India pins high hopes on WTO talks this year

By Vivian Fernandes, CNBC-TV18

Commerce Minister Kamal Nath said that he will play hard ball at the WTO talks in Geneva next week. But after three failed meetings since 2005, and in the context of a global slowdown, there will be pressure on trade ministers to compromise.

After the Minister-level talks in Hongkong in December 2005 ended in acrimony, WTO talks were suspended for a while after July 2006 and there were two failed meetings. Another failure is the last thing that a smaller group of trade ministers from the principal trading nations would be looking forward to when they meet in Geneva next week.

Kamal Nath, said, “ I do not want to address a failure without a failure.”

Commerce Secretary G K Pillai with stand in for Kamal Nath till he joins back in an exception that has been for India because of the trust vote, even though this is a minister-level meeting.

So what is on offer and what will India settle for? This is a development round that started in 2001 and agriculture is on top of the agenda. Last year, the US gave USD 7 billion in trade distorting subsidies; the negotiations will be over capping them between 13 and 16 billion dollars.

As for farm tariff cuts, India is okay with the overall cut of 36% it is required to make, but wants the developed countries to take an overall cut of 54%. '

But of greater concern is the flexibility to exempt a certain number of farm products from tariff cuts. The negotiators will have to choose between 10 and 18 percent of total traded farm products.

India is prepared to settle for 12%. And if there is a surge in imports or a big fall in prices because of imports, India would like to apply special safeguard duties. But there is disagreement on when these duties should kick in and how large they should be.

Kamal Nath said, “ Unless we get a package to protect sensitivities of our subsistence farmers and address their livelihood concerns, it is a no go.”

India has opted for a formula that if accepted would allow a product like cars with an import duty of say 105%, would be importable at 17.5%. Alongside, India would like 5% of products to be exempt from duty cuts. The developed countries say the exempt products should not be concentrated in a few categories, say textiles but spread across.  India says it should be free to decide.

The rich countries have also proposed certain sectors where duties would be brought to zero. India is prepared to yield in areas where it has an advantage, like gems and jewellery not in others, like chemicals, auto components and textiles.

The other area that it wants to go aggressive on is opening up the market for services - like healthcare, education, R&D, engineering and construction. It wants the rich world to give in both on outsourcing and allowing entry of professionals for short periods.

Kamal Nath says that he will not hesitate to break the deal if it is a bad deal. But after three failed meetings there will be pressure to compromise. A work beset with economic woes is entering the WTO talks with expectation and hope.