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Destruction of the Doha Round
-Economic and Political Weekly

India plays a poor hand at the World Trade Organization's negotiations.

The idea that there is no longer a sharp divide between the global North and the global South has been disproved in ample measure by the decisions taken last month in Nairobi at the 10th ministerial conference of the World Trade Organization (WTO). The essence of the final communique is that the 14-year-old Doha “Development” Agenda (DDA) of the Doha Round of multilateral trade negotiations is now effectively dead (though not officially buried), but Doha itself is still alive and available for cherry-picking by the North at the expense of the South.

At the ministerial meeting in Doha in 2001, held in the immediate aftermath of 9/11, the North—led by the United States (US) and the European Union (EU)—sold a new round of trade negotiations at the WTO on the ground that it will provide the world with a badly needed confidence booster. Doha was thrust on a reluctant South with the promise that it would be a “development” round that would deal specifically with the large subsidies given to agriculture in the US and the EU. Fourteen years later, the North has formally abandoned all pretence of a development agenda. In Nairobi it has, for the first time, refused to commit itself to the DDA. It now talks of looking at “new approaches” to explore elements in Doha (that is, use more muscle power to push ahead with those areas such as trade in services that are of self-interest) and at the same time bring “new issues” to the WTO (such as foreign investment, electronic commerce and public sector enterprises).

The Doha Round was a lie when it was born; in Nairobi the greed and self-interest of a triumphant North has caused its death. The idea of a round and a single undertaking where countries gain in some areas in exchange for giving concessions in others has been thrown aside. As a result the developing countries have lost out badly. India in particular has come a cropper.

Nairobi saw a limited but a very important set of outcomes. In agriculture it saw an agreement on export subsidies which gives the North additional time and greater flexibility to interpret and phase out such support. The North refused to agree to the demand of India and China, in particular, on an effective special safeguard mechanism (SSM) which would help protect the South from surges in agricultural imports. And most important for India, the US refused to countenance a time-bound deal on a package that would protect public stockholding programmes in agriculture from WTO-mandated reductions. So the future of India’s public distribution system (PDS) still hangs in the balance, even if the threat will materialise only some years down the line.

In 2013, at the Bali ministerial conference, the United Progressive Alliance government did not forcefully tie its demand for protection to the PDS with an agreement on trade facilitation (covering customs rules and procedures), a subject that was a matter of great interest to the US. Then in 2014, the National Democratic Alliance government after showing a lot of bravado about refusing to endorse the deal on trade facilitation, meekly signed on. So in Nairobi, India found to its acute embarrassment that it had no negotiating chips to play with.

The Doha Round had begun with a huge agenda covering agriculture, industry, services, trade facilitation and the special needs of the Least Developed Countries. In agriculture, it was to address market access, tariffs, and subsidies. In industry, there was the issue of market access and tariffs. Negotiations dragged on at the WTO’s Geneva headquarters and at ministerial meeting after ministerial meeting as countries found it difficult to digest this ambitious agenda. A semblance of a balanced outcome—especially in agriculture—which gave some meaning to the DDA, was available in 2008 when a package of “draft modalities” was drawn up; but the US killed the package when it found it would hurt its powerful farm lobby. After that it has been all downhill until the Nairobi wreck.

The effective abandonment of the Doha Round will once again raise the two-decade-old question of whether developing countries should walk out of the WTO. The argument against doing so is that the South is better off in a multilateral trade organisation, which, unlike the World Bank and International Monetary Fund, is governed by a one country–one voice system. Indeed, the South was earlier successful at the WTO in slowing the juggernaut of the North, which seemed triumphant after the lopsided Uruguay Round agreement. But bit by bit the North chipped away at alliances of the South and bit by bit it grabbed what was of mercantile interest. In the meanwhile, regional trade agreements with their punitive WTO+ clauses acted as pincers on the WTO negotiations leading to the current sorry state of the South, especially one of its leading voices, India.

The story ever since the late 1980s has been that when push comes to shove, New Delhi caves in. Almost always the surrender on WTO issues has been in the interest of pursuing the larger India–US special relationship. The most recent turnaround was on the agreement on trade facilitation which came after discussions in Washington in November 2014 between Prime Minister Narendra Modi and US President Barack Obama. Will the users of the PDS eventually have to pay for this surrender?