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Opinion
Doha Trade Talks Fail, but Developing South Wins
by Sushma Ramachandran
Headlines can
be misleading! The media stories on the recent trade negotiations at the
World Trade Organization (WTO) in Geneva had banners saying "Talks fail"
or "Doha Round Collapses". These gave the impression that calamity had
struck the prolonged negotiations among its 153 members. But the ground
reality was quite different. The talks did fail, but it also had a great
outcome, at least for India and all the other developing countries,
given the state of play.
The collapse of the WTO talks has meant that developing countries have
united against the rich nations and prevented them from concluding a
trade deal that would have been one- sided. The tough stance taken by
Indian interlocutors led by Commerce Minister Kamal Nath and their
counterparts from China led to vociferous complaints by the US and the
European Union over the intransigence of these two emerging economies
that did not accept the terms laid down in the draft agreement on
agriculture.
Many years ago when the Uruguay Round was being negotiated, developing
countries got the short end of the stick mainly because most of them did
not understand the technicalities of the deal. The world trade scenario
has changed enormously since that time and developing countries are now
realizing that not only do they have a voice but they also have enough
muscle, if they remained united, to ensure their concerns are brought on
board.
In the latest round of ministerial negotiations, India was adamant that
it would not agree to drop the provision for special safeguard
mechanisms (SSM) that will allow developing countries to use tariffs to
protect their farm commodities from cheaper imports. In addition,
neither India nor China - nor other developing countries - was satisfied
with the extent to which developed countries had reduced their trade
distorting subsidies on agricultural products. The rich countries, on
their part, felt that developing economies were not opening up their
markets sufficiently and this would in turn impede global trade flows.
The unity of the third world in recent years has baffled the US and EU
trade negotiators. Trade diplomats have conceded that it is a completely
different ball game from the one played out during the previous Uruguay
Round. Issues that could have easily been pushed on to to the table and
squeezed into the final pact are now simply unacceptable to the
developing economies.
Credit for this unity goes largely to the troika of India, Brazil and
South Africa, which has been holding regular consultations for the last
few years before any ministerial or mini-ministerial to ensure that the
common concerns of the developing world are not ignored at the
negotiating table.
India in particular has played a stellar role in forming groups with
special interests that will act in concert to thwart the designs of
developed countries. Former commerce minister Arun Jaitley was
instrumental in creating the Group of 20 developing countries - which
has since expanded - to resist the proposals on agriculture formulated
by the developed world.
This was followed by the setting up of several other groups to focus on
specific interest areas like the Group of 33. Minister Kamal Nath has
also used his considerable organizational skills to ensure that these
groups continued to operate in consultation during all negotiations.
The convergence of the developed world has come too late to prevent the
rich nations from putting issues like intellectual property rights on to
the trade agenda. The Trade Related Intellectual Property Rights (Trips)
agreement that was concluded in the Uruguay Round forced developing
countries like India to switch to process patents from the earlier
product patent system.
Under the latter regime, it was possible for India's fledgling pharma
companies to re-engineer existing drugs and produce them at much cheaper
rates than in the first world. As a result, drug prices in India have
been among the lowest in the world. This situation, however, may not
last long, given the change in the patent regime.
But it is on agriculture that developing nations have simply drawn the
line - thus far and no farther. Both India and China have pointedly
stated that there can be no discussion on livelihood issues that affect
hundreds of millions of farmers in these countries. Developed countries,
on their part, feel this is merely a ploy to deny access to the large
markets of these emerging economies.
But the failure of the mini-ministerial is not the end of the road for
the Doha round of trade talks. It simply means that negotiations will be
resumed after a while with the aim of finally reaching some sort of
consensus. There is little hurry just now since the US presidential
elections are being held at the end of the year.
The current administration has little flexibility right now to take any
drastic decision. Once the new US administration is in place, the trade
talks are likely to move forward once again. But developing countries
have made their point. They will not be bulldozed into any kind of trade
agreement. It will now have to be one that balances the interests of the
rich and the poor globally. Otherwise, developing countries will
continue to march to their own beat even if it means entering into
difficult bilateral trade pacts.
The problem is that a multilateral trade agreement usually provides
better terms and conditions than a bilateral one. Thus to some extent,
rich countries are correct when they point out that the failure of the
Doha round will adversely affect the smaller developing countries.
At the same time, an unequal multilateral agreement is worse as it means
there is little recourse for these countries if the agreement does not
take into account their essential livelihood concerns. The Trips
agreement is a case in point. It has forced developing countries to
raise prices of essential drugs, simply because the giant pharma
companies based in the US and Europe need to protect their patents.
Thus, this time round developing countries have decided to be patient
and wait for a favorable outcome to the Doha Round of trade
negotiations. With large developing economies like India, China, Brazil
and South Africa having taken the lead, it looks like their patience may
be rewarded and the final pact may ultimately be a more equal one than
any other in the past.
(Sushma Ramachandran is an economic and corporate analyst. She can be
reached at sushma.ramachandran@gmail.com)
August 8, 2008
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