Published: The Economic Times, February 9, 2002
By Pradeep S Mehta
CUTS Centre for International Trade, Economics and Environment
It is unwise and unfair to say that a negotiating strategy based on alliances with other developing countries is meaningless (“Keeping the trade cart firmly before the horse”, Narendar Pani, ET, January 11).
On the contrary, that strategy got India a far better result at the Doha Ministerial Meeting of the WTO than any she could have got otherwise. That same strategy will also be useful in handling the Doha Development Agenda, whose algebra will need hard bargaining. Coalitions, alliances on dimensions of development among like-minded countries will be crucial.
Most developing countries who were in the alliance in the run-up to Doha left India by the end, but only due to last minute pressures from developed countries on whom they are dependent for trade, investment and aid. But they had been firmly behind the positions of like-minded countries — India included — in the run up to Doha; otherwise the majority of the gains on issues like implementation, TRIPs and public health would have eluded us.
Developing countries tasted blood when the election of the director general was held up despite pressures from rich countries. That set a new precedent in September 1999: two DGs were elected, each for 2-year terms.
Thailand’s Supachai Panitchpakdi is to succeed Mike Moore in September 2002. The Seattle Ministerial’s failure in December 2000 also buttressed the developing world’s self-esteem and gave them the confidence to assert themselves. Thus, the ghost of Seattle dictated what was to happen at Doha.
Implementation issues, a part of the Seattle/post-Seattle agenda, needed a prior negotiating framework. India knew that only a new agenda would allow progress on old issues. Secondly, WTO members did not want failure with the world in recession. Hence, many developing economies went along with the rich countries.
They agreed to a conclusion in their own interests. India too did that, rather than be a spoilsport. But rich countries were not united on every issue in the current negotiating agenda. The United States is not eager for an investment and competition policy at the WTO, but complied with EU demands to ensure the success of the Doha ministerial.
Another error Mr Pani’s article makes, and one which can harm India’s negotiating strategy, is that the government is trying to introduce a competition policy.
Firstly, the government is not doing that; it only wants a new competition law tailored to modern times. Secondly, we have had a competition law, the Monopolies & Restrictive Trade Practices Act since 1969. But it was better known for its licensing and control policies.
That changed with reforms in 1991. The MRTP Act has been used successfully in many anti-competitive cases, including cross-border abuses. That has helped to build up a body of knowledge, which other developing countries can learn from. That said, India needs to identify issues that cut across poor and rich for a future agenda. That will ensure the build-up of alliances and coalitions on the negotiating agenda of Doha.
Many pundits, for instance, argue that an international agreement on movement of labour is infeasible. But many developing countries are interested; so are the rich because of domestic problems like an ageing and diminishing population. Many new sectors are opening up other than information technology: health care, education, catering, etc.
One of the biggest advantages India offers to other developing countries is the intellectual capacity to develop scientific arguments in negotiations. Many small, less developed countries look up to India’s positions, giving her a leadership role. The experience of the last six years or so shows us how to use this advantage to build and sustain coalitions, not alliances, at the WTO.
But there two hurdles here, calling for a new strategy. Firstly we must develop a permanent cadre of trade negotiators, lawyers and economists who will retain the institutional memory in their heads.
They can be from the civil service, but the system must change to allow a civil servant to choose a permanent path after the initial 10-15 years of generalist duties. This applies to many other areas, including negotiations on environment. Secondly, we will need a more informed political consensus to enable the commerce ministry to exploit opportunities in a liberalised world trade order. But a better informed debate can only ensue if there is transparency and publicity.
States are gearing up by establishing WTO cells, and they will assert themselves more than before. The best place to develop a better consensus among them is the National Development Council, which too needs more independence than it has. We will otherwise be guided by domestic pressures at WTO, and not by the country’s best interest