TWN Info Service on WTO and Trade Issues (Dec11/13)
21 December 2011
Third World Network

North-South divide across issues, India defends policy space
Published in SUNS #7285 dated Tuesday 20 December 2011

Geneva, 17 Dec (Ranja Sengupta) -- Balancing anti-protectionism and domestic policy space of Member States emerged as a key issue at the eighth Ministerial Conference of the World Trade Organization (WTO) with quite a few member countries speaking on commitments to anti-protectionism during the plenary session on 15 December.

A group of countries came out with a ‘pledge against protectionism'. The pledge amounts to pledging away domestic policy space to use new protectionist instruments and even WTO-consistent measures. A standstill on applied tariffs, where they cannot be raised to bound levels even though allowed by the WTO, seems to be one of the main demands raised here.

However, the group of 100+ developing countries and Least Developed Countries (LDCs) made it clear through the "Friends of Development" statement on 15 December that though their commitment to resist protectionist measures is strong, it has to be subject to the condition that they be allowed to use WTO-consistent measures to achieve objectives of growth, development and stability.

A high-level representative of the Indian delegation told Third World Network (TWN) that it was obvious that India strongly stands behind this statement.

Other points of divergence in approaches and content seem to be also emerging between the developed and many developing/LDC members of the WTO.

In the interview, the Indian representative argued that the countries bringing in such pledges against protectionism talk only about limiting the use of tariffs as a protective instrument. However, the high developed country subsidies and non-tariff barriers are not looked at as anti-protectionist.

He suggested that India will definitely argue that WTO-consistent measures are used. "WTO consistent measures are our right and we will use it", he said.

This seems to provide a counter point to the Australian Minister's statement that the words "policy space" could not be an excuse for raising tariffs.

The divide between the developed and developing members is also seen on several other issues. On efforts by some OECD countries to promote the use of plurilateralism to reach agreements, the developing countries have made clear during the 15 December plenary that multilateralism is the only way for decision-making in the WTO.

The Indian representative argued that while plurilateralism may be a method of building consensus, it must be enlarged and ultimately decision-making must be within a multilateral framework.

The Friends of Development statement supports this view unambiguously in paras 4 and 7, highlighting inclusiveness and transparency and multilateral consensus-based decision-making.

If developed countries want plurilateral agreements on the lines of the Government Procurement Agreement, this is clearly not acceptable, the Indian delegate argued.

On early harvest, while the European Union and the United States voiced demands for including trade facilitation, non-tariff barriers in NAMA (non-agricultural market access) and dispute settlement (outside the Doha mandate), developing countries opt for the LDC package.

India wants an early harvest only by multilateral consensus, with the LDC package as number one priority.

This was echoed by many developing countries at the plenary. China, for example, said that LDCs should have gotten higher priority and their issues should be addressed at the earliest.

At the plenary, several countries expressed support for Duty-Free-Quota-Free Access for LDCs, and for rapid elimination of cotton subsidies. Qatar and Benin said the US was blocking the process.

The new issues suggested, most notably by the EU, cover climate change, energy, competition, investment, food security among others.

Developing countries including India did not ask for new issues and they are apprehensive that these may get pushed finally into negotiations. China, at the plenary, said that only after the Doha Round is concluded can members discuss new issues, new challenges with full confidence.

One of the new issues suggested, climate change, may be about legitimising border taxes and other measures, among other things, according to the Indian representative.

Food security is another issue where India did not mince its words. Some member countries have argued that export measures have restricted the movement of food and have threatened food security across the world.

According to the Indian representative, India has been blamed for adversely affecting the usefulness of the World Food Programme (WFP). However, he reiterated that India does not impose restrictions on movements of food under the WFP and is committed to fully facilitating movement of food on humanitarian grounds.

He quoted a Food and Agriculture Organisation (FAO) study to argue that export restrictions have very little impact on food movements and food shortages, whereas the main reasons are the increasing production of bio-fuel and developed country subsidies. An important issue is the movement of food from land locked countries but this is not even mentioned in this ‘food security argument'.

He expressed concern that a review of Article XI. 2 (a) of GATT which allows for export measures is being asked for. But he repeated that India will not want to give up on its right to food, and will do the necessary negotiations on this if this gets to that stage.

A divergence between the countries is also clear on NAMA. India, along with Brazil and South Africa among others, have opposed the NAMA proposals as they currently stand, especially on sectorals.

The Indian representative warned that NAMA sectorals cannot go through in its current shape.

The Director-General Mr. Pascal Lamy has been talking about bringing in a ‘formula plus' proposal for NAMA.

The Indian representative said that any negotiation has to be based on transparency. "The WTO operates on deceit, on half truths", he said.

The NAMA negotiations at the WTO have been an onerous one. The Swiss Formula has already been imposed on developing countries with clear linkage to flexibilities. It also obligates deeper cuts on higher tariffs thus making developing countries cut much more compared to their developed counterparts. The ‘sectorals' negotiations led by the US goes further and asks for tariffs to be dropped to zero or close to zero mainly by three countries, India, Brazil and China, on chemicals, industrial machinery, and electronics which together account for 40% of world trade.

India, along with its developing counterparts and LDCs, reiterated the importance of the conclusion to the Doha Round. This was echoed through the plenary session on 15 December including by India, China, Kenya, Bangladesh. Kenya, among others, reiterated its commitment to the round through a single undertaking.

The Indian representative said "if the Doha Round does not conclude, it will be bad for all, particularly for developing countries and LDCs. The faith of developing countries will be shaken on the multilateral process as Doha is and is likely to be the only development round." +