After N-fiasco, govt will go slow on trade talks

Left fires warning shot on concessions to rich nations on farm tariffs

NEW DELHI: Once bitten, twice shy. After the nuclear deal fiasco, the UPA government is being doubly cautious in proceeding with the Doha round of trade liberalisation talks held under the auspices of the World Trade Organisation (WTO). Indian negotiators say the long-delayed round is still far from yielding a global deal as the rich countries are locked in their differences, but if it were to happen, the government would ensure that the outcome is backed by a domestic political consensus.

The developing world wants the rich to reduce agricultural subsidies, which tend to depress world prices; the rich want developing countries like India to reduce import duties on agricultural products. The Indian government is wary of committing  to fixed tariff cuts since this reduces policy flexibility. Currently, for example, the duty on wheat imports is zero due to a domestic crop shortage, but if the government were to commit itself to a permanently low tariff, it would be unable to protect farmers from international price slumps.

Having tasted blood on the nuke deal, the Left is flexing its muscles on trade. On Thursday, the CPI(M) latched on to Prime Minister Manmohan Singh’s comments on Tuesday in a phone conversation with US President George Bush and slammed him for his talk of a “compromise.” But the mood in the ruling establishment was clearly cautious, suggesting that the government would try and avoid another confrontation with the Left on such a politically explosive issue as agriculture and WTO.
 
Commerce minister Kamal Nath proposes to enter into a series of discussions with all major political parties aimed at securing political backing for any possible final outcome.

The consultative process would also involve other sections of domestic opinion and interest groups, including trade and industry, farmers’ organisations and civil society.

“Our stand in the WTO negotiations has always evolved after wide consultations both within and outside the government. In the event that the WTO negotiations lead towards a conclusion in the coming months, the government would intensify these consultations to secure a mandate for our negotiators to go ahead”, said a senior government functionary.

“India can by and large live with what is on the table and has concerns only on agriculture. We will try to help in reaching a compromise”, the Prime Minister told Bush. Singh said he would instruct the commerce minister to work on these lines.

In the commerce ministry, however, this is being seen only as a reiteration of India’s commitment to work towards a successful conclusion of the Doha #round. It is not seen as an indication that India would accept “any deal”.

Officials point to the commerce minister’s remarks in London on Wednesday before a meeting with WTO director-general Pascal Lamy that India was looking for a “fair deal” and not just another world trade deal. “The Doha round must remove structural flaws in world trade and not perpetuate them”, Nath had stated.

Indian negotiators say the government clearly won’t rush into clinching the WTO deal without first ensuring that it can garner sufficient political backing both within the Congress, and with the UPA coalition partners and the Left. The government wouldn’t like to open another front vis-à-vis the Left parties even as it tries to tide over the political crisis generated in the wake of the standoff over the Indo-US nuclear deal.

The eventual outcome in the WTO talks on liberalising trade in agriculture could be a very sensitive political and electoral issue in India. The PM acknowledged this when he told President Bush that the key to the success of the Doha round is agriculture. He emphasised the importance of taking care of the vulnerability of two-thirds of India’s population – 650 million people – which is dependent on agriculture for sustenance.

Even UPA chairperson Sonia Gandhi has in the past openly expressed her anxiety over the implications of free trade agreements (FTAs) for Indian agriculture and the livelihood of farmers. In a well-publicised letter to the PM, she had asked the government to carefully evaluate the impact trade agreements would have on the farm sector before entering into such deals.

The CPI(M) on Thursday indicated that it is carefully watching the government’s move on WTO and would not spare it for any false step. Slamming the PM’s assurance to Bush that the Doha WTO negotiations on agriculture should proceed with the removal of trade barriers, the CPI(M) said any compromise or “about-turn” on the issue of concessions by the developed world would be “disastrous” for millions of Indian farmers.

Referring to a statement issued by the ministry of external affairs quoting the Prime Minister as saying that “India remained committed to the successful conclusion of the Doha round at an early date” and that “trade liberalisation has contributed immensely to the growth of the world economy in the last few decades and it is our duty to the global community, like everyone else’s, to ensure that the Doha round too takes us forward on the path of removing barriers to trade”, the CPI(M) said it was the developed world needed to reduce agricultural subsidies and provide greater market access.

The Prime Minister’s statement “puts the onus of further reduction of tariffs back on the developing countries,” the party complained. “It is indeed strange” that this came on the eve of the second IBSA (India, Brazil & South Africa) summit when all the three countries were members of the Nama-II (non-agricultural market access) group that had “rejected” the Doha text, “ said CPI(M) politburo member Sitaram Yechury, writing in an edit piece in party organ People’s Democracy.

He said India was also critical of the agriculture text “as it does not concretise the specific measures it needs to protect its agriculture and leaves open the degree of market access the developed countries will offer.

“It is difficult to understand this sudden about-turn in India’ s stand on Nama and the agriculture text as there has been no corresponding change in either the texts or the position of the developed countries,” Yechury said.

The developing world, including India, had opposed the Doha agriculture text as the developed countries had not matched the major concessions announced by the developing nations in the earlier rounds of WTO negotiations. “Given the unprecedented levels of agrarian distress in India, any compromises or concessions on this round concerning agriculture would be disastrous for millions in India,” Yechury said.