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US pressure on Indian Cabinet formation?

There is a rather odd interview Anand Sharma has given to Reuters.

Written by Bibek Debroy | New Delhi |
June 16, 2009 3:56:12 pm

There is a rather odd interview Anand Sharma has given to Reuters. He is off to Washington and the interview comes just before the visit. Part of the interview is about India being keen to break the deadlock in WTO negotiations.

That’s a fair point since multilateral agreements are preferable to bilateral or regional ones. In addition,multilateral agreements can neutralise some protectionism floating around since the financial crisis,though by the time these agreements come into effect,global economy should have recovered.

There are various reasons why there was impasse in Doha Work Programme negotiations in July 2008. In any negotiations,there are certain to be disagreements,including in NAMA (non-agricultural market access) and services. However,these had meeting-points and what led to the July 2008 impasse was agriculture. Within agriculture,it wasn’t domestic support or export subsidies. On the former,reduced liberalisation commitments had been agreed to and on the latter,a phase-out by 2013 was also virtually agreed to,though there was an issue over cotton subsidies. In Pascal Lamy’s list of July 2008,there were 20 contentious items and one went down them one by one. It got stuck on item 19,which was special safeguards mechanism (SSM) for agriculture.

Safeguards are temporary deviations from liberalization commitments if a deluge of imports causes injury. Given India’s high bindings (so tariffs remain high even after reductions from these high bindings),it is probably true that India doesn’t really need SSM,even for products like edible oils and dairy. However,these are negotiations and negotiations aren’t about liberalisation but reciprocity. Why shouldn’t India insist on SSM? Technically,the July 2008 attempt broke down on SSM and disagreements between India and US,though it’s possible had item 19 been sorted out,talks would have broken down on item 20 (cotton subsidies) because of US opposition

In the interview,Anand Sharma has said that impasse has been broken. If this is correct,that could have happened only because India has yielded on its insistence on SSM and because India and US have so agreed,a deal to be formalised in Washington. What did India get in return? In reciprocal negotiations,quid pro quo has to exist. Otherwise,a rumour floating around gets credence. That rumour is US pressure to ensure Kamal Nath’s non-continuation in Commerce. Unless the new Commerce Minister comes clean on what India has got in return,Karat/Yechury will go to town over US pressure on Indian Cabinet formation.

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