The Hindu : Under the microscope

Online edition of India's National Newspaper
Wednesday, Jun 26, 2002

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Under the microscope

SET ASIDE THE general praise for India's economic performance during the 1990s that was expressed at the World Trade Organisation last week and it is apparent that a number of shortcomings in India's trade policies have been highlighted in the latest trade policy review (TPR) of India that has been carried out by the organisation. All the criticisms made during the recent cross-examination may or may not be valid. But India will have to take into account the assessments that were made at the WTO meetings — some highlighted in the WTO Secretariat report on India's policies and the others expressed by representatives of India's trading partners — since they are bound to surface during the ongoing Doha round of negotiations, which is where the Government will have to be prepared to cope with pressures to change its trade policies and regulations. There is therefore no point in feeling pleased that satisfaction was expressed at the WTO with India's reforms and economic growth. It is worth noting that while the Government did make its own presentation of the obstacles that had been placed on Indian exports there was little support for these arguments in comparison to the many critical comments and demands for changes that were made at the meetings.

During the intensive discussion of India's trade policies, the three main criticisms were of India's frequent use of anti-dumping duties, the use of non-tariff barriers (NTBs) to control imports, and high tariffs. Two of these are relatively new features of India's rules and regulations on imports and the third is an old characteristic which is never spared criticism. In none of these areas is India violative of WTO agreements, although in specific cases India's actions have been the subject of WTO dispute proceedings. While the Government is correct in arguing that it follows WTO rules in investigating and then imposing anti-dumping duties, it is a fact that the easy recourse to this option has been in response to domestic pressures to keep out imports. India may claim that its anti-dumping duties cover less than one per cent of total imports. But it says something about Indian trade policies that the country now rivals the U.S. as the world's leading user of the anti-dumping provisions of the WTO agreements. It is now widely acknowledged the world over that the levy of anti-dumping duties — however elaborate the procedures — is a ready and opaque tool in the hands of a Government ready to please threatened domestic producers. Anti-dumping is an important item on the agenda of the Doha round of negotiations — precisely because of dissatisfaction over its use by some countries in the past few years — and it is likely that India will be hard put during the talks to prevent a tightening of the provisions of the existing agreement. A similar argument applies to India's increasing use of standards, specifications and labelling requirements — all NTBs. The Government never loses an opportunity to rail against other countries using NTBs to keep out Indian exports, but it is quick to use the same provisions to control imports. India's application of anti-dumping duties and NTBs has increased, indeed one can say they have emerged after it began removing quantitative restrictions on imports from the mid-1990s. It is apparent to India's trading partners that it is trying to replace one set of import controls with another.

The more traditional form of import control — high customs duties — have also been criticised. Here as well, India had adhered to the letter if not to the spirit of the WTO agreements. As a country with one of the highest import tariffs in the world, it is bound to be pressured during the Doha round talks to make offers of significant tariff cuts. This is independent of demands that India reduce its import duties if it wants the developed countries to lower the incidence of tariff peaks and escalation, which are widespread on developing country exports.

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