Developing country opposition to a new round just now is, however, based
on strong grounds. They point to the fact that the US and the EU had used
their strong negotiating position in the UR to virtually deprive
developing countries of any benefits from trade in agriculture. In fact,
some countries like India have lost out substantially. Lulled into
complacence by the fact that international prices of a range of
agricultural crops ruled well above domestic prices, India bound its
tariffs on a number of commodities like maize, rice and spelt wheat at
zero, even while it set overall tariff binding commitments at 100 per cent
for unprocessed products, 150 per cent for processed cereals and 300 per
cent for certain categories of edible oils. Since then there have been two
developments. First, international prices of agricultural commodities have
collapsed, taking them below India's domestic prices. The price of Copra, which stood at $461.5 per
metric tonne in 1999 (annual average) fell to an average of $304.8 per
metric tonne in 2000, and stood at $191.3 per metric tonne in the first
half (Jan-Jun) of 2001.The price of Coffee, Arabica, which stood at 229.1
cents per kg in 1999 (annual average) fell to an average of 192 cents in
2000, and stood at 140.6 cents per kg in the first half (Jan-Jun) of 2001.
The price of Coffee, Robusta, which stood at 148.9 cents per kg in 1999
(annual average) fell to an average of 91.3 cents in 2000, and stood at
66.8 cents per kg in the first half (Jan-Jun) of 2001. The price of Tea in
the Calcutta auctions, which stood at 206.8 cents per kg in 1999 (annual
average) fell to an average of 170.2 cents in 2000, and stood at cents
per kg in the first half (Jan-Jun) of 2001. The price of Palm Oil, which
stood at $436 per metric tonne in 1999 (annual average) fell to an average
of $310 per metric tonne in 2000, and stood at $248 per metric tonne in
the first half (Jan-Jun) of 2001. This makes existing tariff bindings
inadequate to protect domestic farmers.
Second, as part
of its commitments and under US pressure, India has had to remove all
quantitative restrictions on imports, including on imports of agricultural
commodities. This would aggravate the surge in imports of a number of
commodities. For example,
the imports of palm oil rose from 970,000 tonnes in marketing year 1995 to
4 million tones in marketing year 2000. Though India has subsequently
renegotiated its bound tariffs under Article XXVIII, there are limits to
the protection it can ensure since the relevant clause requires
renegotiation with individual or groups of members. As a result, while
India obtained the right to raise ceiling duty levels and actually raised
duties to 50-80 per cent in the case of a number of agricultural
commodities (rice, maize, wheat, sorghum), the duties on soybean oil
imports have been fixed at 45 per cent, ostensibly as a concession to the
US.
Similar
losses on the agricultural front have been true of other developing
countries as well, which contrasts sharply with the huge gains that the US
and EU have made. On the subsidy front, according to one analyst, "the top
five users of export subsidies for wheat accounted for 95 per cent of
subsidised wheat exports (which is over 50 million tonnes) every year
between 1986 and 1990." It has been estimated that even after meeting the AoA cutback commitments, these five exporters would be able to channelise
about 40 million tonnes of subsidised wheat into the world market. This
amounts to about 40 per cent of the wheat trade in the mid-1990s. Similar
estimates for coarse cereals and poultry place the figures at 22 and 25
per cent respectively.
This
strategic victory on the agricultural front on the part of the developed
countries was not accompanied by the provision of benefits to the
developing countries on other fronts. The most important is the trade in
textiles, where commitments to remove quotas were staggered in a manner
where close to 50 per cent of imports under quotas were to be freed only
at the end of 2004, or the end of the 10-year implementation period. In
the interim, since the developed countries have chosen to remove quota on
products of little relevance to developing-country textile exporters,
hardly any gains have been registered on the textile export front.
Further,
even in non-traditional export areas, such as steel, the US has been using
the option of introducing "anti-dumping" levies to prevent import surges
or market disruption as a protectionist device against manufactured
imports from the developing countries. Even the WTO's dispute settlement
panel has already ruled against the US in cases filed by some countries,
and is expected to do the same in others, including one filed by India.
Finally,
the developing countries have been badly affected by the implementation of
the unequal TRIPs agreement, which some of them have institutionalised
through domestic legislation.
Given all
this, the case for developing countries in general, and India in
particular, refusing to participate in a new round prior to a review of
the UR is indeed extremely strong. But there are signs that
developing-country opposition is weakening. The "like-minded group" is in
any case handicapped by the fact that within the developing countries,
there are some who have reportedly expressed their willingness to divide
implementation issues into those that need to be addressed before a new
round and those that can be considered as part of the round. This could
help postpone discussion of the most controversial issues like textiles
and agricultural support.
But
they are even more weakened by the fact that many of these governments
have internalised the liberalisation and globalisation agenda, and are
seeking in the US an ally to pull them out of their economic and political
difficulties. It was this weakness that Zoellick was exploiting vis-à-vis
India, when he spoke of the possibility of cooperation on issues such as
counter-terrorism, nuclear non-proliferation and human rights. The effects
of this weakness are already visible. Thus, at the time of the Geneva
meeting, the Financial Times reported that besides Brazil, Mexico and
South Africa, "that favour a round, as does China, which is poised to
enter the WTO", "even
India, which has long led the opposition to new global negotiations, seems
to be wavering." More recently, the Times of India reported a subtle
change in India's stand, from opposing the new round to pressing for a
limited agenda. According to that report, senior officials felt that
India's focus should be on "keeping out multiple new issues while taking
care of its core concerns."
While these
reports are by nature speculative, they do reflect a real possibility. And
if experience with the Uruguay Round is anything to go by, India's
officialdom has an uncanny knack of making huge concessions that are
completely at variance with their public postures. This requires emphasis
on the need for public debate and parliamentary sanction before a
departure from publicly declared positions is made. If not, India could
lose far more this time than it did in the last round.