Requiem for the WTO

However, there are three caveats to this resurrection hypothesis. First, the world in 2006 is different from the world in 1993, when through the Blair House Accord a few developed countries rammed agricultural non-reform down the throats of developing countries. Developing countries have increased economic clout. But developing countries are heterogenous, as are developed countries.

It is no one8217;s case that sub-Saharan Africa has greater economic clout. Nor is it the case that India alone has the clout. However, collectively, India, Brazil, China and South Africa matter. As long as this core of G-33 holds together, it is impossible to ignore this coalition and the DWP failure is largely because developed countries have yet to accept this phenomenon, not evident at the Doha Ministerial in 2001, but very obvious since the Cancun Ministerial in 2003. If this is not accepted and WTO8217;s decision-making structures not modified, resurrection is unlikely.

Second, with close to 150 members, any one of whom can block an agreement, WTO has become like the UN General Assembly, where nothing happens. To state that which is politically incorrect, there is only one way to break the decision-making impasse. There should be countries that have no responsibilities like reduction commitments, but have no rights either. LDCs are a case in point. If this is done, there will have an incentive to graduate out of LDC status. Today, there is a perverse incentive towards remaining a LDC. Conversely, developed countries and major developing countries will have both rights and responsibilities. Let us thus formalise the green room processes, unpalatable though they are.

If this is not done, WTO will remain as an organ for implementing Uruguay Round agreements and accomplish nothing more. This leads to the third point. True, there haven8217;t been any multilateral agreements since 1995. But has WTO achieved any liberalisation since it was formed in 1995? With the exception of acceding countries, the answer is no. Liberalisation has either been unilateral or regional, the latter through RTAs regional trading arrangements of various hues. If liberalisation is the objective, that8217;s probably the way to go. Witness the inclusion of services in several RTAs. Or intellectual property rights IPRs and environment. IPRs were included in the Uruguay Round to persuade the US to move away from 301 action. Nothing of the kind has happened and 301 action continues. It is better to make these bilateral and regional rather than unilateral. The WTO has a system of plurilateral agreements, open for signature to countries that wish to do so, as opposed to mandatory multilateral agreements. Perhaps that should be the route, with accession clauses built into all RTAs. Whether one looks on this as modification of green room processes, integration of RTAs or extension of plurilateralism, the end product is the same.

As long as there is modification of the MFN most favoured nation principle and there are no free riders on liberalisation. What about issues that lead to DWP8217;s collapse? For reasons I have mentioned earlier, I think these are symptoms rather than the disease. All issues in negotiations are contentious. But ostensibly, issues that led to the present collapse are NAMA non-agricultural market access and agriculture. The drafts of June 22 were not good enough and subsequent talks in Geneva failed to break the deadlock. There are indeed problems within NAMA, about the formula, coefficients, treatment of unbound tariff lines, exemptions and relative reductions by developing countries compared to developed ones. These are articulated by the NAMA-11 group.

Once we have an uniform goods and service tax GST in place and a proper CVD countervailing duty, we shouldn8217;t have any problems with reducing manufactured good tariffs. By the same token, nor should Brazil. But why should we do this if developed countries don8217;t liberalise agriculture and the Hong Kong Ministerial Declaration in 2005 accepts this link between the two. All said and done, NAMA wouldn8217;t have triggered the collapse. That distinction is reserved for agriculture.

On agriculture, India has an import side the defensive angle and an export one the offensive one. The former kind of view is articulated by G-33, the latter by G-20 and the view that India8217;s agro export interests are peripheral, is not quite true. The defensive intent is adequately protected through tariffs, special products and the special products clause, although there can be problems in edible oils and dairy. However, market access is meaningless if markets are distorted by subsidies domestic and export and this is where the offensive intent kicks in.

True, GATT has sought to liberalise manufactured goods trade since 1947 and agriculture has been on the agenda only since 1986. But developed countries haven8217;t shown enough commitment to reduce subsidies and because of economic clout, the core group of developing countries can now afford to call their bluff. As long as the core holds and as long as we recognise that clout resulted from liberalisation.

From India8217;s perspective, WTO and DWP can wither away, as long as we continue to reform. That is what has changed since the Uruguay Round days. From being an outlier, India has become part of the mainstream. But a stream without running water can become a stagnant pool.

The writer is secretary-general, PHDCCI