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Sub-theme: Globalization

Panel 4: South Asia in the WTO: In search of a common position

• Suspension of Doha Round Talks: The cost implications for India

Suspension of Doha Round Talks: The cost implications for India
Pradeep S. Mehta and Pranav Kumar

While trade ministers agreed to the use of the word ‘Development’ in the agenda, little stability has been established through current negotiations. An indefinite suspension of Doha Round of talks after five years of intensive negotiations is a big setback to a majority of WTO members. It may not adversely affect those countries that are a part of well functioning preferential trading arrangements (PTAs), but a great loss to majority of WTO members, especially developing countries. This loss is more profound because the Doha Round was designed and mandated to deliver pro-development outcomes and at the same time WTO members are urged to make concomitant domestic reforms in order to take full advantage of the Doha Round. (this is the essence of mainstreaming trade into national development strategy as stated in the Doha Ministerial Declaration). This paper outlines two key points - the need for benchmarking on trade negotiations to minimize opportunity costs for developing nations and looking at opportunity costs to India.

There should be a policy of benchmarking pro-development outcomes of trade negotiations (at multilateral as well as bilateral/regional level) with domestic preparedness, so that a robust linkage between pro-development outcomes of trade negotiations and pro-poor outcomes of trade liberalisation is established. Moreover, domestic reforms should be benchmarked on whether they can lead to a relatively more pro-poor growth or not, if one has to link pro-development outcomes of trade negotiations with pro-poor growth outcomes. For instance, phasing out of quotas in textiles trade created a big international market of textiles and clothing but countries (particularly the poor ones) ability to reap benefits out of this new quota-free regime entirely depends on how this sector is restructured and modernized domestically.

Furthermore, opportunity costs need to be taken into account. India wholeheartedly participated in the multilateral trade negotiation despite not being a demandeur of a new round (the Doha Round), while many countries like the USA simultaneously pursued negotiation on bilateral PTAs, undermining such multilateral efforts. Since 2001, the USA has signed not less than a dozen bilateral agreements and many provisions of these agreements are WTO-Plus. India is also engaged in bilateral/regional PTA negotiations, but not as successfully as the USA and some other developing countries. Only India and EU are two major countries, which were not aggressive in pursuing non-multilateral route following the collapse of the Cancun WTO Ministerial. However, today the situation is slightly different. EU and India are actively considering starting negotiations on a comprehensive free trade agreement. And it is yet to be seen whether India gains more by signing such bilateral PTAs rather than spending more resources on multilateral trade negotiations.