On the face of it, it is not surprising that India is disappointed at the outcome of the WTO Ministerial at Nairobi. It has signed on a declaration that marks a watershed on two counts it cannot easily accept: first, an agreement that all developed countries will phase out farm export subsidies immediately and the developing countries four years later; and, second, a politely worded burial of the Doha Development Round which it has championed since 2001. To take the second matter first, this was unfortunate but not unexpected. The Doha agenda was, in fact, initiated by the US, Europe and Japan (the triad was determined to weed it out this time) when the world economy and trade were on a sound footing. It was based on developed countries taking the initiative in opening up their markets, with developing countries following suit at a pace that suited them. The other principle of the Doha Round — which contributed to a 14-year impasse at the WTO — was the insistence on negotiating nothing less than a comprehensive agreement covering agriculture, industry and services, as against ‘cherry-picking’ areas and diluting the principle of differentiated treatment. While these twin pillars of reasoning are well founded, they seemed ambitious in scope, more so in a post-2008 world when the developed economies lapsed into recession. To expect them to open up markets was being a trifle unrealistic. That said, these economies have become pushy in their search for securing new markets, exerting pressure on India to tweak its IPR laws and cap its farm subsidies by redesigning its food procurement programme, as in Bali in December 2013. Nairobi’s focus on agriculture was born of a similar compulsion in a time of sluggish commodity prices.
This has thrown up an interesting outcome — of the developed world agreeing to do away with farm export subsidies in exchange for the developing world getting another four to eight years to do the same. India is dissatisfied that it would have to toe the line without securing any additional progress on food procurement and the ‘special safeguards mechanism’ (SSM), or the discretion to raise tariffs to stave off a flood of food imports. The threshold volume of imports for applying SSM has to be worked out. The ‘peace clause’ of September 2014 stays — that India’s public stockholding will not be questioned till a ‘permanent’ solution is arrived at. But while pursuing these issues, India should shift from price-based to income-based support, since the latter is acceptable under WTO rules and makes sense as well. As for export subsidies, India’s farm exports are more vulnerable to competitive devaluations by Brazil and Argentina and falling demand from oil producing nations. Subsidies to sectors such as sugar are not called for, anyway.
Nairobi was inevitably influenced by the mega trade pacts across the Pacific and the Atlantic. These arrangements have sadly sidestepped Doha and introduced ‘new’ issues in the WTO agenda. India should not get disheartened. Doha may be dead, but Nairobi is not without hope.