'US stalling Doha round but India not weakened at WTO'

Jayant Dasgupta Former Indian Ambassador to WTO too shared his views on the same issue.

Below is the verbatim transcript of the interview..

Q: The left parties, the congress parties and other parliamentarians sought clarifications from the commerce minister in parliament today on the statement that she had tabled in parliament on India's position at the World Trade Organization (WTO). Let me start by asking you first about the Doha Round because the commerce minister clarifying there that India's position is that the Doha round should continue but there has been no convergence on that issue. So, we don't pull the fate of the Doha round. If the Doha round is virtually dead what are the implications then for developing countries like ours?

A: The Doha round was essentially about three big things. Dismantling and disciplining subsidies which distort agricultural trade, opening markets for manufacturing goods and opening markets for services. If no progress is made on that essentially the rules of the game stay exactly where they were, that is what they were in 1995. The implications are that number one, the developed countries can carry on doing precisely what they have been doing since second world war which is throwing huge subsidies at their agricultural sector at the cost of developing countries.

Second, they don't have to open their market for manufacture such as leather and textiles which are two examples of industries which are competitive elsewhere principally in developing countries.

Three, they don't have to open their services market so that jobs don't get Bangalored. So, in a nutshell what is happening is that by stalling Doha which is primarily being done by the US you are in effect shifting the rules of the game back to 1995, 20 years ago and ensuring that developed countries can carry on whatever they are doing whatever they are doing which is in their self interest.

Q: So, you are saying that they will be detrimental to developing country like ours and it will push the game back into the court of (interrupted..)

A: Without a doubt. Let me give you a couple of examples, you will see the point I am making. There are very poor countries is western Africa which produce cotton. India itself is a large cotton producer. Now, if US subsidises its cotton it artificially lowers the international price of cotton. Who gets hurt, the impoverished countries in West Africa, our farmers in Gujarat, farmers in Brazil, all of whom are far more competitive than their counterparts in the US.

Q: If I could ask you to comment on the statement that was made by the commerce minister saying that as part of the Nairobi agreement developed countries have committed to removing export subsidies immediately except for a few agricultural products and developing countries will do so by 2018. How do you then read this with the concern that you have just raised?

A: Essentially it is a trivial part of the agriculture negotiations. The agriculture negotiations included explicit export subsidies and implicit subsidies but most importantly market support. And export subsidies had been agreed to way back in 2008. So, that is no major concession. The point is this. The US does not need to subsidise the export of cotton. If it is directly subsidising the production of cotton because then the price of cotton in the US and in the international market is depressed. So, it does not need to give an explicit export subsidy.

What export subsidies will end up doing is in fact targeting the developing countries so that if a developing country wants to promote its sugar exports like the Caribbean countries or other countries what you will do is you will tighten the belt around them. Short point; export subsidies is nothing new. This had been agreed to way back in 2008 and it is simply similar to suggest that this is some major achievement that Nairobi has achieved.Q: So, the commerce ministers statement on the floor of the house, suggesting that this business of doing away with export subsidy is the commitment that developed countries have given, will ensure a level playing field and will in fact benefit countries like India, you don't buy that argument?A: I don't. I have explained to you please distinguish between what I called market support and an export subsidy. If I want to give an explicit export subsidy on my cheese, that is clearly trade distorting because you are making your cheese more competitive than somebody else's cheese by paying a subsidy. On this there was never any doubt, this had to be dismantled. The second way it is done and the more egregious way is that huge amounts  of domestic market support are provided to producers. So, for instance in the US large corporations get millions of dollars under the farm bill for producing soya, cotton, milk etc. Now that gets factored into the price of those goods. That renders those goods competitive in international markets without an explicit export subsidy. So, till you discipline that how will there ever be a fairer allocation of resources on a global scale?