Will Anand Sharma bow down or bow out at WTO?

Anand Sharma who is at the WTO meet at Bali has been making all the right noises in opposing the peace clause. However at 9 PM on Friday, he will have to make a crucial decision and in case he buckles and goes ahead and accepts the peace clause then it once again becomes a case of the mouse that roars for India.

India has traditionally known to have made all the right noises and then buckled at the end. Kamal Nath did it twice in the past, Arun Jaitley too did the same at Cancun.

However there was one instance when former Commerce Minister, Murusoli Maran stood firm at Doha, but was told to change his decision after a call from the then Prime Minister, Atal Bihari Vajpayee.

All eyes would however be on Anand Sharma who had said that the peace clause was non-negotiable. Some newspapers have even reported that India would get a call from German Chancellor Merkel and British Prime Minister, David Cameron in this regard.

Devinder Sharma a food and trade policy analyst tells rediff.com that traditionally India has always made the right noises only to back out at the last minute. It could be called as a case of the mouse that roars.

In the year 2008 at the Geneva meet, Kamal Nath the then commerce minister had said, “I am willing to negotiate commerce, but not livelihood security of 650 million subsistence Indian farmers."

India had refused to compromise over a proposal- special safeguard mechanism meant to protect the poor farmer from imports.

Sharma asks, did the talks really fail then? The talks did not fail because of the protective shield issue that both India and China wanted with a view of saving their farmers.

The talks collapsed because the US did not want to make any commitment to cut its massive federal subsidies to cotton growers.

I felt that this was political mischief. Kamal Nath told some journalists that he actually was surprised at the stern position the US Trade Representative Susan Schwab took when the SSM issue came up for negotiations in the final session. "She went out of the room for sometime and when she returned she simply dug her heels."

At the Hong Kong ministerial in the year 2005, Kamal Nath had said that the US has already offered to reduce domestic support by 53 per cent while the EU offer is for 70 per cent.

The minister had then lashed out: “What the US proposed last month is not real cuts in agriculture subsidies. The real cuts would be when there is decline in the support provided by the US treasury.” But post-Hong Kong, for some strange reasons the minister agreed

to the same commitment.

The US/EU offer pertained to cut the ceiling on trade-distorting subsidies by 60 per cent and 70 per cent, respectively. Let me clarify here that the US/EU proposal did not mean reduction in farm subsidies by 60 to 70 per cent but a reduction in the ‘ceiling’ on trade-distorting subsidies.

As far as the overall reduction is concerned, it does not translate into any reduction in the domestic support being given.

Kamal Nath probably thought that public memory is too short. Just in a matter of ten days, he made a complete u-turn in his stand on agricultural subsidies.

This is exactly what he did at the time of accepting the July Framework. Two days before the final draft was accepted in Geneva in the early hours of August 1, 2004, he had publicly rejected it. And then, for reasons that remain unexplained, accepted the same draft (with hardly any changes) two days later and called it a ‘victory’ for India.

At the Cancun meet, Arun Jaitley the then commerce minister had taken a tough stand but at the end of it failed to stand firm. In the bargain the G20 countries led by India, Brazil and China failed to take a firm stand and finally reached a compromise on the contentious issue of phase-out of agricultural export subsidies.

If it were not for the walk-out by the smaller African and Caribbean countries, led by Kenya, Arun Jaitley wouldn’t have been able to defend his victorious position that he walked back with.

In the final moments, all that G-20 had managed to extract was a pledge from the rich countries to cap their domestic farm subsidies and eliminate export subsidies on farm goods of export interests to developing countries.

In reality, what the developed countries had promised to give was nothing more than a lollipop.

The promise of a phase-out of export subsidies was even made two years back at Doha, and capping the domestic support would mean that bulk of the $311 billion dollar subsidy that the rich countries provides to its agriculture, would remain.

The meet at Doha surprised one and all. This was due to the defiant and valiant stand taken by India’s Commerce Minister, Murasoli Maran.

He would have all by himself led to the failure of the Doha Ministerial, but at the last minute there was an intervention by the then Prime Minister Atal Bihari Vajpayee.

While the stand taken by Maran may have changed due to the last minute call from New Delhi, the fact is that Maran’s strong conviction who had termed the WTO as a necessary evil made him fight.

He had defied the global community by refusing to submit to unjust pressures, but had to relent at the last minute due to strict orders from the then Prime Minister.