CUTS Centre for International Trade, Economics & Environment

“Global welfare worth billions of dollars is at stake and trade ministers from around the world have taken a right decision to revive the Doha round of trade talks at the political level,” said Pradeep S. Mehta, Secretary General of CUTS International while welcoming the decision. Trade ministers from about 30 countries from Asia, Europe and Americas met on the sidelines of the World Economic Forum held at Davos in Switzerland and decided to revive the stalled negotiations.

“Suspension of Doha Talks and Cost Implications for India”, a study done by CUTS shows that developing countries like India would incur huge economic loss if the Doha round is not completed soon. The political loss would be much greater than the economic loss. These countries are much more vulnerable while opening up their trade regime through the bilateral route rather than subjected to a more rules-based and disciplined multilateral regime. There could be due to increased protectionism; increase in trade disputes and so on.

Another study by CUTS on “Concluding the Doha Round” argues: “If the deal could be clinched with the US agreeing to freeze its domestic support at US$15bn, then, it is a matter of US$4bn (from what US is insisting as a cap in its domestic subsidies) only and that too which benefits mostly big agri-businesses of the US. Now, the big question is, should global welfare of billions of dollars, which is likely to result from successful conclusion of Doha round be mortgaged to the US resistance to reduce domestic subsidies by another US$4bn?”

However, Mehta cited a study done by the International Food Policy Research Institute last year and argued that as things stand now, low-income countries would merely receive about two percent of this increase in global welfare and it would be the rich countries who are to gain most.

Agreeing with the findings of this study, Mehta emphasised that if the rich countries provide 100 percent duty-free, quota-free access to products originating from poor countries then there will be further increase in global welfare and almost half of that increase would accrue to the poor.

“Not only that poor producers of low-income countries would gain, there will be a huge gain for relatively poor consumers in rich countries, as protectionism in the rich world is more prominent in products mostly used by them. Not many jobs are saved either on account of such protectionism”.

Since last November, Doha trade talks have shown signs of revival, as trade negotiators worked hard in Geneva and national capitals to take technical discussions forward. “Now is the time to conclude these negotiations at a political level and deliver of developmental promises of Doha, as that would be win-win for producers and consumers alike,” Mehta added.