The Hindu : India without a clue at Cancun

Online edition of India's National Newspaper
Thursday, Sep 11, 2003

Opinion

Opinion - Leader Page Articles

India without a clue at Cancun

By Subramanian Swamy

India has thus far made only feeble attempts to get an opportunity for professionals and semi-skilled to work anywhere in the world without visa harassment.

TO CANCUN, Mexico, 146 countries have sent their Commerce Ministers to finalise the draft Ministerial declaration prepared by the WTO Secretariat in Geneva. This draft contains what further has to be agreed to, or implemented, following the 2001 Doha Declaration [now titled The Doha Development Agenda].

At Doha two years ago, India had without a considered strategy of negotiations taken a hard line on all issues at the beginning of the conference, and then at the end, faced with a vaguely-worded U.S. threat, just backed down to sign on the dotted line. Even media spin could not cover up the reality. India lost its due stature and an opportunity.

At Cancun, the same thing is going to happen with the new Commerce Minister, Arun Jaitley, and for the same reason: India has no negotiating strategy. In any international conference, every country must know its mind — what to give up for gaining what — in order to succeed. No country can gain on all issues. Negotiating skill lies in making deals for achieving high priority interests at the cost of sacrificing low priority interests. When I was Commerce Minister, I had made such a crucial deal: U.S. agreement to phasing out textile quotas for India's support on agricultural issues. At that time, the U.S. was opposing the European Union countries on subsidies and India had been supporting Europe till I changed that. Since then, because of the inexplicable failure to postulate a negotiating strategy, all succeeding Commerce Ministers have merely been posturing for high-profile media coverage, claiming to stand up to the U.S. and then buckling down under the formidable U.S. -led consensus. This will happen with Mr. Jaitley too at Cancun. He has gone to Cancun thinking that China, Brazil and other developing countries are going to follow India and vote with it. I predict that at the last hour as before, these countries will make a bilateral deal with the U.S. and ditch us. India's posturing ironically will be used to facilitate their bilateral deal. The U.S., which for long has had an intense dislike for India's pomposity and propensity to pontificate, delights in isolating India at international conferences. And it is so easy to do that. The only "saving grace" that will protect the Government from ridicule in Indian public eye is the group of Indian journalists accompanying the Minister, who will dutifully file stories about the "historic" stand of India, as we saw recently when the Prime Minister visited China.

There are 24 contentious issues in the Cancun draft declaration. Has the Government even once indicated what we will insist on and what we will compromise on? Has it led any informed debate on these issues in the country? No, not at all. The BJP-led Union Government, weaned on Hindutva hegemony, is naturally clueless about the dynamics of these negotiations of give and take.

Of the 24 issues in the Draft, four are most important: agriculture, market access, Singapore issues, and special provisions. Others such as anti-dumping, e-commerce and services are important but not urgent. At Cancun, the Ministerial Conference must come to an agreed formulation on these four crucial issues to keep the Doha Agenda alive. Regrettably, it is too late now to bring on board the most important issue for India, in return for which we can afford to compromise on all other issues, namely the cross-border free movement of natural persons for employment. Labour mobility is to India what capital mobility is to developed countries. Yet India has thus far made only feeble attempts to get what it needs most — an opportunity for Indian professionals and semi-skilled to work anywhere in the world without much visa harassment. In 1990, I had temporary construction workers included in the draft of the new GATT, but after that no Commerce Minister has pursued the subject.

On agriculture, this time, the U.S. and the E.U. have already reached a compromise agreement by which they have agreed to reduce export subsidies, open markets, and give special protection to developing countries on some products, measures that do not go far enough but represent progress for India. However, at the instigation of China and Brazil, India has unwisely produced a counter proposal that the majority will not accept. China has much to fear from open international trade in agricultural commodities since its farm products are globally uncompetitive. If it revalues its currency, then things will get worse for its agriculture. But India's agriculture is highly competitive and will gain in exports from any opening of developed country markets.

By the WTO's formula for calculating subsidies called Measure of Aggregate Support (MAS), which is based on international prices, India has negative export subsidies for agricultural exports. At present, India can give Rs. 50,000 crores of exports subsidies more and yet be within the WTO tolerance limit for MAS. India should have joined with the U.S.-E.U. compromise and got something else as well in market or Singapore issues. Now because of the counter proposal, India is vulnerable and could come under strain on Singapore issues such as customs procedures and transparency in government procurement. In any case, going by past experience, China and Brazil might at the last minute desert India after doing a deal with U.S.

As in Doha, India will stand isolated and eat humble pie served by the U.S. Witness that in March this year in Geneva when the draft was being prepared, India sided with the E.U. on protectionist agriculture and claimed that the Europeans would back it on TRIPS. Soon the E.U. ditched India and made a deal with the U.S. on agriculture, selling India out on pharmaceutical patents. Of course, since Opposition parties in Parliament do no studies of all this but merely have ideological responses, there is little accountability of such fiascos. Media spin on it also serves as a fig leaf for the Government.

There is simply no option to finding our own niche in the WTO. The RSS-led Swadeshi Jagran Manch's call for quitting the WTO is extremely unwise. Countries have lined up to join the WTO and abide by GATT. Already, 146 have joined the organisation. China had to wait for 15 years before being re-admitted to GATT. It quit GATT in 1950 and was re-admitted in December 2001 on an application made in 1984.

The market economy and globalisation represent the international trend today and India has to ride it with skill. Its purchasing power parity GNP is the fourth largest today, and on present trends — which can be upset, as in Gujarat where development has come to a standstill — India will overtake Japan by 2007 to become the third after the U.S. and China. Yet India's exports are peanuts, a mere 0.7 per cent of world trade. Although China's export growth rate is a dangerous bubble that will burst if it revalues the Yuan, or wages rise any higher, — for an analysis see my recent book, "Economic Reforms and Performance: China and India in Comparative Perspective" published by Konark — nevertheless China was able to raise its exports by a factor of 10 to $ 200 billion in two decades and reach 4 per cent of world trade. India has a huge potential for exports in agriculture, textiles, services, information technology, pharmaceuticals and biotechnology. This potential can be tapped only if we play the free trade and market access game, and not live in past delusions of Third World leadership.

Today, all blocs have melted away and international relationships are defined by national interest-based negotiations. India's strategy therefore needs to be defined by how it can become a developed country by 2020, for which assured demand through exports and adequate investment supply through foreign direct investment are fundamental. This can be achieved only if India becomes a globally credible player in a competitive market economy by reliable coalition formation. Such a goal cannot be achieved by focussing on temple construction or contriving a Third World fantasy belonging to the past.

(The writer is a former Union Commerce Minister.)

Printer friendly page
Send this article to Friends by E-Mail

Opinion

News Update

Stories in this Section

Strategic delusions

Banking turnaround

India without a clue at Cancun

Indo-Pak. rivalry in Afghanistan