WTO: Geneva talks on Doha Round, Pakistan and India

After hectic negotiations for nine days (longest ministerial meeting in the history of the World Trade Organization - WTO) another marathon round of Doha Talks came to an end in Geneva on July 29th, 2008, without reaching a consensus. Having managed convergence on 18 of the 20 points, they stumbled on the 19th, a device for protecting farmers in the developing countries against surges in imports and never did go on to reach the 20th concerning 'Cotton'.

India backed by China (should we be alarmed at this growing bond through common economic interests) locked horns with the United States of America  by demanding the right to boost duties by an additional 25 percent on agricultural items, if imports surged by 15 percent. The USA insisted that extra duties may only be imposed if imports surged by 40 percent and not just by 15. Some experts argue that the collapse of yet another set of talks is of little importance. Despite a big question mark hanging over Doha's success, world's business people have carried on regardless; the growth of global commerce has outstripped the healthy pace of global GDP making developing countries, by choice, to open their economies to imports and foreign investment; one study puts the eventual benefits at around only $70 billion, a drop in the ocean of the world's GDP; the mushrooming FTAs (Free Trade Agreements) and PTAs (Preferential Trade Agreements) are eating away at the very spirit of WTO and that global stock markets do not even react to Doha results where we saw the S&P 500 index actually rise by 2.30% on the day the talks broke up.

However, the reality one prays for is different, because the supporters argue that the importance of WTO cannot be captured in numbers alone and the phenomenon represents much more than mere dollar denominations. The culture of free and fair trade in essence stands for equal opportunity, level playing field for all, including smaller and developing nations, and an environment that generates unpredictable dynamic benefits of open markets-cum-access to more customers for everyone involved by allowing exporters from across the globe to exploit economies of scale.

Competition encourages not only specialization (known to be the classic result of more open trade), but also increased productivity.

Speaking in defense of some of the emerging results from the current meeting, one aspect that clearly stands out is the glaring fact that even without an agreement on the Doha Talks, WTO seems to be successfully achieving its underlying objective of providing equal voice to all its 153 members. In trying to take a stubborn position, America actually misread the bigger picture: That in the WTO, the rich countries no longer call the shots, as they did in its predecessor, the General Agreement on Tariffs and Trade (GATT). China and India, new economic hubs they may be, in this set-up are as powerful as the USA and the EU.

Other criticism that is often hurled at the WTO relates to the menace of global inflation, which is particularly hurting the poor nations. The argument runs: firstly under the garb of free trade and enhanced market access the rich nations go on to capture the developing markets by granting disguised subsidies to home corporations, which then later on increase their selling prices to maximize internal profits; and secondly, the economically emerging countries also play their part in aiding global inflation by raising stakes in their over zealous pursuit of growth and enhanced market access. Examples being, the present surge in global food and agricultural prices and the spiraling price of oil, respectively.

While India and China can afford to be arrogant and protective of their home markets, Pakistan's interest, in contrast, lies in seeing a successful conclusion of the Doha agenda. If a deal is struck, it would mean a cut in all tariffs in the developed countries to below 6.50 percent. Meaning, in such an event for Pakistan the current tariff of 19.60 percent on export of cotton shirts to the USA will be reduced to 5.60 percent, similarly knitted shirts of man-made fibers would attract a tariff of only 6.40 percent instead of the present 32 percent. In the EU import where Pakistani exporters pay duties of eight and 12 percent on most of their exports, these will reduce to under 6.50 percent (i.e. without affecting the in place Generalized System of Preference's allowance of 20 percent) and the anti-dumping on bed linen will have to go. This will give the desired edge to Pakistani textiles (our main exports) over the Indian and the Chinese textile products. Further, the 15 percent safety that was being conceded by the USA and could very well have been settled at 20 or 25 percent would give Pakistani farmers the necessary protection from the dumping of cheap agricultural products by foreign firms, i.e. if and ever such a situation becomes a reality.

Sadly, our showing at the Geneva talks lacked preparation, purpose, clarity and leadership. With regard to effectively pursuing our interests at the ministerial meeting, the performance of our representative team can at best be termed as indifferent. The disarray of the WTO cell back home naturally reflected in our poor showing during these crucial nine days. While leaders of the world trade busied themselves trying to chalk out a better economic future for their people, our WTO Cell at such a critical juncture was embarrassingly abound with petty quarrels leading to rumors about unscheduled key transfers, dismissals and resignations. Surely these moves, even if needed, could have waited. The rather conspicuous absence of the Commerce Minister from some key hours of the discussions did not help either (he was simultaneously touring USA with the Prime Minister). As if this was not bad enough, after nearly two days of reporting by the international media, the Pakistan's WTO Ambassador in contrast maintained an ominous silence - obviously not bothered about his duty to explain in depth the details of such an important meeting and any its repercussions for the benefit of eagerly awaiting local stakeholders.

Kamal Nath in contrast came out with all guns blazing, leaving no doubt about how seriously India took both, its trade and its traders.

Such a strong show naturally got everyone wondering with one big question: why was a big fuss being created by India and China on protecting the home farmers, especially when both the EU and the USA were willing to concede significant cuts in their farm subsidies and bring them further down by 2011? While the obvious answer would be that both these economic giants have reached the conclusion that the best response to the high food prices was to move closer to agricultural autarky than to free trade, another one though worth exploring would concern the more specific allegation against India about its genuine willingness to open its economy in the real sense, which more often than not appears to be in lamentable contrast due to its inability to commit itself to practically promoting access to its markets. Its stubbornness to remove cum dismantle the existing barriers to free trade is often explained by the ferocity of Indian politics on this very touchy subject and the pressure exerted in this context by the Indian manufacturers. If this Indian show in Geneva is anything to go by, then Pakistan, which has recently opened the floodgates for incoming Indian goods in its trade policy, should be visibly nervous about the seriousness of the Indian government on trade reciprocity.

Not that one is against free trade with India, but for the sake of our entrepreneurs one hopes and prays that the people managing our commerce and trade have worked out a bottle tight agreement with the Indian authorities that not only provides Indian access to the Pakistani market, but also Pakistani access to the Indian market - The finer details, if any, of such an assurance by the Indian government are still eagerly awaited.