Why India should support a new round of negotiations

Published on: The Economic Times, 6 August, 2001

By Pradeep S Mehta

Secretary General
CUTS Centre for International Trade, Economics and Environment

WHEN Thiru Murasoli Maran talks to Robert Zoellick this week, the best thing he can do is be positive. He should say `Yes’ to a new round of trade talks at the WTO, not because of hard sell by the US and EU in their door-to-door sales push for the round in the world’s capitals, not because other key developing countries such as Brazil, Mexico and South Africa, and even China, favour a new round, but because it is the best thing for India to move forward the implementation concerns in the current context.

No one is under any illusion that the bargaining by national delegations at the WTO is as tough as any in Chandni Chowk and India needs to be ready to give as well as to take. But this is not something it can do standing at the Red Fort.

It’s not clear at the moment, what issues will be on the table for the November Ministerial. Some of the most contentious issues are already there in the ‘built-in’ agenda, notably agriculture and implementation.

But without an agreement on a broader overall package, the arduous but ultimately beneficial process of hammering out trade-offs cannot even begin. Negotiators should never compromise key national interests.

As far as the US is concerned, not all issue areas are up for barter. On anti-dumping and TRIPs, the US position might as well be set in stone. The domestic corporate lobbies are too strong for the US administration to engage in negotiations.

The US is also very unlikely to reduce its high tariffs on clothing and textiles on which so many jobs depend. In the area of TRIPs due to all the noise on public health, the US will not go hammer and tongs after countries, which are failing in implementation.

In its turn, India should dig in its heels on linkages between trade and labour standards. Such a linkage would undermine India’s key advantage in international trade, its plentiful labour force.

The protectionist motivations for the linkage are barely disguised by US unions who are happy to flex their political muscle through Democrats in a finely balanced Congress.

If India and other developing countries give in on this issue, they will be abandoning millions of their own people for the sake of a few thousand jobs in the southern United States.

In this resistance movement, governments have the support of some of the world’s most respected US-based trade economists: Jagdish Bhagwati, Jeffrey Sachs, T N Srinivasan, Arvind Panagariya, and many others.

If any more proof of the legitimacy of that position is needed, it can be found in the TWIN-SAL statement of 1999.

In the run up to Seattle, 103 people from all over the world signed on to the Third World Intellectuals and NGOs Statement Against Linkage (TWIN-SAL). The statement called for the Linkage between trade and labour standards to be buried. Two years on, experience has only fortified their arguments.

Of course, Zoellick faces a precarious position at home on introducing labour standards into the WTO framework. Most Democrats, and a number of Republicans, have stated this as the price of their support for the President’s fast track (trade promotion) authority.

But a handful of Democrats do understand developing countries’ objections. A clear and reasoned rejection of the linkage by India will help strengthen Zoellick’s bargaining position when he returns home to face Congress.

The US and India share common ground in several areas. On agriculture, both countries would like to see the EU reduce its enormous subsidies to farmers.

On tariffs, too, they both have an interest in seeing their trading partners reduce their dirty tariffs. On environment too, both India and US share the same concerns.

Many in the US are becoming as suspicious as India that rules would be another form of protectionism.

Resistance may be called for on labour standards, but in other areas India should be taking a positive approach. EU leaders have been liberal with their rhetoric on making the new round of trade talks a ‘Development Round’.

If that’s the case, then let India turn its list of action areas into a Development Agenda. It should, after all, be the developing countries that define this ‘development’, that others are so happy to talk about.

A real Development Agenda would prioritise implementation, reform TRIPs and make Special and Differential treatment and technical assistance operative realities.

It would also include a genuine approach to the movement of labour. If developed countries are really committed to the multilateral trading system and getting the developing countries on board, then accepting a Development Agenda is their only option.

If this commitment is hollow, then let India’s positive engagement reveal it for what it is.

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