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Business Today,  April 22, 2007
Trade Tangle
Six key members of the World Trade Organization-the US, EU, Brazil, India, Japan and Australia-have failed to take forward the Doha round of world trade talks. The trade ministers met in New Delhi in the second week of April. In a joint statement, the countries agreed to set a new timeline for completing the talks, which they said they aim to finish by the end of this year. Here's a review of trade talks, the hurdles, and what's ahead.

At India's initiative in the second week of April, various G-4 and European Union nations met in Delhi in an attempt to work out an acceptable framework towards the progress of the Doha talks and find a meeting ground for competing interests. The nature of India's engagement will determine the fate of many other developing countries in G-20 and G-33, along with Brazil an eminent member of the G-4, the US, and the European Union.

Germany is seen to tow the middle path and open to liberalisation of agriculture. Trade experts feel Portugal is less flexible and more sympathetic towards France's hardline view on agriculture. To make matters tougher, France is in the middle of election season, which makes its future stance on crucial issues even more uncertain. The US government does not have the mandate to take crucial decisions independent of the Congress until its trade promotion authority gets in July, movement in the top political ranks in a number of European countries makes EU trade commissioner Peter Mandelson's negotiating position more difficult. The presidency of the EU, which is currently held by Germany, will go to Portugal in July.

In previous failed Doha talks, agriculture has been the main issue. The subsidies that rich economies such as the US, the EU and Japan pay their farmers have always been a bone of contention, even as negotiators race to agree on a binding, all-encompassing treaty. The European Union has agreed to talks in Delhi in a positive and flexible manner. The participants failed to seek an agreement on key issues such as agricultural subsidies and tariffs, measures to enhance exports from so-called least-developed countries and concessions for poorer nations wanting to protect some of their domestic industries. The broad goal was to meet the Doha round's ambition of cutting poverty and boosting global economic growth by promoting more trade flows between rich and poor parts of the world. The Indian lobby believes that such talks would help WTO to hammer out a new trade accord and further liberalise global commerce.

India and the US have been holding bilateral talks to find common ground and narrow down differences. India and Brazil have donned the mantle of key representatives of developing nations and hold considerable influence on larger groupings. Breakthroughs had to include more market access on agriculture, industry and services. Development will be boosted with a strong market-opening that generates new trade flows in sectors like agriculture, manufactured goods and services. The US is trying to woo India in the global trade arena by promising greater access to the American consumer market by lifting the ban on its mangoes. For years, the US has refused to import them because they didn't meet sanitary conditions.

India has thwarted a European Union (EU) attempt to institute a WTO investigation into the additional customs duties it imposes on imported liquor. The EU has maintained that the additional import duties imposed by India on foreign liquors are not compliant with WTO norms and had asked for an investigation by a panel of the WTO's Dispute Settlement Board. The United States is also likely to ask for similar proceedings.

Brazil and India are important countries in different stages of negotiation and support each other's concerns. Both countries are working together in different multi-lateral forums for many years and the business growth between the two countries will be beneficial to the entire region and the global trade. Aviation technology can be a major area of co-operation between two countries as Brazil is highly advanced in aeronautical technology and research said the minister. India can similarly contribute to the railway transport system of Brazil. There is a new impetus in political relationship of the two countries and this will create opportunity for the bilateral trade of India and Brazil.

There has been growing resentment among other members who feel that negotiations are being hijacked by rich countries and emerging powers such as India and Brazil. A successful conclusion of the Doha Round Table could add as much as $ 96 billion (4,12,800 crore) a year to the global economy, according to World Bank.