'Removal of QRs has motivated industry'

By Our Special Correspondent

CHENNAI, JUNE 2. The removal of all quantitative restrictions (QRs) from April this year will help strengthen the competitiveness of Indian industry and attempts to portray it as a ``national tragedy'' are unwarranted, the Special Secretary, Commerce Ministry, Mr. Nripendra Misra, said here today.

As part of economic reforms, India had been removing QRs on hundreds of tariff lines in the annual export-import policy statements for the last five or six years by shifting items from banned and restricted lists to special import licence (SIL) and later open general licence (OGL).

Large-scale removal of the remaining items in 2000-01 and this year was a result of losing the case in WTO (World Trade Organisation) for the further staggering of the QR phase-out on the grounds of balance-of- payments.

QRs implied a very high level of protection to domestic industry, whereby it did not face any import competition and was encouraged to remain inefficient.

Import restrictions had also encouraged corruption, Mr. Misra said. Participating in a workshop on ``WTO-road ahead for Indian industry,'' organised by the Madras Chamber of Commerce and Industry, he said the Government was, however, sympathetic to the industry's demand for a level-playing field in terms of infrastructure and transaction costs, labour market flexibility and capital cost, for which hard decisions would have to be taken.

It was the removal of QRs which had motivated industry to put pressure for the right kind of reforms.

Referring to regional trade agreements (RTAs) which represented a (WTO-permitted) departure from the MNF (most- favoured-nation) treatment and resulted in diversion of trade, Mr. Misra said there had not been a single audit by the WTO of any RTA so far. Thus, any other provision in RTAs going against WTO principles might have escaped detection.

India, which was considering the merits of a proposal to make MFN applicable to regional trade agreements after some years, understood that it intended to apply only to those aspects of the agreements which were WTO-compatible and not issues like labour or social standards which many such agreements involved.

However, there was the real danger that developed countries might use any such proposal to multilateralise social standards too.

Mr. Misra said developed countries were interested in a new WTO round of negotiations apart from Uruguay Round mandated issues and implementation issues because they feared loss of markets from elimination of huge subsidies to their farm sector resulting from the UR Agreement on Agriculture.

They wanted other WTO members to make sacrifices in other areas like industrial tariffs to help them make up for the loss.

But developing countries like India had already sacrificed a lot because of the inequities in the UR agreements as well as one- sided implementation of the agreements and ``do not want to make further sacrifices,'' Mr. Misra observed.

He appealed to chambers, industry organisations and academia to organise ``stakeholder support'' to the Government's stance at the coming Doha ministerial conference of the WTO.

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