As I was reading the papers this morning, I realized that one piece of news dominated all the papers. The global trade talks, or the so called Doha, failed after 7 years of on-again and off-again negotiations, as none of the countries could reach an understanding. But all the articles I read blamed primarily India and China. I was laughing to myself as it looks like not many people have an understanding of the real reasons of why the talks failed. Why blame India and China?? The US is probably frustrated that they are not able to impose their will on the entire world anymore given that India, China and Brazil have emerged as trading powerhouses. The Doha talks aim to open markets for farm, manufactured goods and services around the world but have struggled to overcome differences between rich and developing nations.
The issue at hand was simple. Developing countries like India and China were asked to reduce tariffs on agricultural and industrial goods, which in turn would allow developed countries like the US, France and Britain to gain access to these markets. India and China however wanted a safeguard clause that would allow them to raise the tariffs in case there was a sudden surge in imports which would threaten their farmers in the domestic market. The US wanted to set the trigger at 40% while India and China wanted it to be set at 10%. No one could agree on the SSM (Special Safeguard Mechanism) and the talks broke down.
The criticism may sting, but the two Asian giants are not likely to succumb to overseas pressure. Both countries enjoy high economic growth, thanks to overseas demand for their manufacturing and outsourcing services. One fact that no one is talking about is that in 2003, the US did the same thing i.e. they invoked a so-called “safeguard” rule to prevent an increase of Chinese textile imports that threatened to put the US manufacturers out of business. So when India and China now want the same safeguard clause, the US is refusing to accept the Chinese and Indian position. Indian and Chinese leaders also have to worry about economic hardship of their farmers as they have struggled to compete against imports from the U.S. and other countries. It's interesting that China and India are being blamed for the failure of these negotiations - the real culprits are the massive farm subsidies in the US and Europe. The playing field is heavily biased in favor of developed nations which give out subsidies to their own farmers while trying to pry open markets in poorer parts of the world. The Americans and Europeans were pretty much asking weaker countries to dismantle their own protection measures without doing the same in their own countries. I'm glad India, China and Brazil had the clout to say no.
While the US has a mere 2% of its population who are farmers (and even they are rich), India has more than 50% of its population doing agriculture and earning less than $2 a day (There are 700 million people who directly or indirectly depend on agriculture in India).China has approx. 500 Million people living in countryside with no basic amenities. Lowering tariffs and giving subsidies will pretty much bring more than half the population in these countries to their knees.
America having the biggest economy in the world was making its own rules through the WTO and was changing them as they saw fit. Again, nothing wrong with that but as China and India builds a larger economy, expect them to do the same.
The issue at hand was simple. Developing countries like India and China were asked to reduce tariffs on agricultural and industrial goods, which in turn would allow developed countries like the US, France and Britain to gain access to these markets. India and China however wanted a safeguard clause that would allow them to raise the tariffs in case there was a sudden surge in imports which would threaten their farmers in the domestic market. The US wanted to set the trigger at 40% while India and China wanted it to be set at 10%. No one could agree on the SSM (Special Safeguard Mechanism) and the talks broke down.
The criticism may sting, but the two Asian giants are not likely to succumb to overseas pressure. Both countries enjoy high economic growth, thanks to overseas demand for their manufacturing and outsourcing services. One fact that no one is talking about is that in 2003, the US did the same thing i.e. they invoked a so-called “safeguard” rule to prevent an increase of Chinese textile imports that threatened to put the US manufacturers out of business. So when India and China now want the same safeguard clause, the US is refusing to accept the Chinese and Indian position. Indian and Chinese leaders also have to worry about economic hardship of their farmers as they have struggled to compete against imports from the U.S. and other countries. It's interesting that China and India are being blamed for the failure of these negotiations - the real culprits are the massive farm subsidies in the US and Europe. The playing field is heavily biased in favor of developed nations which give out subsidies to their own farmers while trying to pry open markets in poorer parts of the world. The Americans and Europeans were pretty much asking weaker countries to dismantle their own protection measures without doing the same in their own countries. I'm glad India, China and Brazil had the clout to say no.
While the US has a mere 2% of its population who are farmers (and even they are rich), India has more than 50% of its population doing agriculture and earning less than $2 a day (There are 700 million people who directly or indirectly depend on agriculture in India).China has approx. 500 Million people living in countryside with no basic amenities. Lowering tariffs and giving subsidies will pretty much bring more than half the population in these countries to their knees.
America having the biggest economy in the world was making its own rules through the WTO and was changing them as they saw fit. Again, nothing wrong with that but as China and India builds a larger economy, expect them to do the same.
2 comments:
Considering the fact that it could be more accurate in giving informations.
do let me know what fact, if any, has been misrepresented in the article...
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