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Centad and the PHD Chamber of Commerce and Industry (PHDCCI) organised a symposium on ‘The Doha Round after Hong Kong: Where does India stand?’, on January 6, 2006, at PHD House, New Delhi. The objective of the symposium was to reflect critically on the nuances of the WTO Hong Kong Ministerial that concluded in December 2005, and to get inputs from all the stakeholders for future negotiations and strategies for India.
The symposium started with a welcome address by Sushma Berlia, President, PHDCCI. The three key speakers were:
- R V Kanoria, Chairman, Economic Affairs Committee, PHDCCI
- Gopal K Pillai, Additional Secretary, Ministry of Commerce, Government of India
- Dr Anil Sharma, Principal Economist, National Council of Applied Economic Research (NCAER)
An interactive floor discussion followed the speeches moderated by DrSamar Verma, Executive Director, Centad. Bibek Debroy, Secretary General, PHDCCI, made the concluding remarks.
The following points were emphasised:
Although the significance of the WTO Ministerial remains undisputed, the “progress” achieved is subject to debate. While the successful completion of the Hong Kong Ministerial can be described as an achievement in itself, from the viewpoint of developing countries like India, some critical questions need to be asked. We need to analyse what the Ministerial really achieved vis-à-vis what was aimed; where things stand at present and what lies ahead.
In spite of the high hopes generated by the Ministerial, there has not been substantial progress since all the modalities for negotiations have been deferred till July 2006. For agriculture and Non-Agricultural Market Access (NAMA), the modalities are to be completed by April 2006, and the scheduling of commitments by July 31, 2006.
In the case of services, plurilateral requests are to be made by February 28, 2006. The negotiations take place from March to June 2006, and final offers are to be made by July 31, 2006.
With the deadlines already set, the period for intense negotiations is due, and this would be crucial in realising the objectives of the Doha Round.
Negotiations at the Hong Kong Ministerial largely concentrated on three specific issues: agriculture, NAMA and services. In areas like Trade Related Intellectual Property Rights (TRIPS), Geographical Indications and Antidumping, only a conceptual framework was proposed.
Agriculture: The Hong Kong Ministerial was notable for the particular stress on the theme of agriculture as a platform for the reform process in the WTO, especially by developing countries. The salience of agriculture for India is illustrated by the fact that 650 million citizens are dependent on it for their livelihood. The three basic issues relating to trade in agriculture are:
- Domestic support
- Export subsidies
- Market access
The agreement by developed countries in Hong Kong to eliminate export subsidies by 2013 is a positive development, but in view of the importance of all three issues, addressing export subsidies in isolation is meaningless. Since export subsidies amount to just 3% of agricultural support, actual progress depends on the phasing out of the other issues that are yet to be negotiated. In the context of the huge pressures involved, the 2013 target was the second best option available for developing countries in Hong Kong.
In the area of domestic support, there are already proposals made by the United States and the G20. The US has offered a 53% cut at the bound rate, and the G20 has demanded a 70% cut from the US, and a 83% cut from the European Union. With these proposals already on the table, the task is to negotiate the gap.
Another achievement is quota-free market access for Least Developed Countries (LDCs). Negotiations on market access for agricultural products have to be geared up considering the potential of developing countries like India to be major exporters of agricultural goods. Together with provisions for the designation of Special Products by developing countries and the proposed Special Safeguard Mechanism, there would be sufficient measures to protect the interests of developing countries.
Non-Agricultural Market Access: In Non-Agricultural Market Access (NAMA), there is agreement on a Swiss formula with multiple coefficients, providing a greater reduction in higher tariffs and lower reduction in lower tariffs. The number of coefficients available is yet to be determined. There are evident disparities in the interests of different countries like the US and EU, the Caribbean countries, newly acceded countries, small and vulnerable countries, and developing countries.
On the issue of flexibilities, India has to decide whether to proceed under option clause (a) or clause (b) of paragraph 8 of the July Package, after careful consideration. The Swiss formula with coefficients is expected to reduce tariff peaks and tariff escalation, thereby switching from trade in raw materials to trade in finished products, which will facilitate the development process. The recognition of Special and Differential Rights allowing the “less than full reciprocity” principle within NAMA is a positive step. However, it needs to be seen how this positive step will be taken forward.
Services: In services, what is notable is the adoption of Annexure C after considerable dilution of the text to accommodate the interests of developing countries. India has a huge stake in this sector, with 52% of its GDP derived from services. In Hong Kong, India was able to put forward certain guiding principles like the reduction/elimination of the Economic Needs Test. It must also push for liberalisation in all the four modes. The approach of negotiations through plurilateral requests will make India stronger with greater bargaining power, particularly if India can identify particular areas in which to seek reciprocal liberalisation. Industrial associations have a vital role in locating business opportunities in each sector/mode and in identifying trade-distorting factors to be knocked off by negotiations.
It is being said that developing countries were able to get much-sought policy space in Hong Kong. However, this will depend on how things play out in the near future. Moreover, whether the promised benefits of the Doha Agenda will come to developing countries or not will also depend on future negotiations.
One major challenge for the South is to sustain the unique solidarity of the developing countries, initiated by G20 and G90 formulations in Hong Kong. These alliances are essential to induce the WTO to deliver the benefits promised to developing countries without succumbing to economic and other pressures from the developed world.
(Centad thanks Elsa Catherine George and Ticy V Thomas, research scholars at Jawaharlal Nehru University, for their substantial contribution in preparing this report)
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