Bumps On The Road To Cancun

Published: The Economic Times, September 06, 2003
By Pradeep S Mehta

AT Cancun, all eyes will be on Arun Jaitley. Not because he is handsome, but because the powers will push him hard for not doing a Maran. The Doha meeting was held to ransom by Maran, and Cancun may witness an encore. Once again, we will need to choose between the Red Fort and the Chandni Chowk, i.e., whether we stand firm on our principles, which may not translate into commercial gains, or enter into some tough bargaining to consolidate and expand our gains.

The Cancun WTO ministerial agenda is again locked in controversies. Our own Doha agenda to get implementation issues resolved has been relegated in a sense. Luckily, the access to medicines debate has been resolved. However, this complex resolution will also become a part of the ‘implementation problematique’. On other issues, some type of movement is taking place, but clearly the battle is going to be tough and hard.

To a large extent, the international political and economic agenda, including the WTO, is driven by the two powerful members: the United States and the European Union. There are bumps on the road, which these two have to clear lest the talks end up in a stalemate. That’s a fact of life, whether we or the swadeshiwallahs like it or not.

Agriculture has always been one of the most contentious issues, which was one of the principal reasons for the delay in the Uruguay Round and for the failure of the Seattle meeting. In spite of much haggling, in the run up to Cancun, the two have arrived at some sort of a deal addressing subsidies, which many including India have criticised strongly. The rather diluted farm deal does not say much on tariffs. The Cairns Group, farm exporting countries, will push hard on tariffs seeking greater market access in both the rich and the poor world. What will happen at Cancun is anybody’s guess but a deal on this will certainly be very crucial for its success.

Another deal, which has been struck between the two giants, and Canada, is on non-agricultural market access, i.e., tariffs on industrial goods such as automobile parts, fishery products, garments, etc. We do not have any problems with this deal and can live with it. We also do not have any problems in maintaining an increasingly liberalising policy to attract foreign investment in the manufacturing sector. However, we do have serious problems with the proposal to multilateralise investment policy. An investment policy is too intrusive and any international agreement can lock in our policy options, which we can ill afford. That is the other strong pillar of our national consensus, our Red Fort thinking of clear opposition.

At Doha, it was agreed that negotiations on investment policy and competition policy can be launched at Cancun if there is an explicit consensus on the modalities of negotiations. Thus investment policy, competition policy and its two stablemates, transparency in government procurement and trade facilitation, are up for grabs at Cancun. We are not opposed only to investment, but to all four of them.

To carry forward our agenda, we are constantly reminded about building up coalitions and alliances with like minded countries. History and realpolitik shows that each country will follow its own self-interests and leave India alone at the end of the day.

EU has been asking for a deal on the four Singapore issues, altogether, as a sort of quid pro quo against its ‘sacrifices’ in agriculture. As part of a wider deal, the US may go along with EU, being supported by Japan and Canada. Thus EU will push hard for its adoption at Cancun, and then what will we do? What we can do is to put on our Chandni Chowk thinking topi and firstly ask for unbundling of the Singapore issues.

Just a few days ago, the US has agreed to unbundle and move on trade facilitation and transparency in government procurement dropping investment, but proposing a peer review process for competition. One is not too sure if the EU will go along with the US on both, but would have to agree to drop investment. If that happens, then it will be wise on our part to agree to the launch of negotiations on competition, trade facilitation and government procurement with a very limited agenda, as has been agreed at Doha. Each of these pacts can enhance welfare without creating problems for our own policy space.

Further, as each of these three pacts will also include special and differential treatment provisions, we will need to get an article of good faith expressed by the rich to agree to strike deals on the pending agenda of implementation issues and SDTs, before we agree to negotiate.

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