January 15, 2007, Financial Express

New Delhi, Jan 14 With the deadlock in WTO talks continuing, any positive indication by major trading partners is seen as a flicker of hope for breaking the impasse.

The meeting between EU trade commissioner Peter Mandelson and US trade representative Susan Schwab in Washington last week did generate some hope. The meeting was followed by a joint statement by Mandelson and Japanese Prime Minister Akira Amari calling for an early resumption of stalled talks. Mandelson flew to Paris last Thursday to brief French Prime Minister Dominique de Villipin and his Cabinet colleagues about discussions he had with Schwab and Amari. Schwab flew to Geneva to discuss with WTO director-general Pascal Lamy on last Friday. The these major negotiators, however, did not yield any significant result.

“India is closely watching the developments,” a senior official in the commerce ministry said adding “we are waiting for developed countries committing to make substantial cuts in their farm subsidies”.

According to some experts, these recent developments may prompt Lamy to take India’s help for breaking the deadlock when he visits the country this week for a CII partnership summit in Bangalore. Other experts expect some developments on the sidelines of the World Economic Forum in Davos. Moreover, there is likely to be a meeting in New Delhi in March which will be attended by several ministers from key nations.

Mandelson after meeting the French Prime Minister assured that EU would not take any unilateral decision. France is a strong defender of European farm interests and, with polls ahead in that country, it seems unlikely that the EU would be able to offer any substantial cuts in its farm subsidy.

Also, public gestures of the USTR, Susan Schwab has invited opposition from Democrats who are now in a majority in the Congress.

While all these developments are taking place, a Washington-based think tank, Carnegie Endowment for International Peace said that “a mutually beneficial solution to the problem is still not in sight.” Delhi-based CUTS-International is also of the view that talks can proceeds if the US offers to cut its farm subsidies.

In a study entitled B’reaking the Doha Deadlock : Congress Could Play a Pivotal Role’ the Carnegie Endowment said it was counterproductive for the US to insist on terms that could lower the income of poor farmers in developing countries, by displacing their production or causing prices to drop for the commodities they produce. The US should not insist developing countries to reduce their tariff. It should accept G-33 proposal on special products, with additional clarifications to ensure that flexibility is used to achieve agrarian development and poverty alleviation in the developing world.

The study also said the US could benefit through exports only if farm income levels continues to rise in the developing countries.

Carnegie Endowment study severely criticised the inequitable, distorted and very expensive set of US policies, serving the interests of the few against the majority in the country and urged the Congress for a sober revision of the US policy in the Farm Bill, 2007.

The EU has indicated that it is prepared to give market access to the developing world by effecting an average tariff cut by 50%. A revision in the US proposal in the farm sector would enable it to make new agreements at WTO that can open up its opportunities for its manufacturing and services sector, the study said.

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