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From the President’s Desk…..
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My Dear Fellow Exporters,
It is sad to know that WTO talks have collapsed. Credibility of multilateral trading system has been eroded and we are likely to witness greater protectionism in world trading. Yet, it is heartening to know that our Hon’ble Minister for Commerce & Industry Mr. Kamal Nath stood firm on safeguard measures, which are vital to protect the livelihood of millions of our farmers against a likely spike in food imports from rich nations.
We are enjoying high economic growth, thanks to burgeoning overseas demand for our manufactures and services. At the same time, we cannot neglect the fact that our farmers are struggling to compete against imports from US and other countries. Unable to compete internationally, cotton farmers in Central India are falling into debt tarp and incidences of peasants committing suicides in regions like Vidarbha are no secret. We have no choice; we have to be firm on protecting the interest of our farmers.
Apparently, the talks failed over the question of safeguards, but actually, the differences are fundamental because the developed countries are pushing to promote their commercial prosperity against the subsistence of millions of farmers in developing countries.
Negotiators say the deal broke down over the proposal to protect farmers in developing countries from a surge in imports. The compromise paper proposed that countries could go above Uruguay Round level (Bound Rates) only if import went up by more than 40% over the average of preceding three years. India rightly rejected the proposal, as it would have allowed action only after our farmers were ruined. For example, in respect of products like apple, the applied rate of duty is 50% while UR rate is 55%. Similarly, in dairy products, applicable duty is 30% while UR rate is 40%, thus giving little flexibility to protect domestic producers.
In fact, the US is not wiling to negotiate a huge amount of subsidy (close to US$ 3.5 billion) it offers to cotton farmers. Pressure exerted by US farm lobbies ahead of presidential elections in November probably played a role in hardening the attitude of US trade negotiator Susan Schwab. However, the US position runs counter to the declaration made by WTO ministers in November 2001 when they launched the talks to "place the needs and interests" of developing states at the very heart of the Doha Round.
The talks exposed once again the fault lines running through the European Union, as French President Nicolas Sarkozy rallied the opposition to an emerging deal while European Trade Commissioner Peter Mandelson was still trying to negotiate it.
On trade flows, the collapse of the deal is less likely to have any immediate impact, given the long implementation periods for the measures under discussion - typically five years for developed countries and ten years for developing countries. Nevertheless, it has vitiated the environment of globalization and free trade.
Interestingly, the talks showed a shift in the power balance towards Asian economies. It also showed how India could successfully address the cause 100 odd LDCs and developing countries.
From national perspective, we are about to gain from services negotiations in future rounds of discussions due to concessions already offered by US and EU. A new administration in Washington after November’s election and changes in European Union’s Executive Commission next year may also set new trade priorities.
Yours sincerely,
Ganesh Kumar Gupta
PRESIDENT
