Indian Council for Research on International Economic Relations

Lecture Details

Suspension of DOHA Round and its Implications
 
 

July 31, 2006

 
An interactive session was organized by ICRIER on July 31, 2006 on‘Suspension of DOHA Round and its Implications’. The objective of the lecture was to brief the assembled participants about the developments at the July 23-24 G-6 meeting at Geneva that concluded inconclusively leading to the suspension of the Doha Round of negotiations. 

Mr. Gopal Pillai, Special Secretary and chief negotiator of Government of India led the discussion and appraised the audience about the reasons and factors that lead to the present stalemate. He was of the opinion that how soon the talks would resume will depend entirely on the outcome of the US-midterm elections scheduled to be held in November this year.

Mr Pillai in his lecture highlighted the main issues that emerged during the proceedings of the July G6 Ministerial Meet held in Geneva. He said that the failure of the twelve and half hours long meeting aimed at resolving the contentious gaps in agriculture, domestic support and NAMA lead to the suspension of the Doha Round and has brought all previous commitments to a standstill. Also, given that DDA is a single undertaking agreement, commitments made by negotiators at the Hong Kong ministerial on the other issues will not be binding now and fulfilling them will be now up to the individual countries.

At the G6 meeting, Mr Pillai noted, Mr Lamy’s agenda broadly consisted of two rounds. Round 1 included discussions on Agricultural Market Access (AMA), Domestic Support and NAMA, comprising the specific issues within each of them: AMA – the ambition in terms of cuts, what would be the proportionality of cuts for developing countries, treatment sensitive and special products and special safeguard mechanism, Domestic support – the cuts and disciplines on the various boxes and NAMA-coefficients for the Swiss formula, Para 8 flexibilities, treatment of unbound lines. Round 2 was to be on sectoral issues.

The meeting began with discussions on Market Access because the US was concerned that only if they could move on market access then could any movement on other issues be possible. The major part of the meeting was concentrated on discussions market access. The EU made the first movement and said that they would take a cut to an equivalent of average of 51-51.5%, up from the earlier 39%. On the issue of treatment of sensitive products, the EU said that while it would stick to the its current norms of percentage of import volumes but agreed to also put a benchmark of 2-2.5% of current consumption, which according to Mr Pillai was a positive move. On the issue of reaching a percentage to be included as total number of sensitive products, a convergence to 4% of total tariff lines seemed possible. 

Mr Pillai summarised that after the ten hours of discussion on Market access, what was on the table was a 100% cut on subsidies by 2013, domestic support cut raised to 70-75% of trade distorting support, and a 51% tariff cut. This according to Mr Lamy was two to three times higher than the Uruguay Rounds.

However, on the issue of domestic support where the US was expected to show movement, little was offered. US maintained that the October proposal was a real cut in AMS which would bind them to a total package of 23 bn dollars (as opposed to a 2005 farm support of 19.6 bn). But finally after some discussion the US said that what they do not see enough on market access and therefore they would not move at all. This, according to Mr Pillai, was extreme intransigence on the part of the US, as their offer would not bind below current level of support.

At this point, Mr Pillai said, the negotiations unravelled and NAMA did not even come up for discussion. He opined that a conclusion could have been reached since there already was resolution on export subsidies and a 75% cut on domestic support. According him there was a near 80% chance of striking a deal. But at this juncture Mr Lamy closed all discussions and the negotiations got stymied.

Mr Pillai felt that it was ironical that the talks failed on issues of agricultural market access, since for most developed countries agriculture is only about 2% of employment and GDP. They had more to gain from services and NAMA that comprise 98% of developed country GDP. Mr Pillai opined that although everyone was a loser, developed countries are the bigger losers as for the first time things were looking to move in NAMA and services and this was an opportunity lost.

However, Mr Pillai said that India has not really lost much, since 75% of its trade falls outside the ambit of WTO negotiations and the government will now actively pursue bilateral trade negotiations. He added that one area where India could have gained was on the grounds of reduction of domestic support as no bilateral or regional agreements would help India to ensure cuts in domestic support. He felt that given a landing ground for an agreement is there, the only way forward is to wait and watch the outcome of the US mid-term elections. 

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