THE COLLAPSE AT DOHA

On July 29, 2008, the 8th Doha Development Round organized by the World Trade Organization, held in Geneva, Switzerland collapsed due to disagreements of India & China with the U.S. over the Special Safeguard Mechanism (SSM).

A failure in agreement regarding the threshold which would allow the SSM to be used triggered the collapse with the U.S. blaming India and China for being steadfast in their position on the issue. With both sides rejecting any compromise the talks collapsed with Susan Schwab, U.S. Trade Representative being quoted as saying, 'In the face of global food price crisis, it is ironic that the debate came down to how much and how fast could nations raise their barriers to imports of food.' and calling the attempts by India & China as 'blatant protectionism'.

India and China depend heavily on agriculture, with India having 60% of its workforce and China having 45% of it population in agriculture. Because of huge populations, countries like India and China can not meet the food requirements for its population and as a result have to import from other countries. Countries, like the U.S. and the European Union, export food grains to India and China. These exporters knowingly or unknowingly resort to 'dumping' which is the practice exporting a good at a relatively lower rate compared to the rate of the good manufactured in the importing country. Dumping and large import volumes decrease the price of a good or commodity, thereby hurting local producers of the same commodity.

In order to protect farmers in low-income countries like India and China, Mexican Foreign Minister Lois Ernesto Derbez, in September 2003, suggested the establishment of a special agricultural safeguard which came to be known as the Special Safeguard Mechanism.

According to the SSM, whenever the import price of a commodity falls below a certain threshold or if the import volumes increase to a certain level, the SSM is triggered. The SSM automatically applies additional duty to imports to keep the price of the commodity from falling further.

The stance taken by India and China was severely criticized and was seen as a demonstration of the power and influence that China and India have on the international economic agenda, although India's Minister of Commerce Kamal Nath defended India's stance saying, 'I'm not risking the livelihood of millions of farmers.'

A question that needs to be asked is, 'Is the government's (of India) stance genuine, in view of the plight of Indian farmers, or is this just a performance executed by the Congress Party keeping in mind the imminent general elections in 2009?'