Optimism on world trade benefits has slid

Updated: Jan 26 2005, 05:30am hrs
Perhaps the most striking thing about WTO in the past 10 years is that member-countries have been deeply divided and are increasingly skeptical about the gains from trade liberalisation. Protesters against WTO, on the other hand, have become united and organised. As a result, trade negotiators are bitter and exhausted, while civil society is exultant. And the rest of us have serious cause to be worried about the way these factors will shape international relations in the next few years.

While on trade issues the interests of developing countries seldom converge, and clear groupings between them are visible, they do come together on issues such as electing the DG at WTO. However political these processes, it does bring into the limelight the shaky foundations of multilateralism on which the present global order rests. In a sense, the WTO has also unleashed a post-Washington consensus, where equity issues appear to play a dominant role.

The proposals being considered in the Nama negotiations do little to address issues such as tariff escalation on items of export interest to developing countries. This is why it becomes attractive to go into bilateral and regional free trade deals. These caveats notwithstanding, it is important to examine what India can gain from WTO. First, it is necessary to emphasize that there are no effective alternatives to WTO. However, participation in a multilateral trade order does not preclude conclusion of meaningful free trade agreements with trading partners. For India, multilateralism is not a substitute for bilateralism; the two reinforce each other. The benefits of globalisation often translate to new trading opportunities in neighbouring countries. However, economic interests of those within and outside regional trading arrangements sharply diverge.

Second, the consensus principle, at the heart of the WTO system, should be upheld in an inclusive manner. Interest groups around issues should be formed with common spokesmen. Third, developing countries such as India should support the initiatives for granting duty-free and quota-free access to products from least developed countries. Given that the South Asian region has four LDCs, such an initiative would foster regional cooperation and development. Last, the benefits of a rules-based system can only protect the interests of member states if the rules themselves are equitable. The Intellectual Property Rights agreement seeks to protect the rights of the innovator above all other concerns. The recent backlash against IP and the demand for public domain software bears testimony to the need to reestablish equity.

There is a distinct change in the attitude of the North towards favouring initiatives for LDCs, rather than developing countries. This is because rapid economic growth in some sectors in the more advanced developing countries has, in some cases, successfully challenged the competitiveness of developed countries. Thus, inefficient industries in the developed countries want to seek protection behind social and environmental clauses, extensive recourse to anti-dumping and other non-tariff barriers to trade. They feel safe with concessions to LDCs which these countries may be unable to utilise, but are reluctant to extend the same concessions to other developing countries. The WTO should not encourage this.

Increasing globalisation appeared inevitable in the 1990s. Debates on it began with a sense of irreversibility. It is vital to rebuild the basis for civil dialogue and action on trade policy, in international forums and, more important, at the domestic level. A proactive agenda on trade will only emerge if the industrial sector in developing countries, such as India, changes its tune from import pessimism to export optimism.

The writer is Unctads India Programme Coordinator