Lamy line’s firm: nibble tariffs & progress

NEW DELHI: India will need to bite into its applied tariffs if any progress is to be made in the ongoing negotiations relating to the Doha Round of trade talks. That was the clear hint coming from World Trade Organisation (WTO) director general Pascal Lamy during his first official visit to India.

Though Lamy did not raise this issue at his meeting with commerce minister Kamal Nath, he said it at two public interactions - one with members of the Federation of Indian Chambers of Commerce and Industry (Ficci) and the other with voluntary organisations and other stakeholders at a meeting organised by Unctad.

At an interaction with the media following a two-hour long meeting with Nath, Lamy admitted that not much progress had been made on substantive issues - tariff and subsidy cuts - in negotiations following the Hong Kong ministerial.

Though he wouldn’t expressly state that the April 30 deadline for finalising details and dates of tariff cuts and reduction of agricultural subsidies by developed countries would be missed, Lamy was firm that there is no question of scaling down ambitions relating to the Doha Round if the April 30 deadline is not met. “I don’t believe a round that is cheap is available,” he asserted. Everything, he said, will depend on whether there is any convergence on contentious issues before the agriculture and industrial tariffs negotiations week between April 18 and 22. “We will re-evaluate the situation at that point of time,” Lamy said.

Nath, for his part, insisted that while meeting deadlines is important, there could be no compromise on the developmental aspects of the Doha Round. Commerce ministry officials are not attaching too much importance to Lamy’s statements relating to applied tariffs. It is, they say, part of necessary posturing, to show that Lamy was putting pressure on all members.

The Nath-Lamy meeting was largely about assessing the ground that has been covered - or not covered - since the Hong Kong ministerial. Lamy has been meeting key WTO members to assess their positions on agriculture and industrial tariffs and impress upon them the need to complete the full modalities.

Both sides flagged the urgency of getting things done, with India reiterating its known positions on protecting Indian agriculture and small and infant industry as well as getting market access for its industrial goods in developed country markets.

...give more to gain more

If you want gain, then prepare for the pain. In his first official visit to India after becoming director general of the World Trade Organisation, Pascal Lamy had this advice to offer at his meetings with various interested groups.

“India has a lot to gain, much more than it has to pay,” he said at a meeting with stakeholders organised by Unctad.

At the meeting, disrupted briefly by a protestor throwing pamphlets and shouting `Shame Shame, Mr Lamy’ (much to Lamy’s amusement), the object of ire said it was right for India to put pressure on the United States and European Union to provide more market access. However, India would also have to reduce the gap between bound (agreed) and applied (actual) tariffs. Cuts in some applied rates will be necessary, he said, but India could keep some room for manouevre.

He repeated this position at an interaction with businessmen at Ficci. India, he said, would need to “bite into some of its applied non-agricultural tariffs” in order to capitalise on its offensive strategy of reducing tariff peaks and tariff escalation in the developed countries.

A similar point was made in the context of services negotiations. If India wanted greater liberalisation by developed countries under Mode 4 of GATS (movement of professionals), it will have to pay a price by opening up its own service sectors, he said.

Lamy pointed out that India had stakes in 70% to 80% of the 25-odd issues on the negotiating table, though the core issues related to reduction of agricultural subsidies and tariffs by developed countries and of industrial tariffs by developing countries. India, he noted, had offensive and defensive interests on most issues.

The WTO head disagreed with the view that agriculture had no place in WTO negotiations, a point made by several speakers at the Unctad interaction.

Agricultural trade, he said, was severely imbalanced against developing countries and this can be set right only through negotiations. “The WTO table is the only table where the developing countries have clout,” he pointed out.