Doha Round of trade talks will be judged by one simple test â€” does it enable poor states to sell more of their goods overseas, creating more jobs? If the answer is â€˜yesâ€™, it will succeed in enabling South Asiaâ€™s 400 million poor come out of abjects poverty over the next decade. If the answer is â€˜noâ€™, the talks will be considered failed. It is a decisive moment as the World Trade Organisation (WTO) ministerial meet is just six weeks away. South Asian countries have a unique opportunity to make the trade talks a success. Especially India has an opportunity, along with Brazil and China, to play a leading role in the developing-country grouping of G20. Since it started trade reforms in the 90s, India has grown rapidly and is now a major global palyer. Just as India has much to gain from global trade reforms, it has much to offer in terms of market access, being a large economy with significant agricultural protection (average ag-ricultural tariffs are 40 per cent).
Along with its G20 partners, India can propose a â€˜grand bargainâ€™ â€” liberalising manufactures, agriculture and services in exchange for rich countriesâ€™ eliminating agricultural subsidies and barriers to trade and maintaining openness to Indiaâ€™s booming service exports. The result will lead to a major boost in global economic growth. But free trade is not a panacea. To maximize the benefits of trade for increasing growth and reducing poverty, South Asian countries need to make progress in their own development agenda. They need to complement
their trade agreements with investments and reforms in education, health, trade infrastructure â€” better ports, roads and customs â€” as well as governance and to ensure that the poor have the means to take full advantage of the new opportunities arising out of greater and better trade.
Bangladesh, as a member of the LDCs, has a vital role to play. It can show, by example, how increased access to developed nationâ€™s market enables a poor state to capitalise on its own reforms and make a difference. Thanks to domestic reforms and preferential access to developed-country markets, Bangla-deshâ€™s ready-made garments industry has expanded rapidly, employing two million women and touching the lives of nearly 10 million. Yet today Bangla-deshâ€™s garment exports to the US face tariffs ranging from 15 to 30 per cent. The US collects the same tariff revenue from its $2 billion of imports from Ban-gladesh as it does from its $26 billion of imports from France. If Bangladesh got duty-free access, its exports would increase by 90 per cent in three years, cr-eating 600,000 new jobs. Even if US tariffs were reduced on a â€˜most-favoured nationâ€™ basis, it would be a major step. The international community can he-lp by making additional â€˜aid for tradeâ€™ available along the lines called for at the G-8 summit.
If the rich states see opening the markets only in terms of pl-easing their domestic interest groups, the talks could fail. By showing that it can continue reforms, South Asia can and sho-uld use its role to get developed states to open up their markets.
(The writer is chief economist, South Asia Region, World Bank)