New Delhi, 18 January 2006
The Trade Ministers of 149 nation-states met at
Hong Kong to
complete Doha Round of Trade Negotiations which began in November
2001. The Hong Kong round began on December 13, 2005 amidst number
of speculations and expectations. The erstwhile trade negotiations
have come as a bane for the third world countries. Even in the
Uruguay Round (1986-1994) the developed nations got what they wanted
and the developing world and the less developed nations were left
empty handed with just ‘hollow promises’. Hence there is an
imperative to analyze the outcomes of recently concluded
Hong Kong round.
Agriculture: The Bone of Contention
Agriculture is being considered the most flawed sectors owing
to following reasons:
given to farmers by United States, European Union and Japan.
Consequently, developing countries have been subjected to
depression in commodity prices in international markets.
countries see nations like India as export markets. Hence, only
defence mechanism left for developing countries is to impose
import duties on heavily subsidized products.
Apart from export
subsidies, a high level of domestic support given by developed
countries to their farmers has induced trade distortions in
Misuse and abuse
of anti-dumping laws by Developed countries.
block is the imposition of Tariff and Non-tariff barriers by
G-110: The Key to Success
A new alliance of 110 countries was formed on the fourth day
of the trade negotiations.
India and Brazil
played a leading role to bring the countries of third world on one
platform to enhance and sharpen their bargaining power. The alliance
was named as G-110 comprising the countries of G-20 and G-90
(countries of African Union, Least Developed Countries (LDC’s),
Africa, Caribbean, and Pacific (ACP)). Agriculture is the main base
of economy of the countries of G-110 (India alone has the interests
of 650 million farmers to be protected). Hence to protect the
interests of the agricultural community the newly formed alliance
played a major role, at times being aggressive. The developing world
has also backed the African initiative on cotton to protect the
livelihood of their farmers. (For example, India imports US $ 500
million cotton annually from US.
is not in a position to import cotton from West Africa owing to
subsidies worth US $ 3.5 billion doled out by Bush administration to
its own cotton producers annually thereby depressing the cotton
prices worldwide). Other such interests which the G-110 has to
safeguard are as follows:
A ‘level playing
field’ should be provided to benefit from liberalization.
in agriculture followed by other medium technology products such
as textiles, clothing, leather products, footwear, and a host of
other similar products, which provide for maximum amount of jobs
in the developing world, requires to be contained.
To stop the
misuse and abuse of food-for-aid program (which US more often
resorts to offload its farm-surpluses.
Hong Kong Declarations (December
subsidies of rich nations would be phased out in stages by 2013,
and reduce the same substantially by 2010;
countries accepted the ‘Swiss Formula’ for import duty reduction
bindings for industrial goods. (The formula was originally
proposed by, key players like the European Union, for cut in
import duty on industrial goods).
protected domestic farmers in developing countries against a surge
in imports through the provisions of Special Products (SPs) and
Special Safeguard Mechanism (SSM). (Under SPs India and other
developing countries would not have to cut tariffs on a specific
number of products, while SSM incorporates both price and volume
triggers to check a surge in cheap imports).
countries would have to reduce tariff peaks and tariff escalations
on products from developing countries. (This would result in
greater market access as developed countries would not be able to
put higher duty for value added products such as leather and
‘less than full reciprocity,’ as a provision, which will govern
all market access commitments has been accepted in principle.
role at Hong Kong
India’s strongly worded letter of December 17, 2005 to the
meeting, which said of dissociating itself with the meeting, sent
panic alarms ringing, and it made the developed world come to terms
with the reality that their indifference to the needs of the
developing world has now come to a passé.
thus, made it clear right in the beginning that it was not going to
budge an inch if its demands were not met regarding agriculture. It
was India and its 650 million farmers’ day, when the declaration
envisaged that the developed countries would eliminate their export
subsidies to agriculture in the next eight years and reduce it
substantially in the next five years. The agreement also promised to
protect domestic farmers against a surge in imports through the
provisions of Special Products (SPs) and Special Safeguard Mechanism
Nine developing nations including
Brazil, Indonesia, South Africa, the Philippines, Venezuela, Namibia
and Egypt formed a core group on Non- Agricultural Market Access (NAMA)
chaired by India and co-chaired by South Africa to placate the
interests of the marginal-technology based industries. Such
industries employ the maximum amount of people in the developing
world, after agriculture. They stressed commitment towards the
principle of less than full reciprocity in tariff reduction.
Challenges before Developing Countries
To protect the
export interests of farmers in Developing countries. (Specially
because EU offers support equivalent to around 90 billion Euros
under the Green, Blue and Amber Boxes, whilst trade distorting
export subsidies amount only to around three billion Euros. In any
case, a substantial reduction in these export subsidies had been
envisaged as integral part of the current phase of reform of EU’s
common agricultural policy, which was to be completed by 2013.)
is still a framework and leaves most of the modalities for
determining the extent of trade liberalization by various members
in the different areas largely unspecified.
World’s interests in agriculture are not aggressive, or focused on
expanding export but defensive in the form of domestic producers
from international competition. (Currently India exports over $7
billion worth of agricultural products to a range of countries and
with this agreement hopes to ‘increase’ it substantially.)
countries have committed to provide greater market access for
agricultural commodities in return for minor concessions from the
EU and the US.
signals an agreement on a non-linear ‘Swiss Formula’ that would
harmonize tariff level by ensuring larger cuts in the case of
higher tariffs, which would be a death knell for the industrial
sector in the developing world.
developing countries to open domestic services market with foreign
investors having the same rights as local suppliers.
Global trade liberalization process is surging forward but
getting increasingly cumbersome and becoming an economic charter of
bondage. With each successive round of trade negotiations the
conditions of the developing countries is changing from hope to
Hong Kong could be
considered as a mixed bag for both
and developing countries especially the last one which ended in a
stalemate (Cancun, 2003). Failure would have enabled the rich
nations to buy more time to phase out subsidies. The completion of
Doha round by the end of 2006 is essential since the US fast-track
authority expires in the middle of 2007. Moreover, US and EU would
have mounted more pressure on the poor nations if the last
opportunity was missed. Undoubtedly, elimination of farm subsidies
should not be linked to progress in non-agricultural market access (NAMA).
G-110 (formed recently) has been able to make a dent but they have
to traverse a tortuous trek to fulfill the long cherished dream of
New International Economic Order (NIEO). The WTO must evolve as a
forum not only for ‘free trade’ but also for ‘fair trade’.
1. K.A. Badrinath,
“The poor of the world unite at WTO” The Hindustan Times, New Delhi,
December 17, 2005.
2. “CEOs want meet
to succeed” The Economic Times, New Delhi, December 18, 2005.
3. N. Ravi Kumar,
“India forms core group on non-agricultural market access” The
Hindu, New Delhi, December 14, 2005.
Subramaniam, “WTO cuts deal on farm subsidies” The Economic Times,
December 19, 2005.
Subramaniam, “India threatened to dissociate from declaration”, The
Economic Times, New Delhi, December 18, 2005.
6. P.K. Bhardwaj,
“India’s concerns fully addressed: “Grand Coalition” helped clinch
deal at WTO”, The Hindu, December 20, 2005.
7. “Keeping the Doha
round alive” The Hindu, December 22, 2005.
Chandashekhar, “India at Hong Kong: more give and take”, The Hindu,
December 24, 2005.
(Dr. Alok Kumar
Gupta is an Asst. Professor at School of Policy Sciences, National
Law University, Jodhpur and Mr. Pratyush Kumar is a student at the