MUMBAI - The fault lines that run through the World Trade Organization (WTO)
cracked open again in Doha, as the fast-growing BRIC nations of Brazil, Russia,
India and China protested at demands for what they regard as unfair access to
their vast markets by developed economies.
The latest WTO outcome continues a dismal series of failed negotiations in the
long-running efforts to reach a new agreement covering global trade terms. In
July 2004, headlines declared "New WTO draft 'unacceptable' to India", a theme
that continued with monotonous regularity through to last December, when the
press announced: "India, Brazil slam new WTO Doha proposals".
The prospect for agreement on agricultural and other goods next year and far
beyond is slight, unless the increasing role played by developing economies is
recognized. BRIC nations, for instance, accounted for about 12% of global gross
domestic product in 2007, up from 8% in 2000.
"This growing influence is not reflected in the leadership structure of the IMF
[International Monetary Fund] or World Bank," the World Political Review states
in its latest issue, "and while Russia is now part of the G-8 [Group of Eight
leading industrialized nations], it is under constant pressure of being kicked
out."
Yet change is inevitable. BRIC economies are forecast to be 50% of the combined
economies of the US, France, Germany, Britain, Japan and Italy by 2025 and
overtake them by 2045, according to Wall Street bank Goldman Sachs in its 2005
study "The BRICs' Path to 2050: A Dramatically Different Global Economy."
BRIC, an acronym born in a Goldman Sachs report in 2001, has not been fully
represented at the WTO. India and Brazil joined WTO at its founding on January
1, 1995, and China joined in 2001. Russia, the world's largest energy exporter,
has merely observer status in WTO talks.
The current Doha Round of talks, called the Doha Development Agenda, started in
2001 and was expected to be concluded by January 1, 2005. A new deadline was
then set for 2006. Since then, WTO director general Pascal Lamy continues to
promise that the negotiations are nearing conclusion, but the deadline fixers
have apparently retired.
The Geneva-based WTO, the premier forum for setting global trade rules and
resolving disputes, in 1995 succeeded the General Agreement on Tariffs and
Trade (GATT) and the Uruguay Round of Talks that started September 1986, in
Punta del Este, Uruguay.
The WTO web page attempts some levity in its introduction to the organization:
"Is it a bird? Is it a plane? Is it a table?" the site asks. "Is it a joke?"
could be its next addition if BRIC nations - together accounting for 40% of the
world's population and over 10% of global gross domestic product - continue to
get lemony deals at the WTO.
Indian negotiators are exasperated by the only concession the WTO has made to
acknowledge India's economic growth of 8% to 9% for the past several years. The
country has been put in a new category of "advanced developing nations". So
India is dismissed as a developing economy when it comes to being denied
seating at power tables, but given exalted status as an "advanced developing
nation" when it comes to making greater tariff concessions.
Industry associations have expressed unhappiness with the latest Doha draft
proposals on agriculture and industrial products, particularly the text
covering Non-Agricultural Market Access (NAMA).
The Federation of Indian Chambers of Commerce (FICCI)and Industry said the new
draft on NAMA modalities "does not adequately reflect concerns of India and
other developing countries. It has again failed to follow the Doha mandate of
'less than full reciprocity' in tariff reduction."
The core of the second revised (May 20) draft of the modalities for working out
tariff cuts for NAMA is a formula, worthy of an Einstein-lab, that helps
support accusations from many non-governmental organizations (NGOs)and others
that the WTO is just a masquerade to rip off developing economies:
{a or (x or y or z)} x t0
t1 = --------------------------------
{a or (x or y or z)} + t0< BR >
where,
t1 = Final bound rate of duty
t0 = Base rate of duty
a = [7-9] = Coefficient for developed members
x = [19-21], y = [21-23], z = [23-26] to be determined as provided in paragraph
7 = Coefficients for developing Members.
The problem even in this numerical gadgetry to conjure up tariff cuts is the
discriminatory paragraph 7, which has different co-efficients for developed
economies such as the US and for developing economies, for example India, which
complains that it is required to lower tariffs on imports at levels that could
destroy local markets.
The FICCI said the formula is discriminatory, adding that it "would be in
complete disregard to the Doha mandate which has categorically specified that
the tariff reduction commitments would be comparatively lower for developing
countries".
In the agriculture draft, India is protesting at dilution of the special
safeguard mechanism that gives developing economies the right to temporarily
raise import duties on specific farm products whenever domestic prices fall due
to a sudden increase in imports. The new draft proposal allows India to
increase import tariffs only after domestic prices fall by 30%, a waiting
percentage India considers disastrously high.
At least 20 various groupings of non-developed economies, such as G-20 and
G-33, have submitted proposals to the WTO, yet most proposals that the trade
body has included in the draft proposals in the NAMA index are from the US and
European Union, showing whose voice dominates back-room decision making.
Fed up with getting sucker deals from American and European-dominated global
trade and financial institutions, BRIC foreign ministers met to formalize their
partnership for the first time in the Ural mountain city of Yekaterinburg,
Russia, on May 16. "Building a more democratic international system founded on
the rule of law and multilateral diplomacy is an imperative of our time," BRIC
foreign ministers said in a joint communique.
Which is all very well, but a problem facing BRIC, RIC or even IC is that they
have their own internal conflicting goals. Until BRIC unites to builds muscles
and then flex some of these, India can continue viewing the WTO as a trade
development Trojan Horse being used to gain disproportionate access to the
subcontinent's markets.
The WTO effect can be found in fruit markets in Mumbai, where expensive
American apples are found, expensive even for middle-class budgets, yet cheaper
and arguably better local Himachal Pradesh apples are missing.
"From the free-market paradigm that underpins it, to the rules and regulations
set forth in the different agreements that make up the Uruguay Round, to its
system of decision-making and accountability, the WTO is a blueprint for the
global hegemony of Corporate America," the Seattle Times quoted Walden Bello,
director of the NGO Focus on the Global South, Thailand.
The latest Doha round has done little to prove him wrong.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
