THE decision by the US Patents Office to award three patents to an American company for strains of basmati rice, throws into sharp relief the kinds of problems that developing countries are having with the current international trade regime. Not only has the WTO delivered little in terms of benefits to countries like India through either more export markets or more transparent functioning of trade partners, it has also entailed many more problems such a having to be involved in expensive litigation procedures.

The case of basmati brings this out very clearly. India has for some time been forced to argue in international forums that basmati rice covers a range of rice varieties traditionally grown for centuries in India and what is now Pakistan. These varieties encapsulate the traditional knowledge and continuous innovation of cultivators over a long period of time, and therefore cannot be - or rather, should not be - patented. Nevertheless, the US-based company Rice-Tec had filed for patents for varieties of basmati which it claims to have developed itself, and on August 19, it was actually awarded these patents and will now have the right to sell these products as basmati rice.

This not only constrains Indian exports of basmati rice to the US market, but potentially can damage domestic producers even further. This is because the need to comply with the TRIPS agreement has meant that India has already passed legislation which could give exclusive marketing rights domestically to the holder of a patent in any member country. To overturn the US Patents Office ruling, the Indian government would have to file a case in the US courts, which means a lengthy and extremely expensive legal process.

The time, energy and valuable resources of many developing countries have been frittered away in such unnecessary expenditures which have been directly caused by the GATT and the manner in which the World Trade Organisation has functioned. Meanwhile, instead of the promised benefits of more and higher priced exports from developing countries, there has been a slump in world trade and a collapse in international prices of important export commodities. Thus it is not surprising that most developing countries are now fed up with the entire process, and have been demanding a thorough review of the implementation process and an assessment of the extent to which the earlier promises have been fulfilled.

However, the way in which international power is distributed at the moment means that these legitimate concerns of developing countries are barely given a hearing even by the WTO Secretariat, which seems to be dominated by the interests of large capital from industrial countries. Instead of acceding to developing country requests for a thorough review along with reconsideration of some of the more problematic parts of the agreement such as TRIPS, the WTO Secretariat has put its weight behind demands by some developed country governments for a new trade round which would push for even more trade and investment concessions by developing countries.

All this is likely to come to a head at the Ministerial Meeting scheduled for November at Doha, Qatar. The United States is leading the drive for a new trade round, to further its aims of further reduction in barriers to its exports of industrial goods as well as more progress in the ongoing negotiations on freeing trade in agriculture and services. But of course there is widespread cynicism about the US government’s proclaimed commitment to free trade. While it is the most active and energetic member country in terms of raising trade disputes within WTO, it continues to use its unilateral trade and investment weapons like Super 301 and Special 301 which are not allowed under GATT. It continues to support its agricultural sector with huge transfers that fall outside the scope of the definition of subsidies under the Uruguay Round Agreement on Agriculture (AoA). It has provided virtually no concessions to developing country exports of textiles and has unwarrantedly used "anti-dumping" levies to protect domestic producers of commodities like steel, against competition from developing country exporters.

The net effect of this and the pattern of other developed economy behaviour has been that movements in world trade have not been along the lines expected by the developing countries when the Uruguay Round agreement was signed. Although world trade as a whole has grown faster than world GDP, this is more true of manufacturing trade and production than of agriculture. Hence, benefits to developing countries, if any, have been concentrated among the few who are major exporters of non-traditional manufactures. World prices of primary products as well as traditional manufactured exports of developing countries have remained very low and even fallen.

It was the US which initiated in the 1980s the process of substituting measures of support that directly impinge on agricultural prices with income support measures, which are supposedly "decoupled" from prices. One example of such decoupled support is "deficiency payments" made to farmers when actual prices rule below target prices. Since these payments, which are linked to specific crops and to farm area, allow farmers to remain in production despite incurring higher costs, they do affect the level of production and therefore must influence prices and trade. Yet the Uruguay Round Agreement excluded these payments from the list of subsidies that distort trade.

The lead provided by the US was followed by the European Union, which made the shift from price to income support the principal plank of the reform of its Common Agricultural Policy. Not surprisingly, these two powerful forces came together and ensured that these types of support to agriculture, categorised as "green box subsidies", were excluded from computing the Aggregate Measure of Support (AMS), which nations were committed to reduce under the AoA, on the grounds that they were not trade-distorting. What is more, under the Peace Clause included in the AoA, no disputes could be raised regarding the "green-box policies" and other AoA conforming support and subsidy measures, during the phase when the agreement was being implemented.

In fact, because of these measures, a study by the OECD in 1999 found that that producer support levels in the developed countries have risen to match previous highs established a decade ago, when the Uruguay Round was under way. And these were already high figures because prior to 1986-88,( which was taken as the base period) the US and other developed countries had substantially raised the support they provided to agriculture. The net result of such protection has been an extremely slow growth of world agricultural trade during the 1990s and a collapse in the prices of most important agricultural items.

It is not only in agriculture that the US resorts to protection under the veneer of being a votary of free trade. Trade in textiles, which is critical for developing countries, has been governed by the most visible non-tariff barrier structure of all - the Multi-Fibre Arrangement. The MFA was the result of a series of negotiated agreements starting in the 1960s, all of which sought to provide the developed countries with the time needed to restructure their industries so that competitive textile exports from lower-cost developing countries do not "disrupt" their markets. Despite three decades of agreement on that principle and periodic revisions of the deadline for ending import restrictions, textiles still are not permitted free entry in developed-country markets.

The case for an immediate end to such restrictions, under a new multilateral trade regime was therefore strong. However, though the Uruguay Round agreement on textiles and clothing provided for the phasing out of restraints stemming from the MFA, it once again delayed the process of liberalisation. The process that was to occur in four stages over a ten-year period starting 1995 was heavily "back-loaded", in the sense that most of the liberalisation was to occur during the last stages. The four stages defined involved the following:

In the first stage, beginning on the date on which the Uruguay Round became effective, each signatory nation was required to remove quotas only on products that account for 16 per cent of its total volume of imports of four categories of textiles and clothing in 1990 (tops and yarns, fabrics, made-up textiles products and clothing);

In the second stage, beginning three years and one month after the agreement enters into force, quotas are to be removed on a further 17 per cent of the total volume of 1990 imports;

In the third stage, which begins four years later, quotas are to be removed on products that account for not less than 18 per cent of the total volume of 1990 imports;

Finally, after 10 years and one month, all other quota restrictions on imports accounting for 49 per cent of the total are to be eliminated.

This prolonged and back-loaded agreement in a labour-intensive area in which the developed countries had agreed to open up markets four decades back, points both to the relative positions of power of developed and developing countries in the Uruguay Round negotiations as well as to the extent of commitment of the latter to offer greater market access as a quid pro quo for the rapid liberalisation of trade and investment rules in the developing countries. The developed countries have exploited the back-loaded schedule, by liberalising in the initial phases textile products that do not appear in the export basket of the developing countries. As a result even after six years of the start of implementation of the Uruguay Round, the access of developing country textile exporters to developed country markets remains restricted. The growth of textile exports has collapsed during the 1990s, as compared with the second half of the 1980s. Further, there has been little change in the distribution of textile and clothing exports between major regions.

Protectionism in the industrial area has not been restricted to textiles. Over the last few years the US has been using the option of introducing "anti-dumping" levies to prevent import surges or market disruption as a protectionist device against manufactured imports from the developing countries. The most blatant example is that of steel, where industry and union pressure led to the introduction of levies that violate WTO norms. Not surprisingly, the WTO’s dispute settlement panel has already ruled against the US in cases filed by some countries, and is expected to do the same in others, including one filed by India.

These developments have deprived most developing countries of even the limited benefits they were to get from the Uruguay Round, and made them suspicious of claims that a new round would bring further gains. Not surprisingly, they are demanding something in return for their own liberalisation efforts, which have substantially increased the access of developed-country producers and investors to their markets. This makes a review of the implementation of the Uruguay Round agreement, and a revision of that agreement to accommodate developing country interests, their principal concern.