Global Policy Forum

By Ravi Kanth Devarakonda

Developing countries led by Indonesia, India, and China issued a strong message to the World Economic Forum under way here that they will not allow attempts to dilute the agricultural negotiations in the Doha Round of trade talks by certain industrialised countries, especially the United States.

"The G33 (group of developing countries) remains committed to engage constructively with all WTO members to secure their development concerns in the Doha outcomes, while specifically addressing the livelihood concerns of small, poor and vulnerable farmers worldwide," India's trade minister Kamal Nath said Friday.

Trade ministers of the G33 are demanding flexibility to moderate the impact of imports of some farm products such as rice, pulses (legumes), and sugar on its farmers, and will work with World Trade Organisation members to ensure development is part of the multilateral trade negotiations. World leaders -- including British Prime Minister Tony Blair, Brazil's President Luiz Inácio Lula da Silva, South Africa's President Thabo Mbeki, among others -- stepped up their efforts at the World Economic Forum's 37th annual meeting for a speedy conclusion to the stalled "Doha Development Round", but differences cropped up over how to intensify the talks and who should make the first move to break the deadlock.

In July, the WTO director general suspended the negotiations after trade ministers of the G6 (United States, European Union, Brazil, India, Australia, and Japan) failed to agree on the magnitude of reduction commitments for farm subsidies and tariffs. The leaders reportedly insisted that all members must strive for an early conclusion of the Doha trade negotiations (launched at the 4th WTO ministerial conference in the Qatari capital, in 2001), stating that a failure to arrive at an agreement bodes poorly for the global trade system. During a closed-door meeting of leaders convened by the WEF on Friday, in which the WTO chief Pascal Lamy chaired the discussion, the Indian trade minister said many developing countries would prefer a formal resumption of trade talks, arguing that they want a "credible" outcome from the Doha Development Agenda.

"The Doha Round is all about helping developing countries to secure a level playing field in the global trading system through better rules and market access into industrialised countries," he told IPS, adding that he is surprised that the WEF had convened so many sessions on trade in services and industrial goods, but not on agriculture, which remains the most difficult area of the Doha package.

The South African trade minister, Mandisi Mpahlwa, told IPS that "all African countries want a formal launch of Doha trade negotiations... a multilateral outcome is the best option, then informal negotiations" in which confidential bilateral meetings dominate the progress. The United States, however, wants a further intensification of the current informal negotiations being convened by the different chairs of Doha negotiating groups. Formal resumption would be put off until there is clear progress in the ongoing bilateral consultations between key players, particularly between the United States and the EU, and the U.S. and India.

At the core of the stalemate in the Doha farm trade package is whether the United States is ready to cut what some call its trade-distorting domestic subsidies to a level below 15 billion dollars, and accept clear discipline to ensure that there is no concentration of subsidy payments for certain products. In October 2005, the United States had proposed that it would reduce its agricultural subsidies to a level above 22 billion dollars, but almost all members rejected the U.S. proposal on the ground that it allowed no material change in its current subsidy payments. The United States, for example, spent little over 11 billion dollars last year on farm subsidies. Consequently, the EU, Brazil, India, Canada and others insisted that the U.S. demands to spend on its domestic subsidies well over its current actual subsidy payments leave farmers in other countries at disadvantage. In fact, the U.S. subsidies for cotton were found to have depressed global cotton prices, harming the interests of four West African cotton-producing countries: Benin, Chad, Burkina Faso, and Mali.

The ongoing intensive consultations between Washington and Brussels to find what they are calling a "landing zone" for a palatable agreement in the Doha farm package is facing difficulties on account of differences on how big the reductions of farm subsidies should be. U.S. Trade Representative Susan Schwab has repeatedly said that Washington is committed to curbing its farm subsidies, provided there is real market access for U.S. farm products into industrialised countries, such as the EU, Japan, and Switzerland, and developing countries like India, China, and Indonesia.

Washington had maintained that the flexibilities sought by the G33 members, through what are known as special products and special safeguard mechanisms, would constitute a loophole to deny market access for U.S. products. Arguing that trade liberalisation is all about opening markets as new trade flows provide an opportunity for all countries, the United States had demanded steep cuts in import tariffs for both farm and industrial products. Many developing countries have rejected the U.S. demands to pry open their farm markets on the grounds that they have specific livelihood and rural development concerns that cannot be sacrificed overnight.

"Developing countries need time and policy space to improve their poor farmers' productivity and incomes and to curtail the risk of dislocation from agriculture from unmanageable agriculture trade liberalisation [as sought by the United States]," the G33 argued in its statement Friday.

"It is but natural that agriculture would remain at the heart of the negotiations since the livelihood concerns of more than a billion resource-poor farmers depend on it," the Indian trade minister Kamal Nath said.

"Manufacturing and services sectors would contribute to the bulk of GDP (gross domestic product) growth in the post-liberalised economic order," he said.

"Therefore, the development imperatives lie in serving the defensive and offensive agendas across agriculture, NAMA (non-agricultural market access) and services for a diverse set of developing countries, and to balance out their needs through ambition, fairness, and equity in the distribution of welfare gains," said the G33. The United States, however, has repeatedly stated that its lawmakers will not allow any extension in the current administration's trade promotion authority, which is set to expire in June this year unless there is adequate response to offer robust market access for its farm and industrial products and services.

In a nutshell, said an African trade minister, the differences persist between the developing countries and the United States on how to reach a credible outcome that is in tune with what was agreed in the WTO's Hong Kong Ministerial Declaration.