On Doha

Here's Puspa's take on the extended, heated meeting there in Geneva -- Manager

On Doha

by Puspa

With rising oil and food prices, and the woes of the US domestic economy still taking a toll and the consequences of the financial crisis still unfolding —who cares about trade any more?

News clips of hundreds of Californians waiting in line at various branches of IndyMac Bank to claim their money seem to have diverted attention away from any other developments in international economic policy. Meanwhile, those who are new to the American mortgage markets are amusing themselves trying to figure out what’s behind acronyms of Freddie Mac and Fannie Mae.

Yet, something went somewhat unnoticed in the news last week. Negotiations of the previously-suspended Doha Round were re-opened last week in Geneva. The Doha Round remains a tough deal to conclude. The negotiations, initially scheduled to end last Friday (July 25^th ’08) continued up until today.

The negotiations continue to pit the two competing blocks, the developing countries (spear-headed by Brazil, China and India) vs the developed countries (US and EU negotiators carrying the torch for their ‘important’ constituent, the farmers).

The core contentious issues are still the same ones, agriculture and NAMA. After several impasses, there is yet to be an agreed formula to reduce neither domestic agricultural subsidies (a concession made by developed countries) nor an agreed set of modalities to grant Non-Agriculture Market Access (NAMA), which is largely translated into slashing very high tariffs in industrial goods, a practice currently adopted mostly by developing countries.

These issues have been sharp and dividing for the past few years. Should be any reason, that in these troubled times, any of the parties involved are in a position to relax their respective stands?

The answer is yes, if you believe that concluding the Doha Round is part of a continued effort to uphold the institutional mechanism of a world trading system that has operated for over half a century. The reason should be yes, if you believe that a positive breakthrough on Doha signals commitment of countries that have agreed to continually liberalize and lower tariffs.

In difficult times, one should aim at picking low-hanging fruits. Pascal Lamy’s efforts to come up with a compromise proposal, with a more modest aim of tariff reductions for both agricultural subsidies and NAMA, should be applauded. It’s now up to the big players to adjust their bargaining positions accordingly.