India Arrives at the WTO

Arvind Panagariya

“THE only real loser in Doha was India, writes Guy de Jonquieres in an editorial comment in the Financial Times (November, 2001). "It achieved no obvious gains except for the dubious pleasure of delaying the close of the meeting."

 If you were at the summit and heard the frequent assertions in the corridors and the pressroom that India was hell bent to bring down the launch of the new round, you would likely believe the harsh assessment by de Jonquieres. But did India truly fair so poorly?

 Consider first the outcome of the summit. I have consistently argued (ET, August 25, 2001) that the launch of a new round with a minimalist agenda that focuses on trade liberalisation is in India’s own best interest. The Doha agenda readily satisfies this criterion.  It calls for negotiations in four areas: trade liberalisation, trade and environment, WTO rules in certain areas and the Dispute Settlement Understanding (DSU). The mandate on trade and environment and WTO rules is truly narrow and DSU negotiations are a part of the Uruguay Round built-in agenda. This leaves trade liberalisation as the main negotiating item on the agenda.

 The Doha agenda calls for trade liberalisation in all sectors: industry, agriculture and services. Given the urgent need to jump-start India’s trade reform, expected benefits to its farmers from increased access to the European market and the need to eliminate tariff peaks in developed countries in products such as textiles and clothing, footwear and fisheries, India stands to benefit big from the proposed liberalisation agenda.

 For the first time, the Doha Declaration places trade and environment on the negotiating agenda of the WTO. Most developing countries including India had vehemently opposed this. Yet, in my judgement, the principal negotiating item in this area promises to promote rather than hurt the interest of developing countries.  This item requires the Members to negotiate on “the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs).” Currently, this relationship remains ill defined, giving the so-called “faceless bureaucrats” at the WTO a free hand in not just interpreting but also formulating policy.  To safeguard against any protectionist outcome, the Declaration explicitly states that the “negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question”

 The third item on the Doha agenda requires clarification and improvement of disciplines on anti-dumping, subsidies and countervailing duties, fisheries subsidies, and the existing WTO provisions on regional trade agreements. Virtually all subjects under this item had been either pushed or backed by developing countries including India. Therefore, its inclusion is prima facie consistent with their interests.

 The Doha Declaration represents a significant victory for India not just in terms of the items it includes but also the items it excludes. Thus, India has successfully kept the issue of labour standards off the agenda. Also excluded from negotiations are the so-called Singapore issues spanning over investment, competition policy, transparency in government procurement, and trade facilitation.  A positive decision on the inclusion of these latter issues into the negotiating agenda can only be made by a consensus among Members two years from now. The benefits from multilateral agreements in these areas having not been fully established, India had firmly opposed their inclusion.

 India can also take pride in two other achievements at Doha. First, a separate declaration on the TRIPs Agreement has clarified that Members have the right to grant compulsory licence in the area of pharmaceuticals and that they have the freedom to determine the ground upon which such licences are granted. This and other provisions in the declaration remove several ambiguities with respect to flexibilities available in the TRIPS Agreement.  Second, India got concessions on a number of ‘implementation’ issues it had aggressively pushed, first at Seattle and then at Doha. While the benefits from these concessions are tiny in relation to the energy and negotiating capital expended on them, they had been sought with zeal by India.

 Commerce minister Maran is, thus, to be congratulated for the victory he has scored in Doha. He was not only personally present at the summit from the beginning to end but also had a presence there.  Though many developed country delegates, observers and journalists were irked by his aggressive negotiating style, he gave effective expression to the interests of India as well as many other developing countries, which had difficulty in having their voices heard. Had he not been true to his promise — “I will go down fighting” — and personally negotiated non-stop for the last 36 hours of the summit with EU and the US, the Doha agenda would have surely included the Singapore issues as sought by the European Union.

 There are, nevertheless, lessons to be learned from the Doha experience. Ever since the Uruguay Round, India has uniformly suffered from a negative image among negotiators. To some degree, this is the outcome of an old tactic whereby negotiators try to tilt the outcome in their favour by painting a particularly vocal rival as “obstructionist”.  But India also bears some responsibility for making the task of these negotiators easy. By opposing the very launch of the new round, India made itself an easy target of criticism by them. It could have instead taken the high road by supporting trade liberalisation agenda unequivocally and positioning itself in favour of a round that focused on this central function of the WTO.

 In negotiations, it is common for participants to demand more than what they are willing to accept at the end. Yet, the initial position of India was so extreme as to effectively rob it of any room to claim an unqualified victory at the end of the day. Given the fact that Maran had publicly opposed the launch of the round altogether, his critics can now point to the newly agreed round as evidence of his defeat. They cannot be more wrong; yet they will be technically right.

 Economic Times, November 21 2001