Policy: India And The World [Pg. 2]

[Contn.]
India And The World

And How Brave Words Hurt India

The stubborn opposition to a new round of talks by Commerce Minister Murasoli Maran saw India's increasing isolation even among the developing countries.

Economists rarely concur and that's true of how they see India's performance at Doha. ''Taken as a whole, I consider the outcome of Doha to be very positive from the Indian perspective,'' says Arvind Panagariya, Professor of Economics and Co-director of the Centre for International Economics at the University of Maryland. Still, as B. Bhattacharyya, the Dean of the Delhi-based Indian Institute of Foreign Trade, points out, ''Despite India's articulated stand that it would oppose a new round of negotiations, the developed countries did manage to push forth their agenda.''

That, by itself, constitutes a significant victory for the First World. The new round paves the way for greater trade liberalisation, although India (and a few other developing countries) have been mollified with the assurance that issues related to investment and the environment will not be discussed unless an ''explicit consensus'' is achieved at the next ministerial meet of the WTO, scheduled to take place in Geneva two years from now. ''Even among the developing countries, India was clearly isolated in its opposition to a new round,'' says Schoff of the Institute of International Economics. ''But it did achieve its central objective of focusing the attention of the new round on market access to industrial countries.''

''We didn't get isolated at Doha,'' counters

R. Seshasayee, ceo, Ashok Leyland, and part of CII's WTO-team. ''In substance, we have gained, but if you get into the semantics, the gains may look limited.'' What exactly are these gains? Maran has achieved victories in four areas: agricultural subsidies, implementation issues, anti-dumping, and Trade-Related Intellectual Property Rights (trips). India can claim to have played a role in forcing developed countries to bring about changes in the trips agreement that offer patent protection to large pharmaceutical companies; in forcing the release of a separate declaration on implementation issues related to the last round of negotiations; and in getting the WTO to take cognisance of its concerns on food security-related agricultural subsidies, and anti-dumping.

However, these gains don't seem very significant when seen in a larger context. The Doha Conference, for instance, did not relent on the Right to Parallel Imports, which would have allowed Indian companies like Cipla to export cheaper and generic medicines to epidemic-affected countries. Worse, Indian pharma companies have been denied the 10-year extension (up to 2016) given to companies in least-developed countries to implement trips.

Most worrying for India, though, are the losses on the textile front and on the issue of Geographical Indications. India was banking on support from like-minded countries like Pakistan, Indonesia, Jamaica, and the Dominican Republic in convincing the WTO to bring forward the deadline on the end of quota-based textile exports (under the Multi-Fibre Agreement). But the US refused to play ball (this, after US Trade Rep Robert Zoellick managed to convince the countries aligned with India to cross over) and the deadline of January 2005 stays. India also did not make any progress on the Geographical Indicators issue, so important in the protection of Basmati and Darjeeling tea. The Doha Declaration announces the establishment of a multilateral system only for wines and spirits, not for other items.

Perhaps India's greatest loss is the fact that four issues-investment, transparency in government procurement, trade facilitation and competition policy-discussed at the 1996 Singapore round and strongly opposed by India, are back on the WTO agenda, albeit at the next ministerial conference in 2003. So is the link between trade and environment (a topic India was blocking, for it could mean the eco-labelling of exports, raising concerns of non-tariff barriers).

Contrary to popular perception then, the significance of India's gains in Doha is overshadowed by the fact that it couldn't block the new round of negotiations. Still, fortune seems to be on India's side. It has now been presented with an opportunity to forge an axis with China that has just entered the WTO and advertised its intention to play ball with an endorsement of the new round. ''India should explore all avenues to push its interests, including an alliance with China,'' says Panagariya. ''Ultimately, prospects of an alliance will depend on a commonality of interests.'' Of that commonality, there's no shortage: India and China share similar concerns on issues ranging from agricultural subsidies to the link between trade and environment.

India's good fortune extends to the political front too: even before the ink dried on Bush's assurance to Musharraf that the anti-Pakistan Northern Alliance would not be allowed to form the next government in Afghanistan, the alliance had taken Kabul. India, with its historical ties with the alliance, can help the US handle a situation that has the potential to turn into a huge international embarrassment. The question is whether India has the maturity to look beyond Pakistan and move to a more mature foreign policy.

-additional reporting by Swati Prasad, Moinak Mitra, & Ashutosh Sinha

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