New WTO round & India

By Muchkund Dubey

THE U.S. Trade Representative, Mr. Robert Zoellick, is in India this week for discussions on a whole range of bilateral and multilateral trade issues. But the issue which is going to figure most prominently in the discussions will be that of launching a new round of multilateral trade negotiations at the forthcoming WTO Ministerial Meeting in Doha.

No consensus has as yet emerged in Geneva on launching such a round. A large number of developing countries, including India, have reservations on the very notion of engaging in rounds of negotiations when the WTO has already become a forum for continuing negotiations. Besides, the moves for a new round have recently been used as a device for blocking progress in mandatory negotiations and reviews in which developing countries have great stake. In any event, these countries have made their acceptance of a new round conditional upon the resolution of some 90 to 95 implementation issues raised by them prior to the Third Ministerial Meeting in Seattle in 1999. These issues pertain to the inequalities and imbalances that have emerged during the course of the implementation of the Uruguay Round agreements. These have been under discussion in special sessions of the WTO's General Council for more than a year and a half now. But no progress has so far been made in resolving any of them in a substantive manner.

The European Union is unwilling to move towards agricultural trade liberalisation unless it becomes a part of a comprehensive agenda including investment, competition policy and environment. This is partly because of the French Presidential election in which the farmers lobby, which has a vested interest in perpetuating agricultural protectionism, is expected to exercise much influence and partly because of the uncertainty surrounding the E.U.'s common agricultural policy in anticipation of the next enlargement of its membership. The Cairns Group of countries, sharing the common interest in agricultural exports, do not see much point in joining a new round without the prospect of agricultural trade liberalisation.

Most developing countries are against a comprehensive agenda because of their bitter experience of the Uruguay Round in which they were made to surrender a big chunk of their domestic policy options in the non trade-related areas of TRIPS & TRIMS in lieu of the marginal gains in the trade-related areas of textiles, industrial tariffs, agriculture and services. They now know that they will have very little to gain and much to lose if they are compelled to negotiate on the establishment of new regimes within WTO, for investment, competition policy and environment.

This experience has also made developing countries extremely wary of entering into trade negotiations as a single undertaking embracing both trade-related and non-trade-related issues, and in which the outcome is presented on an all or nothing alternative, and on a take-it-or-leave-it basis.

A vast majority of developing countries are uncompromisingly against linking trade with labour or environmental standards. For they know that these are blatant neo-protectionist devices under the garb of concern for the protection of labour rights and the environment in developing countries. These are designed to extinguish the comparative cost advantage of developing countries in a whole range of their competitive products. This cannot but seriously undermine their export and hence growth prospects for all time to come.

Left to itself, the present U.S. Administration does not seem to be keen to include investment, competition policy and environment on the agenda of the new round. There are also indications that the U.S. is more or less reconciled to devising arrangements within ILO for a more effective enforcement of labour standards. Thus the U.S. interests have converged on a more limited agenda consisting of industrial tariffs, mandated negotiations in the field of agriculture and services and transparency in Government procurement. This brings the U.S. position very close to that of India except that the Government of India is not particularly enamoured of the prospect of making its procurement policy more transparent. There could perhaps be a compromise by not making it a part of a single undertaking and concluding a plurilateral agreement on it, applicable to only those countries which decide to accede to it.

The other point of divergence is the implementation issues to which India attaches the highest importance and on which the U.S. has not been particularly forthcoming. The best prospects for resolving these issues lie in the ongoing process of the reviews of the Uruguay Round agreements. The U.S. should be pursuaded to adopt a more positive stance in these review exercises. India should also convey to Mr. Zoellick India's firm stand on the linkage issue and its strong reservations on including other non- trade-related item on the agenda.

The U.S. does not seem to be pressing for agricultural trade liberalisation as vigorously as it had done during the Uruguay Round. This may be partly because of its perception that there is little likelihood of pushing the E.U. very far in this direction. But if that is so, then the majority of developing countries and the entire Cairns Group will find little attraction in the new round.

Besides, there are apprehensions that the U.S. may strike a deal with the E.U. in favour of a comprehensive agenda and may also revive the linkage issues under the pressure of the Democratic Party-controlled Congress. The USTR should be told in unambiguous terms that this will be the surest recipe of throwing the baby out with the bathwater, as happened in Seattle.

The ideal position for India and other developing countries to take is that the Doha meeting need not necessarily launch a new round of trade negotiations. Instead it should agree on a two- year work programme for the WTO and impart vigour and a sense of urgency to the on-going negotiations by providing broad guidelines and setting deadlines for their completion.

Alternatively, if a new round has to be launched, then it should have a modest agenda confined to trade-related items. This could include reductions in industrial tariffs and the mandated negotiations on agriculture and services.

The implementation issue should be a common feature of both the scenarios. The ministerial meeting should seek to resolve some of the implementation issues and make special arrangements for pursuing them after Doha. In the continuing exercise, the emphasis should be on resolving these issues through the review exercises under way. Problems arising out of the implementation of a particular agreement must be resolved within the framework of that agreement. No attempt should be made to link these problems to those arising under other agreements, let alone to new issues, or to seek quid pro quo for resolving these problems, outside the confines of the agreement.

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