The Financial Express, August 18, 2003
By Pradeep S Mehta
The President and the Prime Minister want India to be a developed country by the year 2020. How we approach the World Trade Organisation (WTO) will be of crucial significance in this journey.
As Cancun approaches, our commerce ministry is engaged in a last minute fire-fighting exercise. Commerce minister Arun Jaitley believes that there is a national consensus: that we should continue to harp on agriculture and we should oppose an investment agreement. Let’s examine the content and the process with which Jaitley has approached these issues.
The ministry got a grant from UK’s DFID to do coalition building with countries over contentious issues that we feel are necessary to either push the WTO members or to stop them from bringing on board. Several meetings have been organised in association with UNCTAD, for example to: a) push for inclusion of our geographical indications and traditional knowledge in the TRIPs pact; b) stop an investment pact from being taken up.
One can’t forecast any results from such ventures, but our national position have been re-stated quite well. As for success, countries are self-centred and when push comes to shove, they could easily change their stance. Whether it was the Singapore Ministerial (1996) or Doha Ministerial (2000), in the last lap India has been isolated. Our allies have crumbled under pressure or allurements.
What hasn’t been done is to build a coalition nationally. The ministry is engaged in last minute consultations without finding the time for a two-way learning and exchange process. In Jaitley’s recent meeting with trade union leaders, even INTUC suggested that India should walk out of the WTO. This portentuous advice has been often stated by the Swadeshi elements including the BMS. The problem runs across the board and is often reflected in our language press, which few policy makers ever read. The world’s trade ministers agreed at Doha thus: “We shall therefore at the national and multilateral levels continue to promote a better understanding of the WTO and to communicate the benefits of a liberal, rules-based multilateral trading system.” Despite the clear intent, we have done very little to educate our people.
Our inherent weakness is that trade policy is run by generalist civil servants from various services: administrative, foreign, revenue, and economic. None has sound experience of the dynamics of trade policy or the science of economics and law on negotiations. A cadre-based trade service exists, but its involvement is at a considerably lower level. The shots are called by the Brahmins. Some of them are arrogant, one can’t even ’educate’ them. There is little institutional memory. Understanding of nuances is at a premium, but there is not a single officer in the ministry who was at Seattle. Fortuitously, some of them are at our mission in Geneva, but then Delhi’s bureaucrats call the shots.
The advisory committee on international trade, of which I am a member, was summoned after after 19 months on 8 August, 2003, just one month before the D-day. The last one had taken stock of what had happened at Doha. In the interlude the ministry set up consultative groups, but their reports have never been discussed publicly.
The notes put up by the ministry at these meetings are also exclusively on what they think and not what the rest of the WTO members think. There is little fresh air and/or challenge thus depriving the ministry of good advice. The world recognises the role of NGOs. But our government behaves like an ostrich. Despite repeated demands and assurances, the ministry refuses to enlist NGOs on the official delegation. Business interests continue to find a place. All developed country governments have various non-official interest groups nominated in their official delegation. Many developing country governments too have started doing this. This helps to convey these government’s sincerity and builds up national and international coalitions. One can’t forecast anything in the WTO until it happens. Things will move fast as we come closer to the D-Day. A crucial issue is the agreement on agriculture and how the grass gets trampled when the US and the EU fight.
After three weeks of talks, both have put forward a joint paper at Geneva. The paper hasn’t met with the world’s expectations. India has — rightly — criticised it. The Cairns Group (an alliance of developed and developing country agriculture exporters led by Australia) has also howled. Some haggling will now ensue, but a deal will be struck.
The US, EU and Canada have also struck a deal on non-agricultural market access. These were two of the contentious issues in the Doha to Cancun trail. (Issues of our interest such as implementation, TRIPs etc have not got the same steam). Look at the political impact of these on Cancun and what India should do. Firstly, the EU has been wanting negotiations launched on the four Singapore issues: investment, competition, trade facilitation and transparency in government procurement. That might be agreeable to the US as part of the agricultural deal, though there would be nuanced differences on how to approach each of these issues. But that is no big deal as the contours of the possible agreement will be shaped over the next few years. Secondly, the EU is not in favour of unbundling the package of the four Singapore issues, which is perhaps a tactical rather than strategic move.
India has been a vocal opponent to the four Singaporeans, most vehemently the investment accord. That is also reflected in the national consensus. Thus we need to see what we could gain or lose if we strategically signal our acceptance to move on the rest of the three issues. Perhaps the EU may relent, and feel happy that they could get something rather than nothing. However, as the US is also a demandeur for a high standard investment agreement, we may need to put that on a slower track than the others. That can be done only, if we can put forward an alternate proposal on the table rather than opposing by arguing on principles and rhetoric.
When Jaitley had visited China in June, there was understanding that Beijing will be our ally in this effort. But subsequently this changed to a Kamraj type of attitude: parkalaam (let’s see). For China, WTO commitments will help them to reform their domestic agenda. This might even apply to us.
I am not suggesting that we should also proceed in the same manner, but we can’t ignore this altogether. Someone will need to do some quick thinking about how we would like to see these issues in 2020, when we join the rich man’s club. Imagine, if we become a net capital exporter, will we need the protection of a multilateral framework on investment. Or if we see that our economic development will be hampered by increasing cross-border anti-competitive practices, a suitably-drafted multilateral competition policy can actually help us. On trade facilitation there is a consensus that it will only help our traders by reducing delays, while on transparency in government procurement it can only increase welfare.
Once again, by saying “no! no!!” and then getting dragged in kicking and screaming will not show us well. What we do at Cancun should be pragmatic and in line with the vision for India in 2020.