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Monthly Newsletter Volume 3 No 11 • December 2008

India vs Other Countries: A Comparison

Contents 10
IMF Projections on GDP Grow th

WTO NEWS 6
In Percent
4
• Doha Development Round: The Year
2
Gone By, Looking Back to Move
0
Ahead ...................................................... 2
-2
World US European Unit ed Japan Russia China India Brazil

• Dispute Settlement: Checking the

Out put Union Kingdom

2008 2009
Dragon .................................................... 3
SOURCE: IMF

IMF World OUTLOOK PROJECTIONS

FTA NEWS (November’08)

Country/Region 2008 2009

• India – ASEAN FTA: (In Percent) (In Percent)
Scheduled Launch Postponed .............. 3
World Output 3.7 2.2

US 1.4 -0.7

European Union 1.5 -0.2

AROUND THE GLOBE
United Kingdom 0.8 -1.3
• Climate Change: Saving the
Japan 0.5 -0.2
Mother Earth ......................................... 3
Russia 6.8 3.5

China 9.7 8.5

India 7.8 6.3

Brazil 5.2 3

SOURCE: IMF

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 WTO NEWS
Doha Development Round
The Year Gone By: Looking Back to
Move Ahead
The year 2008 will go down in history, as the year
of missed opportunities for the seven – year – old
Doha Development Agenda of the World Trade
Organisation (WTO). After coming so close to
striking a deal in July 2008, during the mini
Ministerial meeting in Geneva, the Round faltered
over the issue of safeguarding the livelihood concerns
of marginal farmers in developing countries. Since
then the negotiations have picked up briefly, however
the conclusion still remains elusive.
Mr. Pascal Lamy, Director General, World Trade
Organisation officially conceded, that there will be
no conclusion of the Round in 2008. He told a
meeting of the Trade Negotiating Committee that
work of negotiators will continue in the New Year.
“Concluding the Round should remain our focus in
2009,” he said, “but this endeavour takes place within
a more global portfolio of WTO activities.”
2008 in Retrospect: A Year of Up’s and
Down’s for Doha
2008 saw a sense of urgency among the member
nations of the World Trade Organisation (WTO) to
conclude the Doha Round of negotiations in 2008.
The new Texts on agriculture and NAMA
negotiations, released on 8 February 2008 paved the
way for intensive negotiations over the next three
months till May’08.
Based on the progress made in the negotiations, new
revised Texts on agriculture and NAMA were
released in May 2008. The industry from developing
countries hailed the revised agriculture text and
commended agriculture Chairman Ambassador
Crawford Falconer for his approach. However, the
new NAMA text included many clauses (such as
anti-concentration, sectorals, dilution of flexibilities),
which compromised the development dimension of
the Doha Round. Hence the industry in developing
countries expressed its dissatisfaction with the revised
NAMA text.
The unsympathetic approach of the NAMA
Chairman Ambassador Don Stephenson towards the
interests of sensitive industrial sectors in developing
countries was reflected again in his new revised Text
on industrial goods released on 10 July 2008. As in
the May Text, the new text included several clauses
that would have pouts sensitive industrial sectors in
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developing countries at risk.
The highlight of 2008 was the mini-Ministerial
meeting in Geneva from 21 July 2008 to 29 July
2008. The nine-day long meeting, longest in the
history of WTO, came so close to convergence that
at one point it looked certain that the Doha deal will
be sealed. This was after WTO Director General
Mr. Pascal Lamy, released his convergence formula
on 25 July 2008. However, in the end the issue of
trigger point for safeguarding the interests of small
and marginal farmers in developing countries proved
to be a stumbling block and the Ministerial meeting
ended in a deadlock on 29 July 2008.
A delegation of the Confederation of Indian Industry
(CII) was in Geneva during the mini-Ministerial
meeting of the World Trade Organisation (WTO).
The delegation comprised of members including
automotives (Society of Indian Automobile
Manufacturers (SIAM)) and automotive components
sector (Automotive Components Manufacturers
Association (ACMA)). During the Ministerial
meeting the CII delegation signed a joint declaration
with industry associations from South Africa and
Argentina, which called upon the developed world
to show leadership and uphold the development
dimension of the Doha mandate.
After the Ministerial meeting Mr. Lamy was in India
on 12 and 13 August 2008 to garner support for the
Doha Round. While addressing a group of senior
CEO’s of India Inc at a closed-door meeting
organised by CII, Mr. Lamy urged India and the US
to “try to understand each other, at the political level,
because this is a political discussion that has to
translate into a technical discussion, not the other
way around.” He expressed optimism that deal was
still possible by 2008 end.
The G 20 meet in Washington on 15 November
2008, in response to the global financial meltdown
gave a fresh hope for the Doha Round. In its joint
statement the G 20 leaders called for agreeing on the
modalities of the Doha Round by end 2008. The
fresh impetus given by the G 20 meeting led to a stir
of activity at Geneva, with talks of another Ministerial
Meeting in December 2008.
However, on 8 December 2008, Mr. Lamy put an
end to all speculation on the possibility of another
Ministerial meeting in December. He said, at an
informal meeting of heads of delegations on 12
December 2008, that he had not “detected the
political drive” for a final push towards agreement.
Dispute Settlement
Checking the Dragon
The WTO’s Appellate Body upheld an earlier dispute
panel ruling against China in an on-going battle with
Canada, the EU and the US over auto part tariffs.
The seven-member Appellate Body recommended
that China bring its import duties on foreign auto
parts into “conformity with its [WTO] obligations.”
Beijing now has a ‘reasonable period of time’ to
comply with the ruling, after which a different WTO
panel will determine whether the country is still in
violation, in which case the complainants could be
allowed to impose retaliatory tariffs.
“The WTO Appellate Body confirmed that China’s
discriminatory taxation of US auto parts is
fundamentally at odds with core WTO principles,”
US Trade Representative Ms Susan Schwab said in
a statement.
“International trade must be a two-way street. Both
the United States and China benefit from our trade
relationship, but as this dispute makes clear, when
China adopts measures that unfairly restrict US
exports, we will not hesitate to use all available tools
to ensure that China complies with the rules of the
international trading system,” Ms Schwab said.
EU Trade Commissioner Ms Catherine Ashton also
FTA NEWS
India – ASEAN FTA
Scheduled Launch Postponed
The signing of the India – ASEAN Free Trade
Agreement (FTA) has been deferred until March
2009, after an indefinite postponement of the 14th
ASEAN Summit scheduled in December 2008 in
Thailand. The ASEAN summit has been postponed
after the news of sacking of the Prime Minister of
Thailand, Mr. Somchai Wongsawat by the
Constitutional Court.
The FTA between Indian and the 10-member
AROUND THE GLOBE
Climate Change
Saving the Mother Earth
Ministers and officials from 189 countries wrapped
up climate change discussions in the early morning
hours of 13 December 2008, having made unexpected
progress on the terms of the UN Adaptation Fund
Trade Talk
welcomed the ruling: “China should now put an
end to the discrimination and ensure a level playing
field in its automotive sector,” she said in a statement.
In September, Beijing appealed a July dispute panel
ruling that found Chinese auto tariffs to be in
violation of WTO rules and China’s scheduled tariff
commitments. Beijing’s duties on foreign auto parts
were first challenged by Canada, the EU and the
US at the WTO in 2006, a year after China enforced
a system of levying tariffs on auto parts based on the
number of imported parts used in completed
vehicles.
Canada, the EU and the US argued that China
violates international trade law by charging a 25
percent tariff on auto parts that account for 60 percent
or more of the value of an entire vehicle. In all other
cases, China charges a 10 percent tariff on the parts.
The complainants also said these policies discriminate
against foreign auto parts producers, as they
effectively subsidise domestic production, pressure
foreign auto part producers to relocate to China,
and contravene China’s WTO accession promise “not
to treat parts as whole cars.”
However, Beijing had argued the duties were
necessary to stop the import of whole cars in chunks,
which would also circumvent the higher taxes on
finished cars.
ASEAN was all set for the launch from 1 January
2009, if the 14th ASEAN Summit was to be held as
scheduled from 16th December 2008.
The negotiations for India – ASEAN FTA were
successfully concluded on 28th August 2008. India’s
FTA with ASEAN would remove import duties on
71 per cent of products by December 2012 and on
another 9 per cent by 2015, while duties on 8-10 per
cent of products that would remain on the sensitive
list would drop to 5 per cent. Bilateral trade between
India and ASEAN annually amounts to about US$ 38
billion and is likely to reach US $50 billion by 2020.
and marginal movement towards an agreement on
technology transfer.
The 14th Conference of the Parties to the United
Nations Framework Convention on Climate Change
(UNFCCC), or COP-14, was expected to provide
delegates with a venue to reflect on 2008 and make
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 solid commitments for the next 12 months leading
up to COP-15 in Copenhagen next year. With a
less-than-expected presence from US President-elect
Barack Obama’s delegation and global economic
uncertainty still casting a shadow over negotiations,
significant progress that environmentalists had hoped
for remained elusive.
Nevertheless, planning for 2009 was fruitful, with
widespread agreement that regular meetings should
be held throughout the year, with a possible major
conference being held in September.
Negotiators Clinch Deal on Adaptation Fund
Delegates finally agreed to provide the UN
Adaptation Fund board with the capacity to grant
developing countries access to funds earmarked for
climate change adaptation. The Adaptation Fund is,
essentially, a pot of money meant to protect
developing countries against the potential impacts of
climate change. The funds have been accumulated
from voluntary contributions and a two-percent
allocation from the Clean Development Mechanism
(CDM) - a market mechanism under the Kyoto
Protocol that allows industrialised countries to receive
credit by investing in emissions reduction projects
in developing countries.
Heading into Poznan, developing countries were
generally unhappy with the prospect that the World
Bank might manage the Fund. Developing countries
subsequently submitted a proposal to allow them to
access the funds - approximately US$80 million -
by applying directly to the Adaptation Fund Board.
Developing countries will be able to apply for funding
for projects in the course of 2009.
While some observers are calling this boost in the legal
capacity of the Adaptation Fund Board an important
achievement, others say they are disappointed by
governments’ inability to reach a consensus on using
proceeds from other flexibility mechanisms of the Kyoto
Protocol (i.e., emissions trading and joint
implementation) to aliment the fund.
According to the UN, adaptation to climate change
in developing countries requires US$86 billion in
funding each year. Further funding streams for
adaptation are expected to be decided in Copenhagen
in 2009.
Poznan Leaves its Mark on Technology Transfer
Technology transfer, which was widely expected to
monopolise the COP-14 agenda, saw some progress
when Parties endorsed the Global Environment
Facility’s “Poznan Strategic Programme on
Technology Transfer.” The programme seeks to scale
up the level of investment in technology transfer in
order to help developing countries address their
needs for environmentally sound technologies to
mitigate and adapt to climate change.
But despite this progress, some green groups
expressed their concerns that developed countries
made no specific proposals detailing how much
finance they would provide for technology transfer.
A major coalition of developing countries – the G77
and China – has called on the industrialised nations
to divert as much as 1 percent of their gross national
product (GNP) to help finance emissions reducing
technology projects in the developing world and
many observers say finding this still-elusive magic
formula will be key to reaching consensus in
Copenhagen.
Moving Forward
Parties agreed to step up their efforts in 2009 to
create the necessary momentum for consensus in
Copenhagen.
When addressing delegates on 11 December, UN
Secretary-General Ban Ki-moon expressed his
concern that Parties would need additional stimulus
to reach consensus and suggested that a high-level
pre-Copenhagen meeting be convened in September.
Ban has been quick to point out that current global
instability should be used as an opportunity to move
climate change negotiations forward.

DISCLAIMER: The data and news used here are from various published and electronically
available sources. We have taken care to verify and crosscheck the accuracy of these reports
and data. However, despite due diligence, the source may contain occasional errors. In such
instances, CII is not responsible for such errors.
Kindly send in your queries and suggestions to
Confederation of Indian Industry
International Trade Policy Division
The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi - 110 003, INDIA
Tel: +91 11 24629994-7 • Fax: +91 11 24626149 • Email: tradetalk@ciionline.org
www.cii.in
Published by Confederation of Indian Industry, The Mantosh Sondhi Centre, 23, Institutional Area, Lodi Road, New Delhi - 110 003
January 2009

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