How Things Stack Up At The WTO Ministerial At Nairobi

If India takes hard a stand in the tenth ministerial conference of the World Trade Organisation will it get isolated?

In little over a week from now, trade ministers from across the world will be sparring at Nairobi, the venue of the tenth ministerial conference of the World Trade Organisation.

Ranged against each other will be the developed countries, led by the United States, and the developing countries, whose most cohesive and vibrant grouping currently is the G33 (a group of 48 countries in which India and Indonesia play a significant role).

“Nairobi will be a difficult conference”, says Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade (IIFT) says. The main focus, he says, will be around whether to abandon or re-affirm the Doha Round and at what price.

The Doha Round was launched in 2001 to focus on issues of concern to developing countries (which is why it is also known as the developmental round), in the teeth of opposition from the developed countries.

The United States, particularly, has made no bones about the fact that it wants the Doha Round abandoned. Other developed economies have not been so explicit, but are not interested in investing negotiating energy to keep the Round alive, unless they manage to get a whole lot of non-trade issues (investment, labour standards, climate change etc) into the WTO agenda.

The developing countries, on the other hand, are hell bent on ensuring that the Doha Round is kept alive; they have too much at stake. Speaking at a conference at the Federation of Indian Chambers of Commerce and Industry on December 3, commerce secretary Rita Teotia listed the continuation of the Doha Round as the top negotiating priority for India.

But with the Doha Round going through ups and downs since its launch and never really getting anywhere, is there any point in holding on to it? The risks of abandoning it will be significant for developing countries, says Das.

One, they may not be able to get a mandate on cuts in agricultural subsidies by developed countries. (These subsidies or domestic support are acknowledged to distort agricultural trade to the detriment of farmers in developing countries). Two, developing countries may not be able to get even the limited flexibilities (special safeguard measures, special and differential treatment) that they were in the process of negotiating and on which a final decision remained to be taken. Indeed, the agriculture negotiations are of particular interest to India.

Two, there is the issue of inclusion of new issues in the WTO agenda – transparency in government procurement, investment, competition, climate change, labour standards, energy security, global value chains. Most of these are not trade issues. Technically, global value chains is a trade issue, but Das cautions that it could be a kind of Trojan horse, which will bring in many of the other non-trade issues into the WTO agenda.

For India, continuation of the Doha Round is crucial because a number of its own negotiating interests centre around it. Related to the issue of agriculture is that of a solution to the problem of public stockholding for food security. This became the focus of a major political storm last year when the present government, just months into its tenure, did not agree to the protocol on the Trade Facilitation Agreement (TFA) till there was clarity that a peace clause negotiated at the Bali ministerial of 2013 would remain till a permanent solution to the problem was finalised.

What could be the contours of such a permanent solution? According to Das, one solution could be that all subsidies related to public stockholding be treated as green box subsidies, so they will not be taken into account when calculating a country’s de minimis threshold (the least amount of subsidies that are allowed despite their ability to distort trade). This, he says, would be a significant gain. Equally important would be to secure the right to apply additional duties (special safeguard measure), in case there is a surge in imports of agricultural products.

The issue of non-agricultural market access (NAMA) or trade in manufactured goods is not a priority item right now, but that could be another flashpoint between the developed and developing countries. There has been no final decision on a formula on tariff cuts and things have been in a limbo since 2008. Das points out that the ambitions of the developed countries got higher, they wanted zero duty in several sectors and started pressing for cuts in applied rates and not just bound rates. This, he notes, goes totally against how tariff negotiations were done in the past.

Since the WTO is all about consensus, negotiations are all about informal coalitions of countries, depending on the convergence of their national interests. Which are the countries India can bank on?

On the issue of food security and special safeguard measures, it is the G33, says Das, which is the only vibrant and functioning group at this point of time. But coalitions are often known to break up at ministerials, of countries find their individual interests being met. Das expects the G33 to remain cohesive, though there may be one or two members who may opt out. Some non-G33 countries like Egypt could side with India on the issue of food security, since it faces a similar problem.

But if India strikes too hard a stand at the negotiations could it run the risk of getting isolated and being labelled a spoiler as has happened in the past. “India is never isolated,” says Das. At Doha, then commerce minister the late Murasoli Maran stood firm till the end. Later, Das recalls, ministers from many countries came to Maran and congratulated him saying they wished they could have taken such a firm stand but they had their constraints.

Das has his fingers crossed about a successful outcome at Nairobi. We’ll know by December 18, whether that has helped.