The government must continue to resist US pressure to bring in labour standards and environment into the WTO, Rahul Bajaj, CII president, said at an interactive session with journalists here on Monday. Also, India should not bow to pressure from the European Union and Japan to a new multilateral agreement on investment (MAI) and competition policy, Bajaj said.

"Cheap labour is the biggest advantage India has and the developed countries must not be allowed to blunt this competitive edge", he said. However, he said India should not posture as a big brother of developing countries on this issue and let others oppose the move. On environment, CII wants the government to resist bringing it under WTO ambit as India is already a signatory to many multilateral environment agreements.

Bajaj said child labour, human rights and environmental issues were in fact non-tariff barriers used by developed countries to curtail the comparative advantage of developing countries. Subsidies given in the developed world to corporates are non-actionable. In that case why should the subsidy we give should be actionable, Bajaj said.

Contrary to the government opposition to a New Round, CII says the government should react positively on this issue and ensure that core interests are preserved. CII has also demanded a standstill on tariffs and reduction in tariff peaks applied by developed countries rather than any reduction in the average rates applicable. It was pointed out that the incidence of high peaks leads to a deceptive impression of the extent of protection.

The CII strategy paper says India should say yes to a new round of tariff negotiations but be prepared that if developed countries reduce peaks, we too have to reduce our high tariffs at least to Asean level by 2003. "The strategy of the developed countries is to keep the tariff low in sectors like aircraft where India or other developing countries did not have export potential while pegging it high in textiles", he said.

India's industrial tariff hovers around 27-28 per cent while that of US is 3.7 per cent, EU (4 per cent), Japan (0.8), Canada (4.5) and Brazil (13 per cent). Bajaj warned that India should not agree to any standstill clause in industrial tariff negotiations. Agreeing to a standstill clause would mean that negotiation would begin with the present rate of duty in a particular country even if it was ahead of the WTO-bound schedule.

On MAI, Bajaj said the country should have the right to decide the foreign investment policy in the pre-establishment phase so that it retained the powers to limit the extent of equity participation.

"Post-establishment, we don't discriminate between India and foreign companies even now", he said. India should move away from its image of being "obdurate" in international negotiations and should be seen as being smart and positive so that it "gives something and gains something", he said. On Special and Differential treatment, CII says India should ask for market access round or alternatively, address at review stage of individual agreements on a bilateral basis.