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G8: Doha Deal Begins to Look Nearer

Sanjay Suri

L'AQUILA, Italy, Jul 9 2009 (IPS) - Clear signs are emerging at the G8 summit here of progress towards concluding new terms for international trade.

Negotiations on an agreement, the Doha development round as it is called after the negotiations that were launched in the Qatari capital of Doha in 2001, have been floundering over fundamental disagreements largely between developed countries on the one hand and developing countries on the other.

Or, as seen at the summit here in Italy, between the likes of the G8, representing what is spoken of as the developed world (the members are the U.S., Canada, Britain, France, Germany, Italy, Japan and Russia) and the G5, a grouping of five major developing countries (China, India, Brazil, Mexico and South Africa).

Inevitable, then, that a G8 plus G5 forum would be a good place to sort out remaining difficulties, since these would take political energy at the top, rather than armies of bureaucrats disagreeing over the placement of every molehill.

The industrialised nations have so far declined to give up subsidies to their agriculture, estimated by some to be as high as 350 billion dollars a year across North America, Japan and Europe. And developed nations have refused to open their markets as a result to agricultural goods from the West, on the grounds that they can be priced artificially low as a result of subsidies, and represent unfair competition consequently for poor farmers in developing countries.

Developing countries in turn maintain their own – far smaller – subsidies. They complain of constricted access to western markets for their own agricultural goods, partly as a result of these subsidies. And so they have refused to open their markets to industrial goods from the developed world as much as the west would like, and slap heavy tariffs on goods that are allowed in. The subsidies dispute is linked with the G8 demands for non-agricultural market access (NAMA).

The G8 summit is now considering a changed situation where headway appears possible. “We commit to reach a rapid, ambitious, balanced and comprehensive conclusion of the Doha Development Agenda,” the G8 said in a statement Wednesday, with G5 backing.

Something has changed, but it is too early yet in the business of putting in place the brick and mortar of a new agreement to say precisely what. Progress came before the G8 summit – this three-day gathering has sought only to give negotiations the political acceleration they so much need.

“The impasse has been broken,” India’s new trade minister Anand Sharma said a few weeks before the summit. He did not say precisely how, but it might indicate something that he said this, rather than his predecessor Kamal Nath, who was shifted to another portfolio after the Congress Party-led government was re-elected in May this year. Also, that in this new term the party is not dependent on the Left parties, who lost out heavily after a long innings of insistence against giving in to the demands of the developed countries.

The exit of the Left would make an obvious difference. But also, Kamal Nath had locked himself into an unending dispute with former European Union trade commissioner Peter Mandelson. There are now new faces doing the talking all round, and they are talking a new language of give and take.

Where the developing countries will give is expected to be their traditional insistence on a move towards the eventual end of subsidies to farmers in developed countries. It is by now clear that this simply will not happen, and not in any case in as tight a time frame as they have been demanding. A breakthrough could come on the back of a simple acceptance that the Western farmer needs looking after.

A declaration on trade that the G5 produced at the summit is strong on rhetoric. They insisted again that the Doha round is really the Doha development round – negotiators from the industrialised world are inclined to forget that middle name. “We are convinced that the successful conclusion of the Doha round on the basis of its development mandate will provide a major stimulus to the restoration of confidence in world markets and inhibit emerging protectionist trends, which are particularly damaging to developing countries.”

The G5 further declared: “The Doha Development Round must deliver real and improved market access to developing country products and services and also ensure meaningful results where the greatest distortions lie, eliminating export subsidies and bringing down the massive trade-distorting subsidies in developed countries.”

Speaking strictly, very strictly, it’s not the case that the G5 are saying one thing and doing another – they have left open, for example, how much these subsidies should be brought down. As well as the time frame. They will continue to declare adherence to these aims; the rest is a matter for legitimate negotiation. And to carry these out “within the context of a transparent and inclusive multilateral process.”

Some movement forward then, at last. As a result of changes: call it compromise, call it realism.