The Hindu Business Line : General Council meeting of WTO

It is time India took a pragmatic view of the emerging situation in the international trading arena, in general, and at the WTO, in particular. The two-day General Council meeting of the WTO beginning today in Geneva is thus crucial for India to watch the situation and move with tact lest its acts of omission and commission get blown out of proportion, says G. Srinivasan.

AS THE General Council of the World Trade Organisation (WTO) hold its first formal meeting in Geneva for two-days beginning today, the principal high-profile players at Cancun — the US, Europe, G-21 (led by Brazil, India and China) and the group formed by Africa and the least-developed countries, would have to bury the hatchet in a serious bid to focus on what can still be done to salvage the ambitious Doha Development Agenda (DDA). Each of the four major players had highlighted its own assessment of the reasons for the failure of Cancun though cautious in defending the DDA and swearing by the virtues of multilateralism. Following the Cancun talk breakdown, the US Trade Representative (USTR) minced no words when he said he would no longer sit by while "won't do countries" block progress in the Doha Trade Round; instead he would forge bilateral and regional trade deals with "can do" countries.

The US reaction is understandable because its trans-Atlantic partners of the European Union (EU) have piled up as many as 30 free trade and special Customs agreements; the EU itself is a big regional Customs union, though its Principal Trade Commissioner, Mr Pascal Lamy, never tires extolling the virtues of multilateralism and rule-based system it personifies in the WTO. It is small wonder that countries such as India which were never a part of any of the big regional trading bloc other than the small grouping called South Asian Association for Regional Cooperation (SAARC), took the first opportunity after the collapse of Cancun talks to latch itself on with some of the bigger trading blocs such as the Association of South East Asian Nations, composed of 10 countries, including the so-called Asian tigers such as Thailand, Malaysia and Singapore.

Thus, during his recent visit to Bali (Indonesia) to take part in the India-Asean Business and Investment Summit, the Prime Minister, Mr Atal Bihari Vajpayee, lost no time to propose a Free Trade Area (FTA) with Asean in goods, services and investment. Mr Vajpayee also signed an agreement to this effect on October 8. The negotiations for tariff reductions/elimination on goods are to conclude by June 2005 to establish the India-Asean FTA. Alongside, India also wrapped up a separate FTA with Thailand.

While addressing the business delegates in Bali, Mr Vajpayee rightly remarked that in spite of the stalemate at Cancun, "a rule-based and fair multilateral trading system is still our goal". His observation that "while we search for this ideal, regional trading arrangements offer immediate advantages, particularly for geographically contiguous regions as they can provide our domestic industry and agriculture with a valuable learning period, before being exposed to the far greater competition of global free trade" ring too realistic to be ignored. Better late than never, India is waking up to the geopolitical realities and the safety of numbers than being left alone to plough a lonely furrow in the choppy waters of international trade.

In any case, as India has failed to become part of any major trading bloc all along these years, its best bet still lay with the rule-based trading system where trade disputes can be resolved without the fear of being subjected to unilateral trade sanctions or discriminatory trade policies of trade majors or bullying allies. That is why at an informal meeting of the heads of delegation in Geneva on October 14, the WTO Director-General, Mr Supachai Pantichpakadi, maintained: "This round is too important to all of us to allow our setback at Cancun to keep us from our objective — an ambitious and balanced round that delivers better market access and more equitable rules for all our member governments and for the people they represent."

The Union Commerce and Industry Minister, Mr Arun Jaitley, in a first-person monograph, echoed thus: "We are firmly of the opinion that a fair rules-based multilateral trading system is absolutely essential to ensure all-round global development... Cancun has proved the point that it is necessary to revive and revitalise the Geneva process. The bulk of the negotiations would need to be done at the technical level in Geneva. It is incumbent on all of us to provide the necessary flexibility to our negotiations to move forward boldly."

Mr Jaitley's remarks need to be followed up with action as New Delhi should be conscious of its share in the global market both in goods and services and eschew any overt posturing that do not redound to its credit in the long run. Costa Rica, Colombia, Guatemala and Ecuador

and Peru — all original members of Group of 21 — have expressed their reservations over adopting any confrontationist stance any more, though India has been stating that, with Brazil and China, the group would hold if there is any challenge or if a compromise is inevitable. But in the WTO alliances hardly remain durable as each country has its own agenda and interest to bolster and secure. In any case, New Delhi should not nurse any sense of exaggerated importance about its role and remit, particularly when it is not a part of any major trading bloc to gain from preferential treatment for its products and personnel.

It is also time India took a pragmatic view of the emerging situation in the international trading arena, in general, and at WTO, in particular, so that it does not get lost in the fast-changing scenario. It would be germane to note the observation of the General Council Chairman, Mr Perez del Castillo, during his informal meeting with heads of delegation, that "there is a willingness on all sides to get back to work in line with the mandate agreed by Ministers at Cancun". He further went on to note that "in line with the mandate given at Cancun, the primary focus of our work will be to concentrate on key outstanding issues: In our judgment, backed up by our consultations, these are, first and foremost, agriculture, cotton, non-agricultural market access (NAMA) and Singapore issues".

As regards other issues with a particular development connotation, he said these were strongly emphasised in the Chairman and DG's consultations with WTO members and "that in many of these issues we were closer to agreement and there is no point addressing any adjustments to texts that may be needed before we have sorted out the major difficulties in the key areas I have identified and unblocked the process as a whole".

As Mr Jaitley noted, much of the negotiations would need to be done at the technical level in Geneva and it is important that everyone provides the necessary flexibility to negotiations to move forward boldly; the deep divisions and fissures which India and a host of developing countries entertained on issues of agriculture, NAMA and Singapore issues with developed countries and vice-versa need to be addressed squarely by all the parties so that some common ground is found to build a consensus on for arriving at negotiating modalities.

In this regard, Mr Castillo reminded members "everyone is very clear in their minds the positive or negative issues that emerged on the different areas during that process in Cancun. I can confirm that we will ensure that all these aspects will be taken into account during this new phase of consultations". He also sought the members' "trust and flexibility to engage in this process without getting bogged down in procedural issues which would not only make us waste valuable time but would also be detrimental to positive results".

As Mr Castillo assured all the stakeholders that the process of consultations in Geneva would have to be supplemented by direct contacts with Ministers and senior officials in capitals, one only hopes that Mr Jaitley and his team of officials in the trade policy division, headed by Mr S. N. Menon, keep themselves involved in all the nitty-gritty of consultations currently being initiated by the WTO General Council to pick up the threads that got snapped at Cancun.

As the DDA has a back-breaking time schedule with a multitude of subjects to cover, the modalities for launching negotiations need to be completed without further loss of time as otherwise the benefits to be derived from an ambitious outcome of the negotiations would be neutralised. No doubt there will be winners and losers but, overall, there should be balance of benefits in terms of enhanced market access for goods and services for a large number of the WTO's 148 members.

Trade liberalisation among developing countries is also the need of the hour as trade flows among them are gaining in importance — almost 40 per cent of their exports now go to other developing economies.

It is those developing countries themselves that would reap the beneficial results by markedly lowering their own trade barriers. That is why Mr Kenneth Rogoff, Director, IMF Research Department, pointed to the steady expansion in global trade over the post-Second World War period as a major factor in raising global income and reducing poverty. Hence, he said, it is of considerable concern that trade has been slowing over the past decade.

The two-day General Council meeting of the WTO is thus crucial for India to watch the situation and move with tact lest its acts of omission and commission get should be blown out of proportion.

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