The Hindu : India has no plans to join WTO procurement pact

Online edition of India's National Newspaper
Tuesday, Aug 06, 2002

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Business

India has no plans to join WTO procurement pact

By R. Gopalakrishnan

CHENNAI AUG. 5. India has no intention at present to join the "plurilateral" (namely, voluntary within the World Trade Organisation system) agreement on government procurement. This has been made clear by India more than once in the course of its response to queries posed by several members of the WTO during the recent India Trade Policy Review (TPR) sessions held in Geneva.

According to the minutes of the WTO's India TPR, India also defended the price preference for public sector enterprises (PSEs), introduced in 1992, as a measure of compensation to the companies against the "substantial social commitments" met by them. The extension of the preference till the end of April 2004 is intended to "help the PSEs' transition to the liberalised and competitive environment".

India pointed out that purchase preference was not mandatory and it was left to the procuring entities to accord or deny the preference.

Denying that purchase preference to public sector for 356 items and price preference constituted import substitution subsidies under Article 1.1(b) of the Agreement on Subsidies and Countervailing Measures (SCM) of the GATT/WTO.

Schemes like the EPCG (export promotion capital goods), DEPB (duty entitlement pass book) and duty drawback, India said, were WTO-compatible in terms of Annex-I to the SCM agreement read with footnote 1 thereto and hence had not been notified to the Subsidies Committee. The Technology Upgradation Fund (TUF) for the textile industry (involving an interest subsidy from the government), it claimed, was being paid for by the industry itself "indirectly" inasmuch as the industry was obliged to pay an additional duty.

In response to the plethora of queries about the use of anti-dumping duties, especially from China, Japan and (South) Korea, India said the removal of quantitative restrictions (QRs) on imports had made Indian industry vulnerable to unfair trade practices.

While Japan felt that chemicals seemed to be particularly vulnerable to anti-dumping duties in India, China alleged that its exporters were not given enough time to respond to queries of the authorities. India said that in about 50 per cent of cases, "best available information" had to be resorted to for arriving at a decision on account of nil response from exporters abroad. Resort to the "best available information" after rejection of exporters' response was quite rare, India emphasised.

Brushing aside doubts about the fairness and legality of Technical Barriers to Trade imposed by India in the form of requirements on packaging, labelling, price information and fulfilment of BIS standards, India said these were non-discriminatory vis-a-vis indigenous and imported goods and had for long been part of the Export-Import policy. But only now these were `highlighted' by way of inclusion in the Foreign Trade and Development Regulation Act since there was a greater likelihood of imports as a result of the removal of QRs.

India refused to comment on the question of bridging the gap between bound rates of tariff and applied rates as also increasing the share of bound rates in the tariff, in the case of both agricultural and non-agricultural products, since these would form part of the current as also impending negotiations on market access.

Many members, particularly those with competitive advantage in agriculture like New Zealand and Canada, sought India's views on the negative impact of the policy of `self-sufficiency' in foodgrains, high levels of price support, unmanageable food stocks, cost of storage and transport subsidies.

Though India has already initiated a policy of making agriculture export and global-market-oriented and even encouraging switch-over to cash crops from cereals, it chose, in the TPR, to defend the `self-sufficiency' approach on the grounds of global price distortion by the export subsidies and domestic support extended by developed countries and vulnerability of Indian agriculture to calamities (like drought and floods) and resultant fluctuations in production and prices of grain.

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