‘Cut subsidies to save trade talks’

Washington, April 16:

India has called upon developed countries to take the lead to save the Doha round of world trade talks by reducing massive trade-distorting subsidies provided to their agriculture sector.

“It is in everyone’s interest to save the Doha Round,” Indian finance secretary Ashok Jha told the development committee of World Bank-International Monetary Fund (IMF) as the group concluded its two-day long spring meetings here yesterday.

The Bank and the Fund should continue to focus their advocacy and research on highlighting the perils as also the development potential of trade liberalisation, he said noting that a deadline for delivering on the development promise of the Doha Round had been missed again. Developing countries are strongly committed to a rule-based global trading system and have demonstrated their willingness to be flexible in arriving at an early positive conclusion of the Doha Round, Jha said.

It must be recognised that for several of the world’s poor, agriculture is not simply a commercial activity but a way of life and a means of subsistence, he said. The outcome of the Doha round has to factor this in and ameliorate the distress of large sections of the world’s poor.

Noting that the pace of global economic growth remained strong during 2006 and exceeded initial estimates, Jha said among the emerging markets, China and India continued to contribute substantially to the growth momentum.

However, the threat of risks lingers and needs to be addressed through national policy responses and coordinated effort at the international level, he said. The benign financial conditions that underpinned global growth may change as evident from the recent bouts of volatility in the financial markets.

While risks remain, the present favourable global economic conditions provide an opportunity to developing countries to further strengthen their policy frameworks, so as to effectively address the many challenges for achieving the Millennium Development Goals (MDGs), Jha said. He noted with happiness that a strong overall per capita GDP growth of 5.8 per cent in developing countries in 2006 mainly supported by high growth rates in East Asia and South Asia Regions.

While the ultimate responsibility of achieving the MDGs rests with the developing countries themselves through streng-thening policies and institutio-ns, the role of donors in enhancing the volume, quality and predictability of aid and harmonisation is equally important.

Donors’ action, especially the large ones, appears to be lagging their commitments of 0.7 per cent of gross national income as ODA, he regretted. The Bank must be careful of not being too prescriptive in an effort to achi-eve results. It’s activities should firmly reflect a country’s priorities as captured in its national plan and strategy, Jha said.