The Hindu Business Line : `India will resist protectionist pressures'

INDIA will resist pressures for any new form of protectionism in the world textile trade following the phase-out of quotas under the multi-fibre arrangement (MFA) and the expiry of the `Agreement on Textiles and Clothing' from January 1, the Minister for Commerce and Industry, Mr Kamal Nath, has said.

At the India Economic Summit's plenary session on `International Trade: A New Voice of Emerging Markets,' organised by the CII and the World Economic Forum (WEF) here on Monday evening, the Minister sounded a note of caution on the post-MFA scenario. "The expiry of Agreement on Textiles & Clothing three weeks from now does not ensure that protectionism will disappear from that date. While developing countries poise themselves to fully exploit the opportunities that will open up before them, there are forces at work to negate this. Of course, we shall not allow it. There is a need to consolidate gains achieved thus far and be vigilant on the emerging trade policy conditions to collectively resist pressure for any new form of protectionism in this sector," he said.

On foreign direct investment, Mr Nath emphasised that FDI, both as a source of capital as well as a vehicle for technology transfer, was welcome. "The scarcity of capital in developing countries is of course there but what is an even more cogent reason for welcoming FDI, in my opinion, is the fact that FDI is a major source of skills upgradation and technology transfer. I am a firm believer that technology alone can enable developing countries to do the `catching up' that could leapfrog them into the frontiers of progress," he said.

The Government, he announced, was in the process of preparing a new `Technology Transfer Policy,' which would be aimed at attracting state-of-the-art technology.

On issues that concern India in the WTO, the Minister said these included the debate on multilateralism vis-à-vis regionalism, the issue of distortions in international trade, especially agriculture, the emergence of non-tariff barriers which is occupying the space being vacated by tariff barriers on account of the implementation of Uruguay Round commitments, as also issues relating to tariff peaks and tariff escalations and access restrictions on services export.

Underlining India's comparative advantages in the services sector, Mr Nath said: "There is need to enable service providers to supply services in overseas markets either from remote locations (Mode 1) or through the temporary movement of service personnel (Mode 4). We shall be working towards this in the ongoing WTO negotiations."

The political backlash against outsourcing in developed countries was misplaced and "this signals an inclination to protectionism which is unfortunate," he said.