The Hindu : India at the WTO

Online edition of India's National Newspaper
Thursday, Dec 19, 2002

Opinion

Opinion - Editorials

India at the WTO

THE LOUD THINKING of the Union Disinvestment Minister, Arun Shourie, on the need to rethink India's position at the World Trade Organisation is going to create ripples in the domestic and international arenas. The negotiating strategies that India is following at the WTO do need a re-assessment, even if Mr. Shourie, now holding additional charge of the Commerce and Industry Ministries, is not clear about what the Government should aim for.

Until the 1980s, the Indian position at the General Agreement on Tariffs and Trade was effective in its objective of shielding the economy from imports. But this approach had exhausted its usefulness by the early 1990s, when at the end of the Uruguay Round negotiations India found itself holding the wrong end of the global trade bargain. The reason for this was not a "sell-out" (as all too easily alleged), but that with the collapse of socialism the alignment of countries at GATT had changed and the advanced market economies had begun investing far more than before in the powers of the GATT/WTO. But India has continued with much the same "defensive" strategy, though at best this approach has only slowed the access that global exporters have to the Indian market without correspondingly expanding the opportunities of Indian exporters. This was most obvious in the formulation of the agenda for the Doha round of trade talks, which contrary to the claims of the Government was far from what India had been negotiating for. What then could be a better approach for India to take at the WTO? Disengagement from the WTO is not an option. If anything, it will leave India worse off since it will strip the economy of even the element of protection provided by multilateralism. But it is also a fact that while on paper each member-country of the WTO has the same power as the other, it is the market interests of the major economies which ultimately decide the final outcome. The course of action then can only be to work towards reforming the WTO as much as is possible while obtaining the best for the country in the (unequal) "give-and-take" process that underlies negotiations.

The best results would require four broad sets of actions. One, India needs to give as much importance to what it wants from the WTO as to what it wants to prevent. Given that India is gradually integrating itself with the world economy, it is no longer in the country's interests to focus solely on a defensive approach. A "pro-active" approach as it is called will require the construction of coalitions of countries at the WTO, which will differ from issue to issue and will cut across developing and developed countries. Two, the negotiators' hands are tied by the Government which since the mid-1990s has been influenced, in turn, by the positions of all political parties and the interests they represent. If the latter are mistaken in their opposition — as sometimes, but not always, they are — then it is because the Government has been less than effective in building a negotiating consensus. Third, the Government all too often holds on to a rigid position at the WTO long after a particular approach has ceased to provide benefits. A case in point is the Indian position on the implementation issues of past WTO agreements. India formulated and for years very successfully led an alliance of countries in articulating these concerns. But there is little point in continuing to expend energy on these issues (however just the cause) when the usefulness of what was always a bargaining strategy has disappeared. Four, while it is perfectly appropriate to control access to the domestic market (the U.S. and the E.U. do so in many areas) it does not serve India's cause if the Government engages in autonomous liberalisation. An example is India's defensive position at the WTO on import duties while at home it has already spoken of a medium-term plan to substantially lower tariffs. A re-orientation of India's strategy at the WTO will not be easy. But it has to be done if the country is not to emerge from the Doha Round in much the same manner as it did from the Uruguay Round.

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