Rahul Bajaj, chairman and managing director of Bajaj Auto Limited, the flagship company of the Bajaj group, heads one of India's top 10 business houses. A former president (twice) of the Confederation of Indian Industry, he has played a pivotal role in shaping India's industrial policy. A strong supporter of Union Industries Minister Murasoli Maran's hard line on issues relating to the World Trade Organisation, Bajaj has not hesitated to make clear his stand on the question of protecting Indian industry. Excerpts from an interview Bajaj gave Anupama Katakam on the fourth Ministerial Meeting of the WTO in Doha.
How do you view the outcome of the WTO Ministerial Meeting in its totality?
I consider the meeting and the final declaration a success. The Government of India's stand, which was extremely ably presented by our Commerce and Industry Minister, Mr. Murasoli Maran, was vindicated. So also was our negotiating strategy.
Those who said that India will be isolated have been proved wrong. Even till November 13, the last day of the scheduled five-day meeting, India continued to be supported by a large number of developing countries on each issue on which we had reservations. In fact, on some issues we received the support even of more than one developed country.
It was because of this unity among developing countries that the meeting had to be extended by a day to November 14. This day turned out to be a glorious day for India as, in a way, we stood alone fighting for the rights and interests of developing countries. Most other developing countries privately continued to support us even on November 14, but told us that they could not do so publicly as they were not as large and as strong as India. But they knew that if India got some concessions, it would help most of the developing countries as well.
There are some in India who say that from India's point of view, Doha was not a success in terms of what was achieved in relation to our stand pre-Doha. I am surprised at this infantile statement. For every country, the pre-Doha stand had to be a negotiating stand, keeping in mind that ultimately there will have to be give and take.
It has to be also understood that when developed countries band together and when they manage to get the support of other developing countries by separate sweetheart deals, a country like India with less than One per cent share of world trade has to recognise its limitations.
The second, third and fourth Draft Ministerial Documents (DMD) were not satisfactory. If Mr. Maran had not stood firm on the last day, the fourth DMD would have become the final declaration. As it turned out, the developed countries had to give in owing to India's firm stand and the final document was an improved version of the fourth DMD.
One big victory was the declaration on TRIPS and public health. It has been accepted that patents will not stand in the way of public health and it covers not only HIV/AIDS but also malaria and tuberculosis.
Another victory was forcing the E.U., specially France, to agree to provide substantial improvement in market access and reductions of, with a view to phasing out, all forms of export subsidies. Also, there is a commitment to reduce substantially trade-distorting domestic support. This was for the E.U., and specially France, a deal-breaker and by our tough stand we won. In return, we had to soften our stand on environment slightly.
A new round of negotiations on industrial tariffs is set to commence without a priori exclusion. What are the implications for specific sectors such as consumer durables and automobiles?
We had to give in a little on providing market access to non-agricultural products. Now the product coverage shall be comprehensive and without a priori exclusion. At present, all our products do not have bound rates of import duties. Now, this will have to be done during negotiations. Hence domestic industry will have to prepare itself to become internationally competitive to meet the increased challenge from imports.
On the other hand, during negotiations India will and should insist that the developed world reduce its peak rates and revise its escalating rates. Until now this has proved to be an obstacle to our exports to the developed world. These negotiations will not necessarily be completed by the next Ministerial round but will carry on at least till December 2004.
What are the near-term and long-term implications for India's export competitiveness owing to China's accession to the WTO?
In the near-term, I do not see any implications. But in the medium and the long term, say, beyond 2004, Indian industry is likely to face serious competition from China in the case of products that India also exports or has the capability to export. China already has large exports to the developed world and these may rise as it will also have better access to the developed markets.
As we have already extended to China the "Most Favoured Nation" status, I do not expect China's accession to the WTO by itself to make any significant difference with respect to Chinese exports to India. However, China remains one of our most serious competitors, specially in manufactured goods, in the developing world and Indian industry has to gear up to meet this significant challenge.
On the other hand, our access to the Chinese market should improve as a result of China's accession to the WTO. This is because China and Chinese companies will have to become more transparent in their functioning and this will help us with respect to both our exports to China and our imports from China.
India had made the point that before a new round of trade negotiations was launched, credible measures should be taken to see that existing agreements were fully honoured. Did this stand find endorsement in the final declaration?
India's stand has been vindicated to a significant extent. We must recognise that for all pending issues, the developed world had not made definite commitments in the Uruguay Round. On many subjects they had said that they would make their best endeavours to do the needful.
It was India's stand that these endeavours did not take place and hence many issues, which should have been implemented to the benefit of the developing countries after Marrakesh, remained unimplemented. It was not as if we did not support a new round. We insisted that the developed world should make firm commitments on most, if not all, of these implementation issues before negotiations can start on other issues.
The Doha Declaration acknowledges the need to resolve implementation issues. India highlighted these issues to ensure that the developed world does not keep misusing and misinterpreting rules to the detriment of developing countries. Now, a time-bound programme has been fixed to resolve implementation issues. Some of these will be directly taken up for negotiation, while others can be addressed as a matter of priority by the relevant WTO bodies, which shall report to the Trade Negotiating Committee by 2002-end.
Very little ground has been gained in terms of implementation of the textiles agreement. Is this a setback or a necessary compromise to get issues such as investment, competition, government procurement and trade facilitations off the immediate negotiating agenda? For Indian industry, what are the implications of bringing these issues into the WTO's negotiating ambit?
There has to be give and take in international negotiations. We wanted quotas on textiles, which exist until December 2004, to be either increased or the date brought forward. This was one of the negotiating points on which we gave in as both the U.S. and the E.U. were very strong on this point.
On the other hand, against tremendous reservations of the U.S., we had some success on the anti-dumping measures that developed countries in particular resort to against products from developing countries.
As far as the so-called Singapore issues are concerned, that is, trade and investment, competition policy, transparency in government procurement and trade facilitation, there is a misconception among some that we had to give in. The developed countries had in the fourth DMD already agreed that these four issues would not enter negotiations now but after the fifth session of the Ministerial conference. In other words, after a minimum of two years. If the wording of the fourth DMD was accepted then there would have been a giving in by the developing countries and India as, after the next Ministerial, negotiations would have started on these issues and all that we would have got was a short two-year breather. However, only because of India's firm stand the wordings in the final declaration were changed to state that negotiations will take place after the fifth session of the Ministerial conference on the basis of a decision to be taken, by explicit consensus at that session, on the modalities of negotiations. This is a substantial improvement and does not commit us to negotiations.
Our strongest objection is to trade and investment. Trade-related investment measures (TRIMS) already exist. By bringing in investment, developed countries want us to give up our sovereign right to determine whether we shall allow foreign capital to enter certain sectors and on what terms. We already do not differentiate between foreign and domestic capital post establishment.
Similarly, we need experience in dealing with competition laws. Also, it can be argued that transparency in government procurement should not be objected to as long as each government has the right to give preference to domestic companies. The fact remains that developed countries are initially asking for transparency but their ultimate aim is to capture our markets and deprive the government of its right to give preference to domestic suppliers.
Finally, on trade facilitation I do not have any objection in principle. However, once we accept this point, we will have to undertake many steps that may be very expensive and complicated. We need time to do this and want to do so at our own pace.
The declaration contains stronger language than India would have wanted on the subject of environment. What are its implications for India?
Our concern for a clean environment is second to none. We should also recognise that in the last 50 years it is the developed countries which have been essentially responsible for polluting the environment. Still, even the U.S. has rejected the Kyoto Protocol just because it claims that the provisions would hurt its industries. Ensuring a clean environment will hurt U.S. industry. What about Indian industries? Developed countries are obviously not concerned with the welfare of Indian industry.
In India we have a strong environmental lobby. The courts also give judgments to protect the environment... I have always quoted Indira Gandhi to say that poverty is the biggest polluter. We should be making every effort to reduce the level of poverty in our country. Our reservations on linking a non-trade issue such as environment to trade is owing to the fact that developed countries will use this to prevent market access to the products of developing countries. In essence, they will use this as a non-tariff barrier. Developing countries succeeded in keeping labour out of the negotiations. In the ideal situation, we also wanted this with respect to environment.
However, for getting the E.U., and especially France, to agree to phase out all forms of export subsidies on agricultural products, we had to, as a quid pro quo, agree to negotiations on environment but without pre-judging their outcome. As Mr. Maran said, in a way this is a political acknowledgement of the importance of the environment and will not harm our market access.
At one juncture in Doha it seemed that the Indian delegation was all set to pull out. Were you aware of this and what (if any) interventions did you feel call upon to make ?
I am not aware of what happened behind the scenes at Doha, especially on November 13 and 14. However, I believe we never had to decide to pull out of the negotiations. We kept a firm stand on certain issues. This was our negotiating strategy. Even on November 14, at the last plenary at 6 p.m., when everyone hoped that Mr. Maran will give in, he got up and made his statement indicating his objections and said that unless these were attended to, we would not participate in the consensus. He did not have to take the next step, which would have been to block the entire draft being presented to the Ministerialconference for approval.
In view of the above, the Chairman of the Conference gave a clarification that negotiations on all the four Singapore issues would be started only after explicit consensus. As a result of this, India said it would participate in the consensus and hence a final blockage was averted.
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