Economic Highlights

New Delhi, 29 November 2013  

WTO Under US Shadow

SHOULD INDIA COME OUT OF IT?

By Shivaji Sarkar

The World Trade Organisation is a bad omen for India. The deals have led to the collapse of its economy. The quantitative restrictions imposed by it in the late 90s have ruined its manufacturing base as free and cheap imports from China and other countries flood the market today. Its growth rate may plummet to around 4 per cent this year and to the classical Hindu rate of may be 3 per cent or less next year.

The nation’s health security is also being threatened as provisions under TRIPS and Intellectual Property Rights are preventing it from producing affordable drugs. Compulsory licensing provisions are a serious threat as drug prices are bound to increase manifold if India or Brazil agrees to it.

Even trade facilitation and host of other provisions are severely pitted against India. However, though the Government makes the “right” noises for the people’s consumption, the country has witnessed that since 1992 at various WTO meets –in Singapore 1996, Cancun 2003, it signed deals without consulting Parliament, leading to tremendous losses to the nation. 

With General Elections not too far off, it’s time political parties announce that the Executive would not be allowed to sign any international deal without parliamentary sanction. High decibel cacophony over subsidy for food security has raised political concerns for the present Government’s flagship Food Security Act. India is concerned. At the official level it does not agree with the WTO compulsion that virtually erodes Indian sovereignty. But the Government is apparently in a hurry to buy “peace clause” for exiting the “controversy”.

The WTO is keen on imposing conditions on India under threat of penalties for “exceeding” the limit on subsidies. The global biggies have suggested that India sign the temporary “peace clause” that would ensure reprieve for the next four years. That means subsidies could continue for four years and India would not be prosecuted. But after that term it would again be back to square one. Provision in Article 13 of the Agriculture Agreement says agricultural subsidies committed under the agreement cannot be challenged under other WTO agreements, in particular the Subsidies Agreement and GATT, which expired at the end of 2003.

India today rues the death of Murasoli Maran, who as Commerce Minister through his reticent diplomatic moves and the one liner – “I have a problem” - to every WTO farm proposal, at Doha meet in 2001, had been able to stall important deals on agriculture. He was criticised by the US, but developing nations praised his negotiating skills. Since 2001, virtually no multilateral agreement has been signed. However, through the back door a regime of bilateral free trade agreements have been introduced, which are potentially against the interest of the poorer nations.

Yes, India today needs to take a tough posture at WTO to protect its national economy, industries and all kinds of welfare measures for its people. It must protest calculation of subsidies at the price level of 1987-88. The rice then had the minimum price of Rs 3 and Rs 19 now. It means in their terms “India is paying a subsidy of Rs 16”, which is unacceptable.

Further, the multi-lateral WTO has virtually become a pawn in the hands of the US and the European Union (EU). The world’s most powerful nations are using it as a personal fiefdom to deprive the rest of the world with the least opportunities to protect their economies.

India, of course, with China is leading the demands of G33 – group of 46 developing countries - for changes in agreement of agriculture. It wants greater subsidies for farmers against the WTO proposed agreement limiting it to 10 per cent. But there seems to be some wavering when it comes to issues affecting India. The Government needs to take a firm stand to stall the deals.

The US and EU control the international grains trade market. The commodities market is fully manipulated by the US. It knows that if they do not arm twist the poor developing countries, India particularly, their grain trading would be hit as any reduction or recalibration of subsidy is bound to increase the prices in their home countries.

To ward off their domestic problem they are using WTO. India ensures an average of 20kg food grains a month and has a total subsidy of $20 billion for a population of 121 crore people. The US has doubled its subsidies to $130 billion from $61 billion in 1995 for 385 kg of food to 31 crore people – one fourth that of India. The subsidy of EU hovers between Euro 90 to 79 billion between 2006 and 09.

The US also wants WTO to include provisions of “international procurement” for food security programmes. It means despite having enough stocks at home, India would have to purchase food grains at international markets, largely US-dominated, to benefit their corporate, an issue that had led to severe protest even in 2001 in Australia.

There are many other issues that affect G33. India needs to reopen the entire dialogue of quantitative restrictions, tariff barriers and other related issues to ensure WTO does not erode national sovereignties. Each time it was said that poor countries would benefit through increase in trade. Of late, it has been observed each one of them has been a loser.

Brazil has raised an objection to the misaligned exchange rates. It is a sober way of saying that the global poor are subsidizing the rich economies of the US and EU. The WTO so far has not talked on the issue.

No wonder WTO Director General Roberto Azevedo has warned global trade deal talks facing collapse. He says a potential deal could add nearly $1trillion (pound 617 billion) to the world economy. Such rhetoric is common before any WTO meet to bring the poor on the platform.

The issue is no more the trade. It is now national economic security that WTO has severely hurt. Its proposals for trade facilitation and Trade in Services agreement (TISA) are weapons that are likely to hurt countries like India the most. Since WTO began, India’s pharmaceutical industry is facing an upheaval of mergers and acquisitions by global majors. The market is getting skewed.

A delay in talks would not make any difference. India certainly needs not proceed on the premise that if the talks are stalled it would be losing any way. It needs to be a tough negotiator and not be lured by sops the US and EU want to offer beyond WTO.

Quarantining the country for a few years would not make much difference. It could only resuscitate industry and manufacturing in the country and ensure growth with jobs. It calls for developing a new strategy. It has to ensure WTO becomes a democratic forum or else at the worst India could think of doing without it. ---INFA

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