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India leads at the WTO

Published by The Straits Times, Singapore on 2004-08-03

NEW DELHI - In this Indian capital city, there's considerable jubilation over the agreement by the World Trade Organisation's 147 members in Geneva on Sunday for establishing a new framework for reviving the 2001 Doha Round of trade talks. In government and political circles, at least, the man of the moment is Mr Kamal Nath, India's Minister of Commerce and Industry, who's widely credited with taking a tough stand in behalf of Third World countries and persuading rich nations to end their export subsidies to farmers.

"I told the negotiators of the industrialized countries that India will block access to our agricultural markets if they did not end their subsidies," Mr Nath told The Straits Times yesterday in an exclusive interview upon his return from Geneva. "With the kind of subsidies that OECD nations give their farmers - that's US$310 billion each year, US$100 billion by the United States alone - there's no way that Indian and developing-country farmers can compete in the global market. On a farmer-to-farmer basis, yes - the Indian farmer can take on his American counterpart any time. But he cannot take on the US government. The government's subsidies create artificial prices."

Mr Nath was empowered by his Third World colleagues to demonstrate toughness when dealing with the industrialised countries particularly on agricultural and import-duty issues. Along with Brazil, India was part of a core negotiating group known as the "Non-Group Five," also known by the moniker, "The Five Interested Parties." This unit consisted of Australia, Brazil, the EU, India and the US.

In a private conversation with Mr Robert B. Zoellick, the US Trade Representative, Mr Nath said: "The US is seeking to enter developing-country markets with artificial prices. What we're seeking is a free, fair trade and a level playing field. If you want to enter our markets, please trade with a real price." The subsidies given by rich countries to their farmers result in depressed world prices for agricultural products - and hence farmers from poor countries feel that they are deprived of more equitable earnings.

At another point in their conversation, according to Mr Nath, he said to Mr Zoellick: "Are you looking for just a one-time deal or sustainable trade?"

And what did Mr Zoellick say to Mr Nath?

"We know that we're dealing with a different kind of negotiator in you," the American said. "We know that you have the political strength to make this whole thing collapse."

A collapse of the Geneva negotiations was the last thing that the industrialised countries wanted, especially in view of the debacle in the Mexican resort of Cancun last year when the biennial meeting of trade ministers ended in disarray when a group of Third World countries led by India and Brazil challenged the US and the European Union over the question of agricultural subsidies and high import duties.

That collapse triggered worldwide concern that a more liberal global trade regime was not in the cards any time soon, a possibility that would hurt the industrialised economies as much as Third World nations. The failure would also hurt, possibly fatally, the prospects of the WTO to supervise a rules-based multilateral global trading system.

But if the Doha Round proceeded, the world economy would add more than US$500 billion annually to the current US$10 trillion of annual global trade, and developing nations would earn more than US$300 billion each year in new income, according to a World Bank study.

At one point, the talks of the "Non-Group Five" broke up in disagreement and decided to spend time on reflection on the vast lawns of the WTO's offices overlooking Lake Geneva. "I said that I was not willing to move ahead unless the subsistence farming and livelihood security issues were settled to our satisfaction," Mr Nath said. He took a particularly strong stand in ensuring that three of the so-called "Singapore issues" - dating back to a WTO meeting in Singapore in 1999 - were removed from future consideration. These issues related to investment, competition and government procurement.

Part of the reason he was accorded special attention by the "Non-Group Five" was that Mr Nath is the only trade minister among them likely to be around for the formal opening of the ministerial meeting of the Doha Round December next year in Hong Kong. Mr Pascal Lamy, the EU's negotiator, is leaving his post this year, as is Foreign Minister Celso Amorin of Brazil. Mr Zoellick's future will depend on whether US President George W. Bush is re-elected in November. Australia is expected to change its trade negotiating team as elections are on the anvil. But Mr Nath was elected just three months ago and his Congress-led ruling coalition, the United Progressive Alliance, is expected to serve out its five-year term.

If the renewed negotiations are on schedule, a new global trade agreement can be expected toward the end of 2007. The Doha Round was originally expected to be completed this year.

But what, exactly, are the Third World nations - all 135 of them, plus China - expecting from the revival of the Doha Round? The answer is clear: They want to jumpstart sustainable development, which has languished in recent years because of diminishing resources and a failure by poor countries to gain better access to the markets of industrialised countries. The global cohort of poverty has increased to more than two billion of the world's 6.1 billion people.

The biennial trade ministers meeting in Doha, capital of Qatar, in 2001, specifically labeled the new series of trade talks as the Doha Development Round. The Doha Round was to succeed the Uruguay Round, which lasted nearly a decade and resulted in the transformation of the post-war General Agreement on Tariffs and Trade into the World Trade Organisation.

In another interview with The Straits Times, Prof Jagdish N. Bhagwati of Columbia University in New York lauded Mr Nath's tactics in "holding out till the end" during the negotiations. Professor Bhagwati, who is a world-renowned authority on trade, and author of the current best-selling book, "In Defence of Globalisation," said that it would have been "political suicide for the industrialised countries not to get the Doha Round back on track."

"Agricultural subsidies cannot be negotiated outside of a multilateral framework," he said. "But let's also not forget that all such agreements are simply steps in a long journey toward making the world a more equitable place."

Asked if there were a possibility that, should the Doha Round end successfully, would the US not comply with the ban on agricultural subsidies, Professor Bhagwati said: "The US wouldn't be able to comply only if there's legislative action necessary. In this case, the US President already has a fast-track authority, which is likely to be renewed next year anyway."

Asked the same question, Minister Nath said: "We consider internationally agreed pacts as binding."

"Developing countries want food, security, livelihood security, and accelerated rural development," Mr Nath said. "So what I was really doing in those talks with the industrialised countries was articulating the concerns of the poor nations."

These concerns, he said, included the demand by rich countries that, in exchange for their elimination of agricultural subsidies, developing nations must reduce their tariffs and the so-called "de minimis" - a subsistence allowance given to poor farmers by countries like India. Mr Nath said that a typical farmer in India cultivates barely a hectare of land.

"This isn't agriculture, it's subsistence farming," the 52-year-old minister said. "Agriculture isn't commerce in India, like it is in the US and Europe."

"I could walk away from this issue," Mr Nath said. "It's far too serious a matter for me. India has 600 million farmers. That's more than the populations of the US and the EU put together."

Pranay Gupte,
Senior Writer and Global-Affairs Columnist


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