Arm Twisting and Horse Trading Gain Momentum

Financial Express, November 12, 2001

By Pradeep S Mehta

Despite all the howling, countries are engaged in specific talks on the controversial text of the draft ministerial declaration being negotiated here. Arm twisting and horse trading tactics are accelerating as the D-Day approaches. Countries are reexamining their positions as any trader would, when selling or buying.

China, which was formally admitted into WTO on Saturday, has already sounded its support for a new round. Till a few weeks back, it was part of a G-77 statement opposing a new round. That appears to be an example of what countries can do, when carrots (or sticks) are offered. With a 4 percent share of the world trade, China is looking at doubling its share over the next ten years, and that is the main reason behind its progressive rather than a defensive stance. How much of this has sunk into the traditional allies of China, if there are any, will be seen over the next two days.

India, which is otherwise on a sustained offensive, had signaled a change, a very small one, that it was ready to look at issues as a package in spite of its disappointment.

This was stated by commerce minister Murasoli Maran, in his speech at the opening plenary in the context of implementation issues. Whether India will change its hard line position remains a million dollar question. Pundits feel it won’t and in that process may get isolated..

Maran is confident that it is not losing the support that it has been enjoying from the African Group and the Like Minded Group, but he appears to be nave that they will not change their position quietly when offered incentives, lures and threats.

At Singapore ministerial conference, from where a lot of troublesome baggage comes, Malaysia was a strong supporter of India that there was no need to even discuss investment and competition. However, when it came to signing on the dotted line, its stand changed. Malaysia explained to India that it was only a study process and so one need not worry and secondly words: ‘explicit consensus’ were added as a part of the language for the purpose of negotiations.

India continues to harp that there is no explicit consensus on negotiating investment and competition therefore the study process should continue for some more time. With a fresh onslaught by Malaysia the position of the European Union on investment and competition has also softened, and perhaps there may not be any agreement to negotiate them over time.

The USA was in any case not a demandeur for both the issues, but was willing to go along as a trade-off with EU to get its hands onto the agricultural subsidies. That leaves EU with a little room to manouver.

Under the present situation, EU is now harping on getting a better deal on environment so that it can a) carry its members and the civil society along and b) create more rules-based barriers for agricultural imports into its domain.

The USA is not too happy about it, as much as many developing countries, and we will see how things move in this complex game of trade-offs only by Monday.