Trade and politics have always been intertwined. A country's trade policy cannot operate independently of its political climate and domestic pressures. Attempts to forcibly sever a country's approach to trade from its political compulsions usually end in disappointment. Seen as such, the failure of the recent Doha round of global trade talks isn't particularly surprising at all.
The blame game began swiftly. Peter Mandelson, the EU's interlocutor had little hesitation in pointing the finger at the US for the impasse: "Having been mandated by heads of government at the G8 to come together to indicate further flexibility, I felt that each of us did, except the United States." Agreeing with him, Commerce Minister Kamal Nath said, "Everybody put something on the table except one country..." On the other hand, Susan Schwab the US representative saw it rather differently: "What became evident was that several of the others had not moved off of positions that they've held for the last four weeks or more."
The finger pointing and recriminations proceeded primarily from an inability to forge an alliance on trade in agriculture. While the US insisted on greater access to the Indian and EU markets for its agricultural products, and India and the EU argued vehemently for an acceptable reduction of the high US agricultural subsidies, the negotiations were marred by each faction's stated position. Ostensibly, protectionism had its day with neither side interested in compromising on their "core issues".
Behind these infractions lay the cold necessity of placating domestic constituencies. Readers will know that Congressional mid-term elections are scheduled in the US in November this year. For the first time since 1994, the Democrats feel they have a real prospect of regaining control of the Congress. With President Bush's ratings on a nowhere trail, antagonizing middle-America's influential farm lobby by cutting agricultural subsidies is something that the Republicans can ill-afford. It was never going to happen.
For that matter, India was never going to offer to open up its agricultural market on a platter. No governing party in India can afford to be perceived domestically as "anti-farmer" by conceding greater access to overseas players without equal value in return. Nevertheless, Kamal Nath's robust championing of Indian interests at a global stage is certainly worthy of commendation. Too often in the past, Indian diplomacy has been affected by an inveterate shyness or a fear complex preventing effective bargaining or resulting in one-sided transactions.
In the long term however, India should not balk from a gradual liberalisation of its agricultural markets. Casting aside scaremongering, this will help India's agrarian sector by boosting exports, minimising the distorting influence of local middlemen, increasing productivity and achieving best prices for India's farmers. Some efforts to harness the huge untapped potential in India's rural sector are already underway. ITC's village chaupal project and FieldFresh Foods (a joint venture between Bharti Enterprises and Rothschild's) are pertinent examples. At another level, India's consumers will also get the prices and choices they deserve. There is no reason why the rising prices of essential commodities should continually be determined by the designs of rapacious hoarders when other avenues exist.
Less logical than the US or the Indian approach to global trade is the EU's position. The EU joined the anti-US bandwagon in Doha without a sufficient examination of its own affairs. Agricultural subsidies are rampant in Europe with France leading the reactionary aversion to ending protectionism. The idea of a singular European approach to global trade exists, if at all, in a dream. There is no real consensus on trade internally within Europe with its member states singing different tunes. Some member states lean towards the free market model; others are still wedded to a hankering of old world socialism.
The reality is that the attempt to forge a global consensus on trade - though a laudable aim - is ultimately a fantasy. The disparate and competing interests of the global actors involved with the specificities of their domestic political arrangements ensure that common ground on trade will remain as elusive. While idealists may still yearn for a utopian multilateral settlement, realpolitik necessitates that the way forward after Doha lies in shrewd bilateral agreements.
Rishabh Bhandari is a lawyer at a global law firm in London. These are his personal views.first published:July 31, 2006, 11:13 ISTlast updated:July 31, 2006, 11:13 IST
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The idea of a common world trade policy is a fantasy.
Trade and politics have always been intertwined. A country's trade policy cannot operate independently of its political climate and domestic pressures. Attempts to forcibly sever a country's approach to trade from its political compulsions usually end in disappointment. Seen as such, the failure of the recent Doha round of global trade talks isn't particularly surprising at all.
The blame game began swiftly. Peter Mandelson, the EU's interlocutor had little hesitation in pointing the finger at the US for the impasse: "Having been mandated by heads of government at the G8 to come together to indicate further flexibility, I felt that each of us did, except the United States." Agreeing with him, Commerce Minister Kamal Nath said, "Everybody put something on the table except one country..." On the other hand, Susan Schwab the US representative saw it rather differently: "What became evident was that several of the others had not moved off of positions that they've held for the last four weeks or more."
The finger pointing and recriminations proceeded primarily from an inability to forge an alliance on trade in agriculture. While the US insisted on greater access to the Indian and EU markets for its agricultural products, and India and the EU argued vehemently for an acceptable reduction of the high US agricultural subsidies, the negotiations were marred by each faction's stated position. Ostensibly, protectionism had its day with neither side interested in compromising on their "core issues".
Behind these infractions lay the cold necessity of placating domestic constituencies. Readers will know that Congressional mid-term elections are scheduled in the US in November this year. For the first time since 1994, the Democrats feel they have a real prospect of regaining control of the Congress. With President Bush's ratings on a nowhere trail, antagonizing middle-America's influential farm lobby by cutting agricultural subsidies is something that the Republicans can ill-afford. It was never going to happen.
For that matter, India was never going to offer to open up its agricultural market on a platter. No governing party in India can afford to be perceived domestically as "anti-farmer" by conceding greater access to overseas players without equal value in return. Nevertheless, Kamal Nath's robust championing of Indian interests at a global stage is certainly worthy of commendation. Too often in the past, Indian diplomacy has been affected by an inveterate shyness or a fear complex preventing effective bargaining or resulting in one-sided transactions.
In the long term however, India should not balk from a gradual liberalisation of its agricultural markets. Casting aside scaremongering, this will help India's agrarian sector by boosting exports, minimising the distorting influence of local middlemen, increasing productivity and achieving best prices for India's farmers. Some efforts to harness the huge untapped potential in India's rural sector are already underway. ITC's village chaupal project and FieldFresh Foods (a joint venture between Bharti Enterprises and Rothschild's) are pertinent examples. At another level, India's consumers will also get the prices and choices they deserve. There is no reason why the rising prices of essential commodities should continually be determined by the designs of rapacious hoarders when other avenues exist.
Less logical than the US or the Indian approach to global trade is the EU's position. The EU joined the anti-US bandwagon in Doha without a sufficient examination of its own affairs. Agricultural subsidies are rampant in Europe with France leading the reactionary aversion to ending protectionism. The idea of a singular European approach to global trade exists, if at all, in a dream. There is no real consensus on trade internally within Europe with its member states singing different tunes. Some member states lean towards the free market model; others are still wedded to a hankering of old world socialism.
The reality is that the attempt to forge a global consensus on trade - though a laudable aim - is ultimately a fantasy. The disparate and competing interests of the global actors involved with the specificities of their domestic political arrangements ensure that common ground on trade will remain as elusive. While idealists may still yearn for a utopian multilateral settlement, realpolitik necessitates that the way forward after Doha lies in shrewd bilateral agreements.
Rishabh Bhandari is a lawyer at a global law firm in London. These are his personal views.
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