Nath: India Not a Trade Obstructionist

♠ Posted by Emmanuel in ,, at 9/23/2007 04:15:00 PM
The protracted nature of the WTO Doha Round has been partly due to leading developed nation negotiators Brazil and India holding out on a deal with the US, EU, and Japan over agricultural subsidies. US Trade Representative Susan Schwab has gone so far as to accuse Brazil and India of trying to "destroy the Doha round" (call me a ham, but I do love such hyperbole that enlivens normally staid trade talks). In his latest missive, India Commerce Minister Kamal Nath replies that India is not taking an especially difficult stance to the negotiation process. Rather, it's a matter of principle over unjust subsidies. This comes from the Times of India:

Rejecting the suggestion that India is taking a difficult stand in the World Trade Organisation (WTO) talks, Commerce Minister Kamal Nath has said New Delhi only wants a multilateral trading system that corrects the existing structural flaws in the global trade rather than perpetuate them.

The rules of the game are very important for India as it engages in the global trading system more and more, he told investors and entrepreneurs here on Friday.

Stressing the need for abolition of agricultural subsidies by the rich countries, he told the India-America Chamber of Commerce that these subsidies and non-tariff barriers greatly distort the system and are not justified.

Defending the protection of intellectual property rights, Nath emphasised that it is important as India graduates from user to producer of intellectual property. It is aimed at coming generations of entrepreneurs who through their innovation would create new products.

Besides, he said, it improves the credibility and standing of India in the international community as it fulfills the commitments made and translates into investments with the investors realising that the country not only has laws but implements them too.

"It is credibility of India which is bringing in investments in various sectors," he added.

Observing that the comparison between India and China is "misplaced", Nath said there is need to see where China was 15 years into the opening up process. He said India, which started economic reforms 15 years ago, is now getting double the investments China got at that point of time.

Note that the US has just agreed to the limits for agricultural subsidies suggested by Kiwi WTO agricultural ambassador Crawford Falconer to get the round going again. However, Bloomberg points out that while the amount spent on subsidies is to be cut, the subsidies that remain are reserved for highly contentious crops. The likely result? No deal in 2007. On to 2008, it seems...
U.S. willingness to accept proposals limiting farm subsidies and opening markets to both agricultural and industrial goods probably won't be sufficient to lead to a global trade agreement this year.

``It's a step in the right direction, but it won't break the impasse,'' said Brian Gardner, head of U.K.-based Food Policy International, which analyzes agriculture strategy. ``They still have a long way to go.''

The U.S. agreed for the first time to limit trade-distorting farm payments to between $13 billion and $16.4 billion provided other World Trade Organization members accept proposed cuts in agricultural tariffs, the WTO's top farm-trade negotiator said yesterday. The move was aimed at energizing talks that have dragged on for almost six years as rich and poor countries spar over cuts in import tariffs and farm subsidies.

Under the proposals put forward in July, the U.S. and other wealthy economies would have to slash spending that distorts commodity markets by as much as 73 percent and eliminate the use of subsidized exports by 2013. Total permitted U.S. spending in all forms would be cut from $48.2 billion a year to between $13 billion and $16.4 billion.

Joe Glauber, the chief U.S. negotiator on farm trade, accepted the proposed subsidy range contingent on other nations agreeing to the July plan for cutting tariffs on farm products, the WTO said [namely EU countries and Japan]. It was the first time the U.S. has made such a concession, Crawford Falconer, New Zealand's WTO ambassador and the head of the agriculture talks, told journalists in Geneva.

Still, two ``basic problems'' continue to dog WTO talks and make it unlikely that the more flexible U.S. position will lead to a quick agreement, Gardner said.

The U.S. remains ``particularly vulnerable'' because most of its domestic aid is in the most damaging classifications and would therefore be subject to substantial reductions, he said. A group of developing countries including Brazil, China, India, South Africa and Mexico are pressing for limits on U.S. aid.

The second big obstacle is the European Union's insistence that its most sensitive products remain in a category in which they are subject to lower aid reductions. The EU is ``not moving as far as the U.S. would like on market access,'' Gardner said.

Under the July proposals, the EU's spending would fall to between 27.6 billion euros ($37.5 billion) and 16.5 billion euros from a current ceiling of 110.3 billion euros.

The EU, the world's biggest agricultural importer, today welcomed the change in the U.S. position, said Peter Power, a European Commission spokesman.

``What we would like is that all partners make a commitment on both texts now,'' he told a news conference in Brussels. ``We hope we will be able to complete this round on that basis.''

That isn't likely, said Philip Whyte, a senior research fellow at the Centre for European Reform.

``The U.S. position doesn't change the underlying politics,'' he said by telephone. ``Bubbling under the surface, there is a sense among key negotiators that progress is being made; but despite that progress, the politics is still going to get in the way of a deal before 2009' [he is referring to the 2008 US elections, of course].