Empty handed: Commerce Minister Nath wants more concessions

Sparring over trade benefits, intractable positions, tough negotiations and mutual recriminations combined to condemn the recent ministerial-level World Trade Organization (WTO) talks in Geneva to failure. Dubbed the Development Round, the negotiations, which began in 2001, were meant to hammer out agreements on domestic farm subsidy cuts by the developed nations. In lieu of this, the developing world was expected to reduce industrial tariffs and open up its services sector. As the real and pragmatic interests of domestic constituencies collided with the theoretical benefits of free trade, both the developed and the developing nations hardened their positions, leading to the impasse in Geneva. "At the heart of the matter is the principle of less than full reciprocity," says Commerce and Industry Minister Kamal Nath. The intent of the Doha Development Agenda was to make trade rules fairer for developing countries. And the obvious contentious issue through the five-year-long negotiations has been the trade-distorting support provided by the rich countries to their domestic farm sectors.

According to estimates, the wealthy nations and blocs-primarily the US, Japan and the European Union-give $300 billion (Rs 13,80,000 crore) a year in support to their domestic agricultural sectors. To put the figure in perspective, that is about six times the aid that developing countries get from the developed world.

Lower import barriers on such subsidised farm products can result in them flooding developing markets, and have disastrous consequences on local livelihoods. Quite naturally, then, the developing world wants deep cuts in these farm subsidies in return for liberalisation of trade in industrial goods and services or non-agricultural market access (NAMA), which the North wants. But under pressure from lawmakers and its politically influential farming community, the US offered much less than what was expected; this led to the virtual collapse of the talks.

Meanwhile, the 149-strong WTO was also under pressure to stitch an agreement together before a December 2006 deadline. The matter gains urgency as a special us tool for speedy negotiations, the Fast Track Authority, expires in July 2007. Any subsequent WTO deal will be open to amendments by the US Congress. For the Bush administration to get enough time to push a deal through Congress before next July, a pact had to be frozen in Geneva. However, as Nath and his us counterpart reiterated in briefings later: "Content is more important than completion." Stuck on the details, countries such as us and India, which held the key to the agreement, felt it was better to return home empty-handed rather than with an agreement which could not be sold to their domestic lobbies.

What now? Says Nath: "It is up to the developed nations to realise the development content of this round. They have to offer some real and substantial concessions rather than optical ones." But that is easier said than done. "The January 1, 2007 deadline looks extremely unlikely to be met," says Commerce Secretary S.N. Menon. "But remember, the Uruguay Round agreement took seven years to tie up," says Subir Gokarn, Executive Director and Chief Economist, CRISIL. India, meanwhile, is in a comfortable position. Though NAMA was one of the causes for the failure of talks, it is, by itself, not a worrying issue for India. "Applied tariffs in India are already well below our WTO commitments," says Menon. And on agriculture too, the developing world stood together and did not budge.

One possible downside of the failure of the talks, says T.K. Bhaumik, Chief Economist, Reliance Industries, will be a proliferation of free trade agreements and regional trade pacts. There are already some 190 such agreements in existence. "This will lead countries to adopt more protectionist policies," Bhaumik says.

INSTAN TIP
The fortnight's burning question.

India is importing wheat after seven years. There is a shortage of pulses in the country. Is India's food security under threat?

No. Abhishek Singhvi, Congress Spokesman

This government is doing what should have been done earlier. The shortage of pulses is a temporary one. The government is taking steps to bring this situation under control.

Maybe. M.S. Swaminathan, Chairman, National Commission on Farmers

Domestic production of foodgrains not only provides food, but also generates employment. Importing foodgrains hits livelihoods. The government will have to do something in the long run to increase domestic production.

No. Siddhartha Roy, Chief Economist, Tata Group

There is a lot of foodgrain in the country. Looking purely at the low buffer stocks will not give a correct idea. In July-August every year, the buffer stock comes down, as we eat into our old stockpiles. However, one should be very much concerned if the monsoons aren't good this year.

-Compiled by Shaleen Agrawal

REINVENTING STREET FOOD

Stomach bugs: No more

You will soon be able to savour your favourite pao bhaji, bhel puri, phuchkas and kathi rolls without having to worry about stomach bugs. The Ministry of Food Processing will launch a pilot project by December this year to upgrade the quality of street food available in 15 cities around country. It will initially distribute 15,000 scientifically built insect- and rodent-proof food carts to vendors in these cities. The regulatory authority will also issue hygiene certificates which will have to renewed every three months without which vendors will not be allowed to operate. This project will be undertaken in association with the Tourism and Urban Development Authorities in the states. The Confederation of Indian Industry (CII), the Ministries of Tourism and Urban Development, various civic bodies and non-governmental organisations will also be involved in this project.

According to the National Policy for Street Vendors drawn up by the Ministry of Urban Employment and Poverty Alleviation, Mumbai has the largest number of street food vendors (250,000) while Delhi has around 200,000. "Thailand and Singapore have been able to upgrade their street food, which is now a global tourism magnet. Our initiative will also attract tourists who are already fascinated by India's ethnic foods," says P.I. Suvrathan, Secretary, Ministry of Food Processing Industry.

-Pallavi Srivastava