Financial Express, September 06, 2001
By Pradeep S Mehta & Pranav Kumar
The reverse countdown to the fourth World Trade Organisation (WTO) Ministerial Conference has begun without any agreement on the agenda. Even the European Union and the United States, the world trading giants, have not been able to overcome their major differences over the Agreement on Agriculture. Already a sense of panic seems to be taking grip on the international trading community. Before the summer break, Mike Moore, director-general of WTO, urged members “to get real” on agreeing the agenda. A second failure to launch a global trade round, he said, following the failure in Seattle in 1999, “would certainly condemn us to a long period of irrelevance”.
Though India’s share in global trade is slightly over half-a-per cent, it has emerged as an influential voice in the international trading community. What is India’s latest stand vis-a-vis the agenda? “No” to a new round unless implementation issues are resolved satisfactorily, and “No” to negotiations on the so-called ‘new’ issues, i.e., competition, investment, trade facilitation and government procurement. However, different shades of opinion are becoming apparent among Cabinet members. The entire world is looking to India as a leader of the developing world and a major potential force in future global trade. India must realise that it is now time to take concrete steps rather than engaging in set-piece rhetorical exchanges.
The WTO is a forum to bargain and negotiate. In this environment, principles take a back seat to a realistic assessment of what is best for the country. Yet India’s steadfast resistance over the two years since the Seattle Ministerial has hardly softened, leaving no room for the give and take that trade talks necessarily involve. This is hardly the realistic approach that a successful trade negotiator requires. Indian policy-makers need to weigh up carefully the potential gains and losses of this approach to key groups— consumers, farmers, manufacturers etc. The opposition may sound better than it actually is, given the alternative.
Some of the influential developing countries like South Africa and Egypt have shifted camps from the no-round camp to yes-round camp. Some are crediting the shift to arm-twisting by the US or EU, but it may also be the result of a reassessment of their national interests.
One of the main reasons for opposing the new round is non-implementation of Uruguay Round Agreements. The logic sounds fine: you should not give away more until you get what you were promised. But what is our end objective? The successful resolution of implementation issues. Progress outside the context of a round of trade talks has been limited. Recently, the least developing countries (LDCs) have won duty and quota-free access for an extended range of products to the EU under the Everything But Arms (EBA) proposal, but three of the most important items (rice, sugar and bananas) have been excluded.
The strategy of resisting a new trade round has yielded some results, too, at least in terms of attracting attention. Robert Zoellick, the US Trade Representative, probably would not have visited India had she been supporting the new round. He has offered some concessions to India within the unilateral Generalised System of Preferences (GSP) programme. Duty-free access to the US market under GSP is to be restored on 42 products including carpets, jewellery and leather. This decision by the US government is almost certainly intended to convert India into a supporter of the new round. However, there are no guarantees under this system—the privileges can be withdrawn as quickly as they were granted.
Another reason behind the resistance to the new round was to stop the US and others pushing labour standards onto the agenda.
However, it looks increasingly likely that this highly contentious issue will not be included in the talks. Developing countries have made a strong case against the linkage at the WTO and dug their heels in.
India needs to assess what there is to gain from holding its ground at this stage. Can any more concessions be wrung from the developed countries? What kind of pressure will India be able to exert if other influential countries are all in support? In theory, the agreement of all the members of the WTO is needed to start a new round and, even alone, India would be able to put on the brakes. In practice, countries which see gains from trade liberalisation will find ways to move forward, inside or outside the WTO. Isolation is not the issue; results are. China, for example, was able to develop very successfully outside the WTO. China stood apart when it served the national interest, now, it is willing to accept the conditions for joining.
India needs to conduct the same clear-headed analysis with regard to the new round. Indian policy-makers should also develop maximalist and minimalist positions on all of the issues that might arise. Even if a new round is not launched, mandated reviews of agriculture, Trade Related Intellectual Property Rights, services etc. will have to go ahead. A more flexible approach would allow negotiators to respond better to the situation as country coalitions shape up at WTO. India should approach the Doha meeting as an opportunity. It has a renewed strength in the international community. Perhaps it is for the first time India’s voice is being given a significant weight in international trading community. This will allow Indian negotiators to bring home real benefits for the country if they are given the flexibility to engage in agenda formulation and to engage actively in any subsequent negotiations, right from the beginning.