India poll should boost world trade

By Paul Taylor
May 18, 2009

Paul Taylor Great Debate– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

India’s voters have just given stalled world trade talks their biggest potential boost since the financial crisis spurred fears of rising protectionism.

By handing the governing Congress party a decisive victory, unshackled from the Communist party, Indians have created a chance to break a deadlock in negotiations on global commerce that foundered last year on a U.S.-Indian spat over farm trade.

Trade Minister Kamal Nath, whose dogged defence of India’s small farmers helped sink the talks, told Reuters on Sunday: “We believe that it is even more important to conclude the Doha round as one of the measures to extricate the global economic from going into a tailspin, and India is willing to play a leadership role in this.”

The unexpectedly clear Indian vote coincides with signs that U.S. President Barack Obama’s administration, after striking a protectionist tone to appease blue-collar voters, is warming to completing a World Trade Organisation accord. In recent speeches Obama has rightly identified trade as key to pulling the world out of recession.

U.S. Trade Representative Ron Kirk made positive noises on a visit to Geneva last week. He revealed nothing new but said Washington was committed to seeing the trade round launched in Doha in 2001 succeed and he did not want talks to start from scratch or throw away work already done.

He restated U.S. demands that major emerging economies — China, India, Brazil and South Africa — must open their markets more to American exports to achieve a deal. Without tangible benefits for business, it would be hard for Obama to push a WTO agreement through a trade-sceptical Democratic Senate.

The prospect of holding a decisive WTO ministerial before the summer break still seems remote. Before it is worth convening ministers, the United States, India and probably China must thrash out the complex dispute over ways to shield developing nations from a surge in agricultural imports.

This and the equally sensitive issue of cotton, where U.S. subsidies are a big obstacle, were the last two points to be resolved when last year’s WTO talks collapsed. Eighteen other areas had been provisionally settled.

With hindsight, it is extraordinary that the pro-trade Bush administration clinched an agreement on nuclear cooperation with India last year without linking it to a Doha accord. Obama has not set a date for concluding a U.S. trade policy review, but Washington should not squander the opportunity for an early understanding with a more market-friendly Indian government.

5 comments

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Free software foundation and Communist party and politburos work very closely together in India. Infact all the FSF events have communist participants and even chief guests are communists.

Posted by John | Report as abusive

Congress party is voted to power doesn’t mean that they will agree for Agri imports from other countries at the expense of small farmers who on average hold 2 acres per farmer, and at the same time 70% of the population is dependent on agriculture.
If Congress Party goes ahead and inks a deal for Agri imports, this term would be last we see them in government!

Posted by vinod | Report as abusive

Please understand the basic political complexion of the Congress party prior to making wildly optimistic presumptions about their embracing laissez faire. They are essentially left of center politicians.

Mrs Gandhi the Congress party chief has heaped ridicule on those who derided the public sector nature of India’s banking system. Mr Nath has also not minced words in ridiculing the “best practices” used as a selling plank for American free market ideoloogy.

Also take into account the primary reason for the stellar showing the Congress party has had in the rural hinterland in the just concluded polls. They have laid a great deal of emphasis on implementing rural safety nets in the form of assured employment for rural poor, farm loan waivers. The point being rural India where the bulk of the votes are, forms a very important constituency of the Congress party. The probability of their ignoring the interests of this constituency just to embrace American style capitalism/free trade are next to nil if not nil.

Posted by Rakesh | Report as abusive

Mr. Taylor, it would appear your commentators have a much clearer understanding of the political dynamics governing India’s electorate than you do. Quite frankly, I find it hard to believe anyone would want to see nations move towards the American/British form of capitalism. Particularly so in light of Judge Posner, Stiglitz and Krugmans recent publications. Our economic catechism is is much like Catholicism’s. Stuck in obfuscated teachings of centuries past.

Perhaps you might consider rereading the works of Adam Smith and Karl Marx. I also urge anyone to read “Collapse” by Jared Diamond. You might then understand better how we have failed at industrialization and capitalism. As a result, socialism and communism have become the default choices for societies trying to lift themselves out of economic and environmental turmoil.

Environmental impact is the single most important long term consideration for developing and maintaining a sustainable economy. The fates of all societies present and past has been determined by how they used their natural resources. India recognizes this. The U.S. now suffers banking collapses and loss of farm land to drought and soil erosion twice in less than a century. I would call this mismanagement. This is the fruit of unregulated free market capitalism.

Posted by Anubis | Report as abusive

CAN SOMEBODY EXPLAIN TO ME HOW A DEMOCRACY AND A CASTE SYSTEM FUNCTION TOGETHER?

Posted by Eldon Lopes | Report as abusive