India says ‘no deal better than bad deal’ at WTO

NEW DELHI - International trade negotiations are in limbo since talks were suspended in July 2006 with countries in the World Trade Organisation (WTO) hitting a deadlock. Now the frozen trade talks are warming up again, because of the need for an agreement before the fast track negotiating powers of the US president expires in July 2007.

The US is also heading into congressional elections in 2007, which is also expected to slow down international trade talks. If WTO countries cannot agree on critical areas before these events get underway a final agreement on international trade could be delayed further.

“If some agreement is reached by April, the Doha round could be completed by December 2007,” said the Commerce Secretary of India Gopal K Pillai, speaking at a regional trade conference organised by the Centre for Trade and Development (CENTAD), in New Delhi, India last week.

Pillai pointed out that to meet the 2007-December deadline negotiations in the coming months of January and February would be critical. “If there is no deal on the table by April, the Doha round could be delayed until 2009,” he said.

However, Indian trade authorities say ‘no deal is better than a bad deal’. India’s trade secretary points out that the current Doha round of trade talks is a rare occasion that favours developing country interests and should not be bartered for a quick-fix.
“This is the only round of talks where we will have a development dimension. We may not get a development round at the WTO again in the future. So even if it takes another 3 years to reach an agreement, that is better than agreeing to something unsuitable,” said Pillai.

Meanwhile Indian trade experts are urging South Asian countries to be cautious when re-engaging in trade talks given the increasing pressure for a quick agreement.

“This is not the first slow down at WTO negotiations but every downturn like this has resulted in damages to developing countries. After a downturn like this everybody is anxious to get results. So rather than developed countries making changes, the developing countries are the ones making concessions. So what I fear is that the current downturn will again force us to make concessions,” said B L Das, India’s former ambassador for international trade issues.

“We have to be careful that we are not put under such pressure that we are forced into doing certain actions to break this deadlock. So there is a need for caution and to remain ready when negotiations restart. Not only governments but civil groups must remain alert so that no damage is done, even if there are no gains for us,’ said Das.

International trade talks were suspended in July this year when the G6 countries of Australia, Brazil, the EU, India, Japan and the US could not agree on crucial areas regarding the international trade of agricultural goods. The deadlock set in when countries refused to compromise on reducing domestic support and market access for agricultural goods. The US for instance has been unwilling to cut down trade distorting agricultural subsidies at a rate that will have a real impact on world trade.

Developing countries like India and Brazil want rich countries like the US, the EU, Japan and Australia to reduce, and eventually stop, providing subsidies to their agricultural sectors. These rich country agricultural supports are under-fire because they make developing country agricultural goods more expensive and ultimately uncompetitive in world markets.

Trade experts say that most of these agricultural subsidies given by governments in rich countries do not go to poor farmers but to corporates involved in commercial agricultural production. Most developing country governments on the other hand, cannot afford to give such large scale subsidies to their farmers. So developing countries want these agricultural supports in developed countries removed, so that farmers in poor countries have a level playing field to compete against agricultural goods from rich countries.

Given the high dependency on agriculture as a means of employment in poor countries, developing countries are demanding a favourable deal in agriculture trade in return for opening up their markets to developed countries.