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India pays little heed to Doha deadlock

The US should be getting the message as Delhi gives more time to bilateral trade agreements than to resolving the breakdown of the WTO talks.

India is ducking its trade talks responsibility.
India is ducking its trade talks responsibility.

The US should be getting the message as Delhi gives more time to bilateral trade agreements than to resolving the breakdown of the WTO talks. As Demetrios Marantis, the US trade negotiator, ponders last week's talks in Delhi on the Doha Round, he could be forgiven for feeling a little slighted. Instead of meeting Anand Sharma, India's new commerce minister, as expected last month, Mr Marantis had to content himself with Rahul Khullar, the commerce secretary. Mr Sharma preferred to be in Singapore.

Admittedly, he was there to sign India's most wide-reaching bilateral trade agreement so far; a new trade pact with the Association of South East Asian Nations (ASEAN) that could boost trade between the two to US$60 billion (Dh220.38bn) from $47bn. But that underlines just how much of a sideline the Doha talks, which resume in New Delhi in the first week of next month, have become. When Mr Sharma first met Ron Kirk, the US deputy trade representative, in Bali last June it was hoped that a fresh set of personalities would break the deadlock between India and the US that in July last year led to the calamitous collapse of talks on the Doha negotiating round, which aims to set a new multilateral trade agreement for all members of the World Trade Organisation (WTO).

The two met again that month in Washington. Since then, though, India has had its focus elsewhere. At the start of this month it struck a deal with South Korea that Mr Sharma called India's first comprehensive trade agreement with a major economy. It has long had deals with Sri Lanka and Singapore. Saudi Arabia's commerce minister is expected to visit India this month to prepare the ground for signing a set of free-trade agreements. Long-awaited deals with the GCC and the EU are still under discussion.

The mental and administrative muscle of India's trade ministry is certainly not being applied to breaking the Doha deadlock. Not many of Mr Sharma's senior team would have stayed behind in New Delhi to meet Mr Marantis. "Developing countries have limited amounts to spend on trade negotiations and intellectual resources are also scarce, so to spread these resources over many agreements is probably the perdition of the entire trade-enhancing exercise," warned Rajesh Chadha, of Delhi's National Council of Applied Economic Research.

"The bilaterals are a problem," agreed Manoj Pant, a professor at Delhi University's Centre for International Trade and Development. "Because the whole point of the Doha round is that there should not be bilaterals, you are making a folly out of the whole agreement. The whole WTO talks become meaningless." India and the US were held jointly responsible for the calamitous breakdown of last year's Doha talks. India refused the unacceptably high level of "damage" to its farmers from import surges the US would allow for protective measures. Few economists, from India anyway, think India's stand was unreasonable.

"The US has been the central spoiler, refusing to cut its trade-distorting subsidies significantly even though they are universally recognised as intolerable," wrote Jagdish Bhagwati, a professor of economics at Columbia University in New York after the collapse. "While making negligible concessions itself, the US was insisting on difficult concessions from India." The US in July last year offered to cap its agricultural subsidies at $14.5bn, well beyond the estimated $9bn of existing subsidies that other nations objected to.

"The ball's in the US court and not in the Indian court," Prof Pant said. "The kind of triggers that they're asking developing countries to use are far too serious: 40 per cent damage. That's ridiculous. "Currently, the figure in the developed countries is 3 per cent. It's politically impossible for the Indian government to agree to it." The extra urgency the global slowdown has given to boosting trade, and the Obama administration's softer, more conciliatory approach to foreign policy was hoped to help overcome this. Next month's talks in Delhi have been compared by Indian officials to the "Save Doha" meeting hosted by Delhi in 2006.

The idea is to get the outlines of a deal agreed to before a meeting of the Group of 20 (G20) leading and emerging economies in Pittsburgh in the US in September, and a formal meeting of WTO members by the end of this year. But the sounds coming out of Delhi since Mr Kirk and Mr Sharma's first meeting are not as positive as one might hope. Mr Khullar said last month that far from bringing new impetus to Doha negotiations, the new set of faces in Washington and Delhi had actually set them back.

The Bush administration's nuclear deal with India, which allowed India to return to the global nuclear trade despite not signing a treaty banning nuclear tests, won a lot of friends in Delhi. The background Doha talks do not appear to have gone entirely smoothly. "Of late there has been some demands for a new approach to the negotiations; that is, to skip the modalities stage and move straight to notifying individual member commitments," Mr Sharma said sharply at the end of last month.

"This is not acceptable to India and the majority of other WTO members. There must first be agreement on modalities." Which is perhaps why after last week's meeting, the US trade representative's official statement made no mention of Doha whatsoever. Instead, it said, the two had begun the first round of bilateral investment treaty negotiations between the two countries. business@thenational.ae