Saturday, July 21, 2007

Plain speaking on Doha Round

India has come in for scathing criticism at the hands of the US and also the western media for supposedly wrecking the Doha Round of trade negotiations. The best riposte to this I have seen is a letter to the editor in the Economist (July 12, 2007):


The breakdown at Potsdam was America's fault, not India's. Ms Schwab offered to lower the ceiling on America's distorting agricultural subsidies to $17 billion. As America currently spends only about $11 billion, a ceiling of $17 billion would actually allow it to raise its subsidy level in the future.

In Ms Schwab's world, however, what is sauce for the goose is not sauce for the gander. Regarding manufacturing, she insisted that India (and Brazil) not merely lower their subsidy ceilings, but that they do so to such an extent as to bring the actual tariffs down below current levels. Aside from the double standard of the American position, India has already undertaken significant unilateral liberalisation—it cut its top industrial tariff to 10% in 2007 from 38.5% in 2001—for which it has received little credit.

The significant additional access demanded by Ms Schwab would require India to cut its ceiling by nearly 80%. But then, under the July 2004 Doha framework, such a large cut would have to be matched by near-zero tariffs in the developed countries. Ms Schwab was unwilling to make that concession...... During the Doha round it (India) is doing what America and Europe have done for virtually the entire post-war period: engage in tough bargaining to obtain maximum concessions for its offers.

And the letter writers? Our own Jagdish Bhagwati and Arvind Panagriya, both professors at Columbia University.


1 comment:

gaddeswarup said...

Interesting. In 2004, Arvind Panagariya said (in "The Miracles of Globalization" a review of Martin Wolf's "Why Globalization Works"):

"Overall, the benefits from removing protective measures would accrue less to poor countries than to rich ones, which enjoy the greatest comparative advantage in agricultural products."