Doha Round: Issues, Implications & Challenges

What this article is about ?
Trade ministers from about 35 countries met in Delhi recently to give impetus to the Doha round of trade talks. This article covers in a condensed form the background of the stalled Doha round of Trade negotiations, understanding the issues of the developing countries and challenges ahead. Before You read this article Here are a few helpful links. This article is the extension of the fourth link 'Genesis of WTO & Doha Round".

1. What is Tariff?
2. What is Protectionism?
3. What is GATT?
4. Issues & Priorities of Developing Countries
5. Genesis of WTO and Doha Round

What was the Objective of Delhi Meeting?
The objective of the Delhi meeting was neither to focus on negotiations on specific topics nor to reach an agreement .The objective was to concentrate on working on a timetable for the talks. India's Foreign trade minister, Anand Sharma had invited the leaders to get some momentum into the negotiations.

The Echo of the Issues:
The core issues were echoed in G20 summits in Washington in November and London in April as well as the G8+ summit in L'Aquila in July apart from a meeting of farm exporters in June at Bali and again at the Organisation for Economic Cooperation and Development (OPEC) in Paris and in July at a meeting of the Asia-Pacific APEC grouping.
Is America taking Much Interest ?
United States which is key to any deal , is expected by many other countries to start engaging in the negotiations , however the key focus of Obama Administration seems to be upon economic crisis and health care besides to be able to point to new opportunities for U.S. business.

What is Emphasis of Developed Countries?

Developed countries emphasize the big emerging countries like China, India and Brazil to open their markets and not make excessive use of special arrangements for developing countries in a Doha deal to shield their industries from competition.
Who came for the Meeting?
About 35 trade ministers, representing major developed economies, such as the United States and European Union; the big emerging countries, such as China, India, Brazil, Indonesia and South Africa; and developing countries who coordinate regional alliances, such as Mauritius for the African, Caribbean and Pacific countries, and Burkina Faso for the cotton producer apart from WTO Director-General Pascal Lamy. (TOI)

What are the core Issues & Challenges?

1. There are gaps and unresolved issues on agriculture and non-agriculture market access (Nama). The center point of talks involves efforts to open up trade in agriculture and industrial goods.
2. The involves rich countries to open their protected markets for agriculture produce and cutting their heavy subsidies they provide to their farmers & agro exporters , as they are able to wipe out the farmers in poor / developing countries out of the market.
3. The richer developing countries will also cut industrial tariffs in return so that it opens up their markets for industrial goods to do business with both rich and poor countries.

What is center point of issues?

1. There are some exceptions to these cuts which are called flexibilities. The flexibilities are the major difficulty.
2. The developing countries are being led by Brazil. Developing countries say that rich nations are using these flexibilities to protect farmers and prevent any competition at their domestic market in such commodities like farm produces which are politically sensitive everywhere.
3. The developed countries also see that developing nations may use some flexibilities to shield some sectors. The United States says it would not move further until it has a better idea how the developing nations like India, China , Brazil will use the flexibilities.
4. Special safeguard mechanism : This is an agreement that would allow developing countries to raise agricultural tariffs temporarily to help their farmers cope with a sudden flood of imports.
5. US and some developing countries such as Costa Rica which exports food said that the safeguard must not be used to choke off the normal growth in trade, and that tariffs must not rise above "pre-Doha" levels.
6. India and other big countries such as Indonesia said they needed a quick and powerful safeguard to protect their millions of subsistence farmers from the unforeseen impact of market opening, even if that meant big rises in tariffs.
7. The United States wants to push for agreements that would go beyond any general cut in industrial tariffs to eliminate duties altogether in some sectors, such as chemicals or electronic goods.
8. China and India say they are resisting efforts to strong arm them into sector deals, which they insist must be purely voluntary.
9. African countries want the United States to make bigger cuts in its cotton subsidies than in other agricultural products. They say that U.S. cotton subsidies make it uneconomic for their farmers to produce, and they cannot afford similar state aid.

What did WTO Director General Pascal lamy Said?

1. WTO Director General Pascal Lamy pointed out that in the Hong Kong ministerial in 2005, it was decided that the modalities (formulae for calculating tariff and subsidy cuts and levels of flexibilities) for agriculture and NAMA (Non Agriculture Market Access) would be concluded first and then the final offers in services negotiations would be exchanged.
2. However, in July 2008, a number of developing countries, including India, wanted to make sure while the NAMA (Non Agriculture market Access) and agri talks moved towards conclusion, services were also made part of the package so that offensive interests are met.

What is the Current Situation?

1. The 36 invitees (excluding India) included the Brazil-led members of the G-20 alliance of developing countries, the G-33 Group, the coordinators of the Least Developed Countries group, African group, Caribbean and Pacific countries, Nama-11, Small and Vulnerable Economies, Cotton-4, and the G-10. The US, European Union, Japan, Australia and New Zealand.
2. A deadline has been already fixed to conclude the Doha round by the 2010, however it seems difficult as WTO's decision-making process works on the basis of consensus even if one member decides not to join a proposed agreement talks get stalled.
3. Trade ministers are now working on the a ‘single undertaking’, which means decisions have to be made on all important issues like agriculture, services and NAMA.
4. This means that nothing gets inked till everything is decided.
5. There seems to be a more of a split between the developing and the developed nations.
6. G20 summit will held in Pittsburgh in September 25-25 for further continuing the talks.

GENESIS OF WTO & DOHA DEVELOPMENT ROUND

Uruguay Round of Multilateral Trade Negotiations comprised 28 Agreements. It had two components: the WTO Agreement and the Ministerial decisions and declarations.

The WTO Agreement covers the formation of the organisation and the rules governing its working. Its Annexures contain the Agreements covering trade in goods, services, intellectual property rights, plurilateral trade, GATT Rules 1994, dispute settlement rules and trade policy review.
The Uruguay Round was concerned with two aspects of trade in goods and services. The first related to increasing market access by reducing or eliminating trade barriers. Reductions in tariffs, reductions in non-tariff support in agriculture, the elimination of bilateral quantitative restrictions, and reductions in barriers to trade in services met this.

The second related to increasing the legal security of the new levels of market access by strengthening and expanding rules and procedures and institutions.

So, the World Trade Organization (WTO) was foundeed to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakesh Agreement, replacing the General Agreements on Tariffs and Trade (GATT). The WTO has 153 members which represent more than 95% of total world trade and 30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.
WTO deals with

1. Regulation of trade between participating countries
2. Providing a framework for negotiating and formalising trade agreements
3. Dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

What is Doha Development Agenda?
WTO is currently endeavouring to persist with a trade negotiation called the Doha Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable participation of poorer countries which represent a majority of the world's population.

However, the negotiation has been dogged by "disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports. At this time, the future of the Doha Round is uncertain."

Ministerial conferences & bulwark of disagreements

First ministerial conference - Singapore 1996
After birth of The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues".
The sigapore issues were:

1. Transparency in government procurement
2. Trade facilitation (customs issues),
3. Trade and investment
4. Trade and competition.

The developing countries opposed these issues as they were not in their favours. The European Union, Japan and Korea favoured these issues and pushed them in successive conferences. US said that it could accept some or all of them at various times, but preferring to focus on market access.

Second ministerial conference : Geneva 1998
Third ministerial conference : Seattle 1999
The two conferences nothing notable could happen except that at Seattle, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention failed the conference.

Fourth ministerial conference Doha 2001
The Doha Development Round was launched at the conference. The talks are stalled even today and impetus is on reaching a final agreement. The major impediment is different interests of developed and developing nations.

Fifth ministerial conference, Cancun Mexico 2003
This minieterial conference was called for to reach an agreement on the Doha round. However, an alliance of 22 southern states, the G20 developing nations (led by India, China and Brazil), demanded agreements on Singapore issues and called for an end to agricultural subsidies within the EU and the US. There was no progress made in this round too.

Sixth ministerial conference: Hong Kong 2005:
The sixth WTO ministerial conference was held in Hong Kong from 13 December – 18 December 2005 with an aim to reach an agreement on Doha Round by 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything But Arms initiative of the European Union — but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010

Seventh ministerial conference : Geneva 2009
This will held in Geneva from 30 November–December 2009.

NATIONAL HORTICULTURE MISSION

National Horticulture Mission had been approved by Cabinet Committee on Economic Affairs in 2005-06 as a Centrally Sponsored Scheme to promote holistic growth of the horticulture sector through an area based regionally differentiated strategies.
Memorable Points:
1. It is a scheme of Department of Agriculture & Cooperation Ministry of Agriculture India.
2. The scheme is fully funded by the Government and different components proposed for implementation financially supported on the scales laid down.
3. This scheme aims at doubling the horticulture production by 2012
4. At National Level it has General Council (GC) & Executive Committee (EC).
5. The Mission has a General Council (GC) at the National level under the Chairmanship of the Union Agriculture Minister. There are members and secretaries in the General Council.
6. There is an Executive Committee (EC) headed by the Secretary, Dep’t. Of Agriculture & Cooperation to oversee the activities of the Mission and to approve the Action Plans.
7. The EC will be empowered to reallocate resources across States and components and approve projects on the basis of the approved subsidy norms. EC will use its discretion in approving components of a project for which norms have not been prescribed.
8. The subsidy for such components will not be more than 50% of the cost for small & marginal farmers and 30% of the cost for other farmers
9. The Horticulture Division in the Department of Agriculture & Cooperation will provide the necessary support to the EC and the GC and will administer the NHM.
10. The EC coordinates between different agencies. The EC shall meet every quarter but at least once in two months in the initial stages of the Mission.
11. At State Level there is a state Level Executive Committee, District Mission Committee, & Technical Support Groups.
12. State Level Executive Committee will be constituted by the State Government under the Chairmanship of the Agricultural Production Commissioner, or Secretary Horticulture/Agriculture having representatives from other concerned Departments, the SAUs, ICAR Institutes, Grower’s Associations, etc for overseeing the implementation of the programmes.
13. Central Government will nominate its representative who will be a Member in the SLEC.
14. The State Mission Director to be appointed by the State Government will be the Member Secretary of SLEC.
15. At the operational level, State Governments will have the freedom to nominate, or create a suitable autonomous agency to be registered under the Societies Registration Act for implementing the Mission programmes at the State and District levels. The Panchayat Raj Institutions existing in the State should be fully involved in the implementation structure.
The State level agency will have the following functions.
1. Prepare Perspective and annual State Level Action
2. Receive funds from the national mission authority, the State Government and other sources for carrying on the mission’s activities, maintain proper accounts thereof and submit utilization certificate to the concerned agencies.
3. Release funds to the implementing organizations and oversee, monitor & review the implementation of the programmes.
4. Organize base-line survey and feasibility studies in different parts
5. Assist and oversee the implementation of the Mission’s programmes in the State through Farmers, Societies, NGOs, growers, associations, self-help groups, State institutions and other similar entities.
6. Organize Workshops, Seminars and training programmes
9. At the District level, the District Mission Committee (DMC) will be constituted by the State Government.
10 Technical Support Group:

The Mission will have a strong technical component and domain experts will be central to the management of the Mission. TSG will have the following role and functions:
1. To visit the States regularly and frequently to provide guidance in organizational and technical matters.
2. To compile materials for conduct of regional workshops in respect of different plantations and different aspects viz. production, post-harvest management, processing, marketing.
3. There will a yearlong calendar of capacity building and promotional events, workshops/seminars on different subjects in different regions.
4. To conduct studies on different aspects of horticulture in different regions.

KISAN CREDIT CARD

The aim of Kisan Credit Card Scheme (KCC) is to provide adequate and timely support from the banking system to the farmers for their short-term credit needs during their cultivation for purchase of inputs etc., during the cropping season. Credit card scheme proposed to introduce flexibility to the system and improve cost efficiency.

Memorable Points:
1. This scheme was announced in Budget speech of Finance Minister in 1998-99 (Shri Yashwant Sinha was India’s Finance Minister at that time)
2. In the speech it was stated that NABARD would formulate a Model scheme for issue of Kisan Credit Cards to farmers, on the basis of their land holdings, for uniform adoption by banks, so that the farmers may use them to readily purchase agricultural inputs such as seeds, fertilizers, pesticides, etc. and also draw cash for their production needs.
3. NABARD formulated a Model Kisan Credit Card Scheme in consultation with major banks. Model Scheme circulated by RBI to commercial banks and by NABARD to Cooperative. Banks and RRBs in August 1998, with instructions to introduce the same in their respective area of operation.
4. As a pioneering credit delivery innovation, Kisan Credit Card Scheme aims at provision of adequate and timely support from the banking system to the farmers for their cultivation needs including purchase of inputs in a flexible and cost effective manner.
5. Beneficiaries covered under the Scheme are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc., which may serve both as an identity card and facilitate recording of transactions on an ongoing basis.

Benefits:
1. Simplifies disbursement procedures
2. Removes rigidity regarding cash and kind
3. No need to apply for a loan for every crop
4. Assured availability of credit at any time enabling reduced interest burden for the farmer.
5. Helps buy seeds, fertilizers at farmer’s convenience and choice
6. Helps buy on cash-avail discount from dealers
7. Credit facility for 3 years – no need for seasonal appraisal
8. Maximum credit limit based on agriculture income
9. Any number of withdrawals subject to credit limit
10. Repayment only after harvest
11. Rate of interest as applicable to agriculture advance
12. Security, margin and documentation norms as applicable to agricultural advance
13. Access to adequate and timely credit to farmers
14. Full year's credit requirement of the borrower taken care of.
15. Minimum paper work and simplification of documentation for drawal of funds from the bank.
16. Flexibility to draw cash and buy inputs.
17. Assured availability of credit at any time enabling reduced interest burden for the farmer.
18. Flexibility of drawals from a branch other than the issuing branch at the discretion of the bank.


Salient features of the Kisan Credit Card (KCC) Scheme
1. Farmers eligible for production credit of Rs. 5000 or more are eligible for issue of Kisan Credit Card.
2. Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book.
3. Revolving cash credit facility involving any number of drawals and repayments within the limit.
4. Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.
5. Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.
6. Sub-limits may be fixed at the discretion of banks.
7. Card valid for 3 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.
8. Each drawal to be repaid within a maximum period of 12 months.
9. Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.
10. Security, margin, rate of interest, etc. as per RBI norms.
11. Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.
12. Withdrawals through slips/cheques accompanied by card and passbook.

Benefits of the Scheme to the Banks
1. Reduction in work load for branch staff by avoidance of repeat appraisal and processing of loan papers under Kisan Credit Card Scheme.
2. Minimum paper work and simplification of documentation for drawal of funds from the bank.
3. Improvement in recycling of funds and better recovery of loans.
4. Reduction in transaction cost to the banks.
5. Better Banker - Client relationships.

Over 7 crore Kisan Credit Cards have been issued to farmers till the end of March 2008 from its inception in 1998.In 2006-07, 85.11 lakh cards were issued and Rs 46.72 lakh credit extended to farmers through these.

Farmers, who took agriculture loans through the Kisan Credit Card, were also covered under the Rs 60,000-crore loan waiver scheme announced in the Budget 2008-09.