TRADE: Developing Countries Insist On Balance

By IPS Correspondents Reprint | | Print |

Ravi Kanth Devarakonda

DAVOS, Jan 27 2008 (IPS) - Ministers from India, Brazil and South Africa warned at the Davos World Economic Forum Saturday that the success of Doha trade negotiations over the next couple of months will depend on “balanced” commitments between agriculture and opening of markets for industrial products.

The three ministers said they are ready to conclude by April the modalities (parameters) that would indicate the magnitude of required tariff and subsidy cuts in agriculture and tariff cuts in industrial products.

But the success of these modalities, they said, will hinge on the “balance” between what the two chairs for Doha agriculture negotiations and opening of markets for industrial goods will propose in their revised draft texts expected by Feb. 6.

At a closed-door informal ministerial meeting convened by the Swiss government, the three countries said they will only accept a balanced agreement.

“We have conveyed a clear message that if the revised draft text on market-opening for industrials does not adequately reflect our concerns and include the figures we had suggested in our proposals, then it would be difficult to accept an agreement,” South African trade minister Mandisi Bongani Mabuto Mpahlwa told IPS.

“The previous draft modalities text on industrial goods ignored all our major concerns, and this time around we don’t want to see a text that is one-sided,” he said.

Brazil’s foreign minister Celso Amorim said “there is quite a sizeable difference” between what was proposed in the previous draft text on industrial goods and the unfinished text on agriculture, suggesting that there is a major imbalance that needs to be addressed.

He said that the previous draft text on agriculture left several big issues relating to subsidy and tariff cuts for farm products in industrialised countries unaddressed, while the draft on industrial goods presented a “final product” which set high ambitions without even knowing the outcome in agriculture.

“If negotiations have to proceed smoothly in the coming months, there have to be balanced revised draft texts in both areas,” Amorim told reporters at a press conference.

At issue is whether developing countries should make ambitious commitments to reduce their industrial tariffs without proportionate effort in industrialised countries to reduce farm subsidies and tariffs.

“We don’t know what is going to be the outcome on the subsidy cuts where a member (the United States) has a range between 13 and 16.4 billion dollars to reduce its farm subsidies, and it is quite a sizeable difference between the two figures,” the Brazilian minister said. “But developing countries are being told what to do precisely in cutting down tariffs on industrial goods.”

But, he said, “there is a necessity for concluding the Doha Round given the current economic climate, and I am still hopeful that we will be able to do it.”

With fears growing of a global economic recession, there is clear recognition at the WEF meeting in Davos of the need to conclude the much-delayed Doha Round by the end of this year.

The Doha Round was launched in 2001 on the promise that developing countries will be provided a “development” dimension in global trade, but key developing countries like India maintain that the round has been converted into a pure market-access round.

Trade ministers urged business leaders to press their governments to seek a successful conclusion to the Doha Round, or risk seeing a rise in new barriers to international commerce.

“If it’s not concluded this year, it won’t be concluded next year – and by 2010 the caravans will have moved on elsewhere,” EU trade commissioner Peter Mandelson told participants at the WEF meeting.

“Not only will the caravans have moved on in different directions of trade negotiations, but what has already been on the table, which in my view is quite substantial, will have been put into deep freeze.”

The EU commissioner said the negotiations had become prisoner to some extent of the U.S. political calendar. He said a new president is unlikely to put the Doha round at the front of the U.S. policy agenda.

But concerns persist among developing countries that lower industrial tariffs will unfairly expose poor rural farmers to global competition. “The content of this round must deliver to healthy economies in Asia, in Africa, in the Pacific and in Latin America because that’s the goose that’s laying the golden egg,” said Indian trade minister Kamal Nath.