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ANALYSIS-Indian polls unlikely to budge WTO stance

Published 11/25/2008, 05:09 AM
Updated 11/25/2008, 05:12 AM

By Charlotte Cooper

NEW DELHI, Nov 25 (Reuters) - Countries hoping regional and general elections might shift India's tough stance in stalled talks to forge a global trade pact are likely to be disappointed, regardless of who wins the polls, trade experts say.

India is a leading negotiator for emerging nations in the struggling Doha round of talks, and its effort to protect poor farmers has been one of the stumbling blocks to agreement.

Now the Congress party-led government faces several tests at the state ballot box, including a vote in central Madhya Pradesh on Thursday in which its trade minister is campaigning, and the whole country goes to the polls by May next year.

But a change of the political guard will not mean a shift in trade policy, experts say, because of a broad consensus across the major parties for the existing stance, not least because the seven-year talks have spanned two different administrations.

"In terms of policies in the Indian political scene I don't think you're going to see any major change," said Biswajit Dhar, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade.

"The policy of the government is important. The minister is merely a vehicle."

Pressure is growing for the World Trade Organisation (WTO) to hold a ministerial meeting in December after leaders of the Group of 20 major rich and emerging economies agreed earlier this month to try to approve the outline of a new accord by year end.

The call came alongside a list of steps to help the world economy ride out its worst financial crisis since the 1930s. A global pact for freer trade is seen as a way to boost confidence and encourage cross-border flows.

NEW TRADE MINISTER?

India Trade Minister Kamal Nath is campaigning in Madhya Pradesh for this week's state vote and is widely seen as one Congress party choice for the top job in his home state should it win, which would take him out of the national cabinet.

"He wants to be chief minister," said Madhya Pradesh political columnist N.D. Sharma.

The vote count is not due until Dec. 8 and a new chief could take office later in the month. In that case Dhar at IIFT expects New Delhi to appoint a new trade minister swiftly or send Jairam Ramesh, junior commerce and power minister, to a WTO ministerial.

"It's important for the government to give the right signals, particularly now when exports are not really doing that well," he said. "They won't want to give the impression they are not giving it the importance it deserves."

Trade ministers came close to a breakthrough in the trade talks last July but the effort failed due to sharp disagreement between the United States on one hand and India and China on the other over the terms of a "special safeguard mechanism" to shield poor farmers against a price-depressing surge in imports.

The focus is on making a breakthrough by year end because once January comes key players, such as the United States with a new administration and India ahead of national elections, will be busy with domestic concerns.

CHANGE OF GUARD BUT NOT DIRECTION

A key concern for India has been to safeguard the livelihood of 600 million farmers and even if it does see a change in national government, Manab Majumdar, senior director at industry lobby group the Federation of Indian Chambers of Commerce and Industry, says its trade position will remain the same.

"Post-election any fundamental change in the philosophy and basic thrust of India's trade policy is unlikely," Majumdar said.

The opposition Bharatiya Janata Party (BJP) was in government when the Doha round first began in the Qatari capital in 2001. The Congress party took the mantle when it won elections in 2004.

"There will be a consensus on that issue (safeguards) and there is a political consensus here on all these issues," Dhar at IIFT said. "There might be some change of nuances here and there but broadly speaking I don't think there'll be any change." (Additional reporting by Alistair Scrutton and Surojit Gupta; Editing by Mark Williams and Jerry Norton)

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