Published:The Economic Times, December 22, 2005

By Pradeep S Mehta

Developing countries have extracted the maximum they could at Hong Kong, and India played a key role in the coalition-building and negotiations that accomplished this.

In spite of what Prakash Karat and A B Bardhan have to say, commerce minister Kamal Nath does deserve laddoos, and also jalebis and barfis, for what he achieved at Hong Kong. The deal at the sixth ministerial conference of the WTO was the best under the circumstances. Before the ministerial commenced, there was general scpeticism as to whether we could have achieved anything at all.

On December 20, Karat’s comrade and state secretary of the West Bengal unit of CPI(M) Anil Biswas was quoted by the Ananda Bazar Patrika, “At Hong Kong, India’s role was positive. It is true that all our demands were not met. But, given the present situation (of the trade talks), it would not have been possible for the government of India to do much better than what it did at Hong Kong…Kamal Nath’s performance was good….”.

Biswas was echoing what many in the media in Hong Kong had to say about Kamal Nath’s negotiating skills. The media, described him as the ‘star negotiator’ who managed to clinch the deal in favour of developing countries. I can heartily endorse this. Having been at all the WTO ministerials since Marrakesh, I can assert that Kamal Nath’s performance was one of the best.

The 1994 Marrakesh was the meeting to sign in the new WTO, where Pranab Mukherji was our leader. There was some murmur on trade and labour standards, which Mukherji retorted against, suggesting that we should also speak about a multilateral competition agreement.

That sealed the matter, but only temporarily. Following this, we had an incompetent commerce minister, Dr B B Ramiah at Singapore in 1996. That ministerial created a new work programme, including the much opposed Singapore issues (investment, competition, government procurement and trade facilitation). There was a hint on labour standards as well.

The ghost of labour standards reappeared at the next ministerial at Seattle in 1999, when then commerce minister Murasoli Maran opposed it tooth and nail. It was not the demonstrating crowds outside the ministerial conference which led to the breakdown, but labour standards and the rift between the US and European Union over farm goods. And the inept handling by Charlene Barshefsky, the US Trade Representative, in her role as the chair of the conference.

Maran as the Indian commerce minister, in his second innings, had to battle with the Singapore issues at Doha in 2001. There was a deal at Doha, when ‘development’ was used as the label to bring in the poor countries on board. The west was pretty alarmed at the 9/11 disaster and did not wish to walk away from the ministerial without any deal.

Maran had dug in his heels on Singapore issues, got the conference extended by a day, and came away as the hero. However, he had to literally fight the battle single handed, because many of the developing countries deserted us after getting an assurance on the ACP waiver. This is a system of preferences for developing countries of Africa, Caribbean and Pacific, all former colonies of European powers.

However, the Doha meeting was successful in getting concessions on TRIPs and public health and another declaration on addressing implementation problems. Importantly, it is at Doha where the rich agreed to eliminate farm export subsidies, with the end dates to be negotiated in the future.

The Singapore issues once again played the spoilsport at the fifth ministerial at Cancun in 2003, when Arun Jaitley led the Indian delegation. The ACP and other African countries walked out of the meeting on this contentious matter. This was the fig leaf behind other bigger issues such as in agriculture and particularly the US reaction on cotton subsidies and its deleterious effects on poor west African countries.

Most importantly Cancun did not fail, but did collapse, due to the adroit coalition building on farm subsidies, lead by Brazil and India. It saw the birth of the G-20 alliance of developing countries. In spite of doomsayers, the alliance went on to play a splendid role at Hong Kong.

Farm issues continued to dominate the talks in Geneva following the Cancun debacle. These could not be resolved right until the first day of the Hong Kong meeting (see Neglecting the costs of failure: ET, Dec 8).

Cancun was a big turning point in the history of multilateral trade negotiations. For the first time developing countries could flex their muscles in trade negotiations. Unlike Doha where India was left all alone in the end, at Cancun developing members showed exemplary unity and countered the pressure of the North. While Jaitley deserves accolades for being one of the main architects of G-20 alliance, at Hong Kong a wider poor country alliance was cemented by convening the first ever ministerial-level meeting of G-20 and G-90 (G-110).

It is only after this joint meeting of G-110, the EU and the US realised that LDCs will not cave in or be lured by ‘bribes’.

Formation of this grand alliance was a masterstroke and helped in bringing back focus of the negotiations on the core agenda of trade liberalisation and development. Otherwise during the first three days, developed countries spent their time in discussing peripheral issues of aid for trade, and duty and quota-free market access for LDCs. Since none could have afforded a failure, good sense prevailed over key players.

The EU softened its stance on at least agreeing to an end date for elimination of export subsidies. At the start, this was opposed vehemently by Mandelson who stated that he has no mandate to do so. G-20 too inched closer, by agreeing to an end date of 2013 instead of 2010.

This too was done grudgingly, because Brazil was in no mood, but later realised the cost of failure and agreed on the extended date, with some frontloading.

Export subsidies are but the beginning of the end of the whole bundle of farm subsidies; domestic support too is on the anvil — to be negotiated by April, 2006.

It is an arduous path, but we need to encourage Kamal Nath and his team of bureaucrats, rather than run them down. They are fully conscious of the bigger goal of protecting our farmers and achieving the goal of development not only for India, but the whole South.

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