Seattle and beyond

Print edition : February 05, 2000

Post-Seattle, only a coming together of developing countries on the basis of an agenda that will help protect their interests can hold out against the developed world on issues of practising technological protectionism, environmental imperialism and social exclusion.


THE strategies that the United States and the European Commission (E.C.) would follow in the World Trade Organisation (WTO) in order to shape the agenda of post-Seattle negotiations in Geneva are now clear. Their recent actions indicate that despite diff erences on some crucial issues, the U.S. and the E.C. will closely coordinate on issues of common concern to them.

The joint attempt of the E.C., Norway, the U.S., Japan and Switzerland to make the Committee on Subsidies take action on the extension of the period of waiver from the application of provisions that make many of their own subsidies for technology develop ment actionable, is a case in point. The U.S. and the E.C. continue to coordinate on the issue of getting the members to agree on the start of a new round that will have several non-trade issues (such as investment, competition policy, biotechnology safe ty, environment and labour) included in the agenda. They have even pressed Mike Moore, the Director-General of the WTO, into service to champion the cause of a new round. The Director-General was in India recently to attend an event organised by the Conf ederation of Indian Industry (CII). At this meeting, the Director-General was completely open about his mission. He went out of his way to impress upon industry and government officials the need to launch a new round of negotiations.

It is a matter of relief that the view of a large majority of countries is that the Seattle Ministerial Conference has ended and that the conference is not in a state of suspension and cannot be resumed. In the consultations after Seattle before the Dece mber 17 General Council meeting in Geneva, the U.S. sought to take the opposite position. It tried to adopt a view that had two sides. One, that the Ministerial Conference was in suspension and that all issues and papers before it remained "frozen". Two, that the Seattle Ministerial had ended, in the sense that the General Council could act and decide issues. This way the U.S. wanted to enable itself to continue consultations to find a consensus on dispute settlement and keeping alive the e-commerce mor atorium on custom duties or the labour issue.

The developing countries themselves have to share the blame for this partly. The inability of these countries to follow an agreed approach on relevant issues is a major reason for a new determination on the part of the developed world. The developing cou ntries are yet to realise the real meaning of the failure of WTO in Seattle. They are still unable to act in concert. Individual nations are trying to cut deals with the U.S., whose administration cannot for now deliver anything. India is itself a perfec t example of this mode of behaviour.

The result is that the WTO General Council meeting on December 17 got adjourned without a decision on the proposals seeking delays in end-of-the-year deadlines for applying obligations and other provisions of WTO agreements - for example, in the realm of intellectual property (TRIPS) and certain investment measures (TRIMS). These deadlines will now be among the subjects discussed.

A detailed reading of the decision taken in the General Council meeting indicates a sinister design on the part of the developed world to trap the developing countries into another major surrender. The real intentions of the developed world are clearly l inked to the so-called "implementation" issues on which the developing world can claim to have done at least some mobilisation. At one level, the December 17 decision is an attempt by the developed world to decide at least some of the so-called "implemen tation" issues through the means of not taking any action. The developed world has thereby succeeded in creating a situation where it would be in a position, post-December 31, to threaten some of the developing countries with cross-retaliation on the iss ue of non-implementation. The developed world is also interested in putting them on a new round because that would give the delegations of developed countries a clear chance to use the so-called issues of "implementation" or extension of deadlines to ext ract more concessions from the developing countries.

Mike Moore, Director-General of the WTO.-STUART RAMSON / AP

THEREFORE for the developing world, the moot issues to be considered today are two fundamental questions of counter-strategy. First, what kind of leverage does the developing world have today vis-a-vis the developed countries in the WTO? And second, is t he developing world at all in a position to take advantage of the available space?

There are at least two issues in which the developed world clearly has a major interest, and if the developing countries join forces to withhold consensus on these, they are likely to get leverage to influence the WTO on their own problems and demands.

One issue relates to the Agreement on Subsidies and Countervailing duties that sets for the developed countries the target of completely removing by December 31 all those subsidies that are said to cause serious prejudice to other members. The subsidies that are defined as prohibited and actionable by the WTO include research and development activities of enterprises that could be subsidised up to 75 per cent of the cost of research and up to 50 per cent of the costs of pre-competitive activity. Several countries of the developed world were supposed to undertake reductions in such industrial subsidies and they are as a whole guilty of violating these legal provisions of the WTO.

Similar violations have occurred in the case of environmental and regional subsidies, where too the developed world is a big culprit. There has been little close monitoring, and even less of a reporting requirement on countries, on the various subsidies that they provide to industrial and service enterprises.

The second issue relates to the Agreement on Electronic Commerce, where also the Seattle Conference has neither extended the moratorium on custom duties nor taken any decision. The interests of the developed world, particularly of the U.S., are largely a t stake here. To the developing world, both these issues offer some hopes of righting the wrongs done to it at Marrakesh.

COMING now to the second aspect, the moot question is whether the developing world has the right mindset to exploit the above-discussed issues for its own benefit. By all indications, the developing countries are still divided along the lines of large an d small countries. The E.C. and the U.S. are also consciously trying to divide them as the advanced and least developed countries. In Seattle they made a conscious attempt to divide the developing countries into three sets: advanced developing economies, developing economies and least developed economies. They have announced that the developed world would be willing to offer zero tariff benefit to the least developing economies if the advanced developing economies are also ready to do the same. In the U ruguay Round, the developing world was divided into only two sub-sets, but in Seattle the attempt was to divide the developing world into three sub-sets. This issue, if not tackled on time, has the potential to cause serious divisions in the developing w orld.

But if the developing world were in the right mindset, it would not allow itself to be divided on this issue. Large developing economies have to play a positive role here. India can take a lead in suggesting to the least developed economies that if they give full support on the concerns relating to non-trade issues, the proposal of zero tariffs would be acceptable to it.

To come to the hurdle of differentiated interests in respect of access to markets, technology and investment, India can take the lead by suggesting to the developing countries the adoption of an approach of having only multilateral agreements on non-trad e issues. The suggested approach would give the developing countries freedom to optimise their own respective strategies. They will be still free to decide whether to join the multilateral agreements being offered on non-trade issues. With these steps In dia can hope to bring all the developing economies into a united bloc. In Seattle, the developing countries showed maximum unity over the issue of undemocratic practices being followed in the decision-making processes. There was a clear assertion over th is by Africa, the countries of the Caribbean Community (Caricom) and the Latinos. They were forthright in stating that they will not tolerate the lack of respect being shown by the developed world to the issues of transparency and full participation of m embers. The scale of unity that was seen in Seattle over the issue of decision-making processes is yet to be converted into unity on substantive issues. In the absence of a common approach to substantive issues, it would not be possible for the developin g world to take advantage of the leverage the developed world appears to be generating on account of its own compulsions. The scale of unity was smaller when it came to taking a common stand on substantive issues. The like-minded group gathered by India on the "implementation" issues has just 12 members.

IN this connection, the question to be answered is why this unity was always limited. The answer may be that the larger economies among the developing countries have developed a mindset which is essentially inimical to the strengthening of unity in the d eveloping world. They have started to believe that they are "Big Boys", and that their interests are better served by being with the countries of the North. Apparently their thinking is that they have little in common with the rest of the developing worl d. Among them there is a perception that the smaller developing countries are merely herds that could will be easily bought for small gains, and also that they are too diverse to be united as the developing world. In their view, the developing world is a differentiated world, whose interests in respect of market access are so varied that in the WTO a united approach by the developing countries is not possible.

In fact, Commerce Minister Murasoli Maran is one of those few leaders who went on record on this issue in Seattle. Asked why groups like G-15 and G-77 were not able to issue any declarations, he clearly said that their interests were too diverse. In Indi a this belief has emerged as a part of the process of ongoing liberalisation. In this the Minister is not alone; it is a complete mindset. It is a mindset that big business holds today in India. Montek Singh Ahluwalia, Member, Planning Commission, was la ter echoing the words. In fact, he went one step further and argued that it was wrong on the part of the Commerce Ministry to try changes in the agreements based on a perspective that runs contrary to liberalisation. He wondered why the Ministry of Comme rce should be at all interested in reviving the instrument of quantitative restrictions (QRs) for the sake of food security when the country is committed to moving in the direction of speeding up the process of liberalisation. He was quite open in arguin g that India should not bother about how to unite the developing countries. His advice was to bother only about how you can get more foreign direct investment (FDI) or enhanced market access. The only issue that bothered him relates to the demand for the linkage of trade with the enforcement of labour standards. Significantly, on the eve of the start of the Seattle negotiations, in Parliament Prime Minister Atal Behari Vajpayee advocated the same stand of do-and-die on the labour linkage issue.

WHAT is really striking about this stand is that in this framework there is no firm opposition to the introduction of agreements on the rest of the non-trade issues. The stand of no compromise on labour linkage but surrender on every other non-trade issu e is an integral part of the framework that Indian big business seems to be content with today. It appears that since this framework ensures for big business a place of junior partner of multinational corporations, the liberalisers have no qualms in driv ing the government in the direction of making such a bargain. It is also seemingly true that to Indian big business it is immaterial that such a framework is essentially inimical to the interests of employment-oriented growth and technological self-relia nce.

This time Indian big business was well represented in the official WTO delegation in Seattle. Its influence was quite visible on the strategy. Indian big business was busy having a tete-a-tete with U.S. business and was directing India to go close r to the U.S. positions. India was being moved to accept an extremely dangerous position that the U.S. was taking in Seattle on the issue of market access in respect of agricultural goods. This time the U.S. was trying to push its biotechnology products into the negotiations on agriculture in the WTO. The U.S. position was therefore that the WTO should end the distinction it today makes between industry and agriculture when it comes to deciding on issues of market access. India was being pushed by big b usiness into accepting this position. This time the Indian delegation was totally for a policy of market access at any cost. It was willing to sacrifice the crucial interest of food security for a few dollars more for the sake of Indian big business, whi ch may get some crumbs in respect of agribusiness. In the Agreement on Agriculture, the mention of food security amounts merely to a best endeavour clause. India may not be able to convert it now into a binding commitment without making a compromise on t he issue of subsidies for agriculture in the developed world.

Needless to say, if India wants to avert these kinds of disasters it would have to pursue a consistent stand in the interests of the Indian people as a whole. The government would have to be pushed into adopting an approach that unites the developing cou ntries in the direction of fighting the developed world on the issue of practising technological protectionism, environmental imperialism and social exclusion.

The government must oppose with greater determination the implementation of a framework that grants multinational corporations easy access to Indian markets without the developing world and the Indian people getting anything substantially in return in th e areas of access to technology and markets.

Dinesh Abrol is a researcher working on science and technology policy. He is joint convener of the National Working Group on Patent Laws.

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