(Weekly Organ of the Communist Party of India (Marxist)
August 30, 2009
Thwart Initiative to Revive WTO Negotiations: IPCAWTO
Doha Round of negotiations which was dormant for about a year is now
revived at the initiative of the Indian commerce minister whose
objective is to
“break the deadlock” in the process. A ministerial meeting to which
five countries have been invited is scheduled for 3-4th
The Indian initiative in this regard is, to say the least, intriguing. The so-called “deadlock” was cited in official circles, only a year ago, as the proof of a strong pro-farmer stance of the then commerce minister. It was argued that the negotiations got deadlocked mainly because the minimum safeguards insisted upon by the commerce minister for protecting the livelihood of millions of Indian farmers against the unfair competition from subsidised cheap imports from developed countries were not acceptable to the developed countries, particularly USA.
an iota of evidence is available to indicate that developed agriculture
The initiative to “break the deadlock” is thus likely to boomerang. The forthcoming ministerial meeting may well turn out to be the preparation of the ground for substantial dilution of the official Indian stand in vital areas of negotiations.
The Indian Peoples Campaign Against WTO (IPCAWTO) has consistently pressed for a strong negotiating stance, particularly in the areas of agriculture, non-agricultural market access (NAMA), intellectual property rights, services. IPCAWTO had hailed the re-emergence of the solidarity of the South at the Cancun ministerial meeting in 2003 and has been stressing that India should forge links with the developing countries and evolve a coordinated stand to defend the interests of the South in these negotiations.
Unfortunately the Indian position not only got diluted in the crucial areas as the negotiations progressed but India also veered away from the solidarity of the South on more than one crucial occasions.
IPCAWTO appeals to the peasantry, the workers, the craftsmen, all patriotic elements and particularly the youth, committed to self-reliant, just, prosperous and egalitarian India, to join the campaign to not only thwart the present initiative to revive the WTO negotiations at the present juncture but also to compel the Indian Government to thoroughly reorient its stand in international negotiations so that it fully accords with the interest of working people.
In Agriculture, the
fundamental imbalance persists. The market access sought by developed
into the developing countries is ensured by the maintenance of the
tiered tariff reduction formula which has been there for some time.
broadly speaking, requires developing countries to reduce their tariffs
agricultural products by 36 per cent as against the developed countries
obligation to reduce them by 54 per cent. The promise of average
developed countries will make sense if the very high tariffs in the top
(some ranging as high as 700 per cent or even more) are drastically
few exceptions are permitted through the escape route of “sensitive
Both these conditions seem very unlikely to be fulfilled. For
countries like ours, an average cut of 36 per cent on bound tariffs in
agriculture is a stiff proposition. In sharp contrast, the issue of
elimination/ substantial reduction in subsidies by developed countries,
The possible level to which
· As regards special safeguard mechanism, the criteria in the text for the price- based measures are too restrictive and ineffectual. Thus, the provision to impose additional duty to protect indigenous peasantry from sharp decline in international prices and consequent surge or threat of surge of imports can be invoked only if the import price declines to or below the designated "trigger price" which the text suggests to be 70 percent of the average import price of the preceding three years. The additional duty to be so levied cannot exceed 50 percent of the difference between the actual import price and the trigger price. By definition, the import price will continue to remain much below the "trigger price" even after the levy of additional duty. Moreover, this measure will be applicable only on a shipment-by-shipment basis. The protection so offered is also therefore ineffectual.
· The other safeguard measure is volume-based. It has a two-tier volume trigger, with one tier being a volume increase of 120-140 per cent of the base level imports and the second tier being a volume increase over 140 per cent. In tier one, the maximum additional duty permissible shall not exceed one third the current bound tariff or 8 percentage points (whichever is higher). In the second tier, the maximum additional duty shall not exceed half the current bound tariff or 12 percentage points, whichever is higher. These are too restrictive formulations. For one thing, the trigger range of volume is too high, making the remedy coming into force when the damage is already done. Secondly, the remedial protection through levy of additional tariff is too low to effectively address the problem of import surge.
· There is also proposed cross-linkage of the two triggers making the application of remedial measures even more problematic. At the same time, the volume- based and price- based measures cannot be invoked simultaneously for the same product. Moreover the measures are not expected to be applied beyond a limited period (four to eight months) and are not expected to be repeated before a lapse of similar period.
· It is well known that adverse impact of decline in international prices in a domestic market integrated with the world market is felt even before or without large scale actual imports. What is needed to insulate the peasantry from such adverse impact is a strong signal like immediate imposition of quantitative restrictions. Finely calibrated, halting and inadequate measures taken after the damage is done are of little use.
· All in all, the protection regime visualised in the text is too limited and ineffectual to protect the livelihood of millions of small and marginal farmers against the surge or threat of surge of cheap imports of products the bulk of which would continue to be heavily subsidized.
· The logic of integration of Indian peasant agriculture with the global agri-buisiness dominated agriculture is deeply flawed and fraught with incalculably dangerous consequences. And the present conjuncture only underlines the untenability of that logic. The free trade agreement with the ASEAN has evoked spontaneous resistance in Kerala and other states where the livelihood of small peasantry dependent on plantation crops is threatened. We are witnessing a severe countrywide drought which is already threatening the livelihood of millions of small and marginal peasants. It would be nothing short of suicidal to aggravate such disastrous situations today or in future by accepting or preparing the ground for eventual acceptance of a trade policy that poses a systemic threat to the livelihood of our peasantry.
regards the NAMA text, the tilt against the developing
countries is even more
blatant. The universal binding of tariffs, the line-by-line tariff
instead of the average reduction target (which was the rule in all the
rounds), application of the "Swiss Formula" and more than
proportionate reduction in the tariffs of developing countries through
coefficients and few exceptions, which constituted the hallmark of the
texts continue to govern the approach in the latest text. What is
The choice of low coefficients leaves developing
countries with little margin or manoeuvrability. The simulation
· A new conditionality has been introduced to reduce the flexibility even further. The policy space for exempting a particular industrial sector from the drastic formula cut has been severely circumscribed by proposing that no sector or sub-sector can be totally excluded from the formula cut and at least 20 per cent of tariff lines or 9 per cent of value of imports in a given sector or sub-sector must be subject to the formula cut.
· Our current level of applied tariff is, on average, 10 per cent, and the bound level average is 34 per cent. The cut which the formula would likely entail will require drastic reduction of bound level of tariff. Assuming that India accepts the coefficient of 22, we would be obliged to reduce tariff by about 60 per cent with only 10 per cent of tariff lines open for less than formula cut. With very limited exceptions available under the dispensation of the text and the policy space severely circumscribed, the door to de-industrialisation will be wide open.
· We are experiencing a severe contraction of exports, particularly in the labour- intensive sectors of textiles and garments, leather and leather goods, gems and jewellery, handicrafts. Large scale lay-offs are taking place. Of late, industrial sector had witnessed stagnation or very low growth. Employment is not keeping pace with the additions to labour force, not to speak of the vast backlog of under and unemployment. In such a situation, it would be nothing short of courting a disaster to open doors to de-industrialisation through trade policies imposed by lopsided and unequal negotiations.
There is therefore little to "take" and
quite a lot to "give" in the dispensation visualised in the two major
areas of negotiations. But the story does not end there. Developed
are keen to give a push to the negotiations in the area of services to
new commitments, which means building up of pressures on emerging
particular to integrate their services markets, particularly the
services markets with the global market. This has a sinister
implication at the
present times. The "toxic waste " of the financial services market,
the magnitude and manifestation of which is still not fully understood,
which virtually brought the recession in the US economy needs to be
somewhere. And the burgeoning financial services sector in emerging
like ours would be as good a destination as any other for the purpose.
already a powerful "in-house" lobby advocating, as in the Economic
Survey 2009, liberalisation and further opening of banking, insurance
financial services sectors. The
When the Doha Round was launched, it was agreed by all
that negotiations on outstanding “implementation issues” constituted an
integral part of its mandate. Developing countries including
Although more than
two years have elapsed after the text was proposed for negotiations,
been no progress whatsoever. And it seems unlikely that any progress
take place when the negotiation are being focussed only on Agriculture
texts. The latest twist, however, is that
Last, but certainly
not the least, consideration why the initiative taken by the commerce
should be thwarted is the stark fact that the present
initiative of the commerce minister took shape after his visit to
We must be vigilant
in the coming months as the process sought to be initiated in the