The time left for the conclusion of the Doha Round of trade negotiations is too little and they have to be concluded by the end of 2006, while the progress made at Hong Kong was not quite substantive and thornier issues have yet to be sorted out. The Uruguay Round of trade talks, resulting in the creation of World Trade Organization (WTO), could conclude after the developed countries conceded the demand to phase out quotas under the Multi-Fibre Arrangement arbitrarily imposed on textiles and clothing from the developing countries. The WTO was, and is being, seen among the developing countries as an instrument in the hands of developed, powerful economies and multinational corporations against the interests of developing countries and the poor. The Marrakech Treaty, due to its various and elaborate provisions, was in fact poised in favour of the developed countries and powerful multinationals and demands were violently raised by the protestors from Seattle (1999) to Cancun (2003) to give way to a 'just economic order'. The issues of patents and intellectual property further exacerbated the differences between the North and the South.
Of greater concern were the relatively higher tariffs on the exports, coupled with restrictive quotas on textiles and clothing, from developing to the developed countries and higher subsidies given to the farmers of the developed countries making agriculturists in the developing countries vulnerable in an area where they have had a comparative advantage. Setting higher international standards and prices, while keeping wages lower, served the interests of the developed and powerful. The trade regime, rather than becoming even-handed, became more biased in favour of the rich countries who continued to practice unequal standards by demanding withdrawal of subsides and lowering of tariffs in the developing countries while keeping their own agriculture related subsidies and third-world-specific higher tariffs and employing so many non-tariff barriers. However, by the time of the Doha Round the situation had changed and the demands of developing countries could not be further ignored if the WTO were to survive. Therefore, the Doha Round brought on agenda the issues of real concern to the developing countries.
The Hong Kong ministerial could meet a total failure unless Europe and United States were made to agree to address the goals set by the Doha Round, the issues of subsidy on agriculture in Europe and the U.S., in particular. The leading agro-protectionists of Europe followed by the United States agreed to lift subsidies on their agricultural products by the year 2013 and 97 per cent of the product lines from the Least Developed Countries (LDCs) were given access to their markets. They agreed to create a financing facility of 'aid for trade' to compensate for the losers and those not still prepared to enter the global realm of open and free trade, especially the LDCs. A multi-tier formula was evolved to apply bigger cuts on higher tariffs, smaller cuts on 'sensitive' products in the developed countries and exemption for 'special' products produced by the developing countries without, however, determining the size of cuts and number of special and sensitive products. The concessions granted by the EU and the U.S. were seen as a buy-off of 50 LDCs by the developed countries to isolate the relatively more developed developing countries or Group-20 and pressurise them to bring down their tariffs and subsidies.
The G-20, including Brazil, China, India, South Africa and Pakistan, was essentially keen at getting Non-Agricultural Market Access (NAMA) to the markets of developed countries. Along with the LDCs the G-20 attacked the higher agricultural subsidies being maintained and disguised in Europe and the U.S. and extracted certain concessions, even though at the costs of LDCs on certain issues. They succeeded, such as Pakistan and India, in including the textiles in the three per cent of production lines that are not being opened for LDCs' free access to the developed markets. There were differences of conflicting interests within the G-20, for example between Brazil and others, including the LDCs, which wanted an even playing field, undistorted by subsidies, for its agricultural products. Yet the G-20 negotiated hard without conceding much on the demands of developed countries which are no more prepared to keep the preferential treatment that they had once allowed to the now rapidly growing developing countries, such as India, China and Brazil.
Various rounds of the trade talks have shown that even though the developing countries are not as united, as they could and should have been, they can still make better deals rather than pursuing their particular self-interests or entering into bilateral deals with the US or the EU. Similarly, more developed developing countries still insist upon keeping protectionist tariff and non-tariff barriers and distorting subsides in the face of a reluctant South yet not agreeable to an even playing field. This will not work, nor will it help in ushering in an era of free but fair trade. The best course for developing countries is to keep their unity and use their new found weight in order to create an even playing field. But they could not keep their ranks together and negotiated deals at variance with their overall interests.
The South Asian countries also played their cards disparately, despite rightly ratifying the agreement on South Asian Free Trade Area (SAFTA). If India and Pakistan, as part of G-20, pursued the cause of relatively more developed developing countries, Bangladesh and Nepal were too happy to join the ranks of LDCs. In textiles and clothing, for instance, India, Pakistan and Sri Lanka were on the opposite side of Bangladesh and Nepal. If India was more concerned about the Non-Agricultural Market Access, Pakistan showed greater keenness for the access of its textiles to the developed markets, rather than together focusing on the greater access for their more value added agricultural products. What makes them pursue different lines of action is that they compete in similar products in which they have similar relative advantage and are at various stages of macro-economic reforms. While Sri Lanka leads, followed by Pakistan, in undertaking economic reforms and opening of their economies, India lags behind in both lifting higher subsidies and reducing tariffs and eliminating non-tariff barriers that may also obstruct the path of creating a free trade area in South Asia.
Regardless of what the critics of multilateralism and globalisation say, the real battle around the WTO is going to be fought from within. Be it the countries of South Asia or other developing countries, they can gain by evolving a common strategy to create a just and free trade world order. They have to prepare to face the challenges of globalisation, on the one hand, and seek due share in the world market, on the other. If seen from the point of view of optimists, freeing international trade of all distortions can help 320 million poor rise above the poverty line and the Millennium Development Goals set by the UN can be met, even though if not by 2015. But for that to happen the developed countries must let some resources flow back to the developing countries by removing their own barriers and abandoning many a privileges they have enjoyed far too long and at the cost of the developing countries.
