast, EU is unable to make new concessions on the farm front due to lack of consensus among its powerful members such as France. The French, in fact, bluntly told EU trade commissioner Peter Mandelson that his offer to cut subsidies and tariffs was giving away too much. Like the US, it aggressively seeks greater access to the markets of developing countries in goods and services while holding the ground on agriculture. This aggression will be manifest increasingly in the run-up to the Hong Kong ministerial.

In this milieu, the big question is how developing countries like India will resist such pressures and achieve their objectives. But thanks to Left pressure, there are no prizes for guessing that our negotiating stance will be defensive in nature -- as it has always been.


N Chandra Mohan is a commentator on economic issues and is based in New Delhi

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