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Launching the Qatar Round

Arvind Panagariya

            India has expressed its clear opposition to the launch of a new round of multilateral negotiations at the forthcoming WTO ministerial in Qatar. 

India’s position is not without justification.  Yet, unless intended to be an interim, tactical move, it can hurt our ultimate interests.  We have much to gain from a new round provided we actively engage in shaping its agenda.

            But consider first the reasons why the hard-line position taken by India is not without justification.

First, the origins of the skepticism on the part of India and several other developing countries can be traced back to the Uruguay Round (UR).  Few developing countries had anticipated that Punta del Este Mandate, which launched the Uruguay Round, would turn into a gigantic negotiation, leading to the establishment of WTO with its complex and elaborate rules.  Many developing countries are still struggling to implement the unanticipated changes necessitated by the round.

Second, even more surprising to many developing countries was the UR Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs).  From the brief statement on intellectual property rights negotiations in the Punta del Este Mandate, few developing countries foresaw a comprehensive global intellectual property rights regime as the outcome.  Countries such as India were taken by surprise by the reach of the TRIPs Agreement.

Moreover, unlike trade liberalization, which is a “win-win” negotiation, many developing countries view the enhanced intellectual property protection as redistributing income from the users of patented technology to the holders of patents, located principally in developed countries.  The severe limit placed on the access of African countries to AIDS medicines by the TRIPs Agreement has magnified this anxiety.

Third, the slow pace with which developed countries, principally the United States and European Union, have implemented the UR Agreement on Textiles and Clothing (ATC) has added to the disappointment of developing countries with multilateral negotiations.  Under the agreement, developed countries had agreed to dismantle the Multifibre Arrangement (MFA) by January 1, 2005 but have chosen the slowest possible route to it.  The big gains to developing countries, widely advertised by researchers and press at the time of negotiations, have so far failed to materialize.

Finally, in the aftermath of the UR Agreement, a link between labor standards to trade, which developing countries view as eroding their current trading rights without conferring any benefits, has become a central element of the negotiating agendas proposed by some developed countries.  This fact has made developing countries further doubtful that a round is in their interest.

Thus, the events of the recent past provide India and other developing countries ample reasons to view a new round with skepticism, even suspicion.  Yet, it may be shortsighted to reject the round outright.

Thus, if the Quad countries, US, EU, Japan and Canada, agree to a round and offer enough incentives to other major developing countries to join hands, we may simply not be able to stop it.  Our experience with the UR negotiations is a sobering reminder in this context.  We opposed the conclusion of this round until almost the end.  But by then we were left alone and without any option other than to accept the deal on the table.  An alternative approach would have been to deploy our energies and negotiating capital into shaping the agreement itself.

An even more important reason why we must support a new round is that it is in our own best interest.  The thrust of our efforts should be on shaping the agenda of the round rather than blocking it.  The lesson of the past experience is not that we refrain from negotiations but that we negotiate hard, paying careful attention to every detail.

Two years ago, prior to the WTO ministerial in Seattle, I had argued that developing countries should support a minimalist negotiating agenda that includes the UR built-in agenda plus trade liberalization in industrial goods.  The built-in agenda requires negotiations in agriculture and services and reviews of certain aspects of the Dispute Settlement Understanding and Agreement on TRIPs.  This agenda still makes sense for India.

As a part of its economic reforms, India is likely to continue liberalizing its trade in industrial goods, agriculture and services.  The benefit from this liberalization can be greatly leveraged by pursuing it in the context of a multilateral negotiation.  This way, we will benefit not only from our own liberalization but from the liberalization of our trading partners as well.  The dividend on the latter is double nowadays since it helps dilute trade preferences which have proliferated lately and discriminate against our exports in North America, Europe and other parts of the world.

We can also make speedier dismantling of the MFA or larger MFA quotas for India a pre-condition for launching the next round.  Even this objective has a better chance of being addressed if pursued in the context of a negotiation than used as a reason for non-negotiation.

It is also important to recognize that most developing countries do not want a round that includes labor standards in any form whatsoever.  Prospects for a round consistent with this goal have never been better.  As a part of the mandate for the next round, developing countries may be able to assign this subject to the International Labor Organization once and for all. 

This leaves principally the subjects of investment, competition policy and environment and trade on which the European Union is insistent.  Even here, compromise may be possible.  One option is to place these latter subjects on a second track and make participation in negotiations on issues on the second track optional.  Alternatively, sufficiently tight wording could be chosen to limit the scope of negotiations in these areas.

The key element of our strategy must be to identify attainable objectives that best serve our interests.  The negotiating strategy should be then targeted to achieve these objectives.

Economic Times, August 25, 2001