Nobel laureate-in-waiting Jagdish Bhagwati has suggested a two-point agenda for Clinton's India visit: that Prime Minister Atal Behari Vajpayee and President Bill Clinton agree to initiate discussion on labour standards under the aegis of ILO-UNCTAD; and a new millennium round under the WTO. It is implied that these twoboth possibly laudable in their own rightcould be pursued independently. Nothing could be farther from truth. In fact, the apparent separation of discussions on labour standards and millennium round is only Bhagwati's ploy to ultimately include labour standards in the WTO.Bhagwati has suggested that an Expert Group on Advancing Labour and Children's Rights Worldwide be established under the joint charge of ILO and UNCTAD. This Expert Group, along with other non-WTO-related measures, should also study the "appropriateness of the use of trade sanctions, where countries fall short on any of the entire spectrum of labour and children's rights, whether through the inclusion of a wide-ranging social clause at the WTO or in other ways." The implication is that under the aegis of ILO-UNCTAD, the developing countries will discuss, among other things, how to incorporate labour standards in the WTO.It is clear that Bhagwati argues only for discussions on the two issues to be undertaken separately. He does not argue for separate mechanism for their implementation. In fact, he is quite favourably disposed towards the inclusion of labour standards in the WTO regime. He is only trying to camouflage this linkage by suggesting that the linkage be discussed outside the WTO.Clinton is more to the point. Free trade implies that cheap goods produced by cheap labour of the developing countries will hit at the high wages of the workers of the industrial countries. In order to save US labour from such terror of the free markets, Clinton rightly insists that trade sanctions should be imposed on those developing countries paying low wages. That will protect US labour from free trade. He said at Davos that if labour standards were not implemented then the US would be forced to resort to protectionism and reconsider free trade itself.The interests of the US are served if it can have free access to the markets of the developing countries for its hi-tech products such as Boeing airplanes and computers; and the developing countries do not have access to the markets of the US for their labour-intensive products such as garments. Clinton's difficulty is how to persuade the developing countries to agree to such unfree trade. Vajpayee should beware. The slightest concession on global labour standards as suggested by Bhagwati will backfire on India. It will have to give free entry to US hi-tech imports in India while its low-wage exports will be denied free entry in the US.In order to make his suggestion appear evenhanded, he suggests that the working group also study the violations of human rights of labour in the industrial countries: sweatshops in New York, quasi-slavery conditions for migrant labour in agriculture in the US south, lack of unionisation, lack of worker participation in management etc. Bhagwati suggests that if India will have to artificially increase the wages of its workers the US too would have to solve its labour-related problems.The problem is that the problems of the rich countries that Bhagwati enumerates are really cosmetic. The basic problem is whether US workers should be provided protection from cheap Indian imports. This problem remains even if quasi-slavery conditions for migrant labour in the US are suitably dealt with. If India were to accept labour standards as a part of such a quid pro quo, it would be sacrificing its basic economic interests for cosmetic changes in the US.We should realise that a great battle is waging in the world economy today. On the one side are the hi-tech products of the industrial countries. On the other low-wage products of the developing countries. The developing countries are likely to emerge victorious. The reason is that technological changes are not likely to continue to occur ad infinitum. But low wages will remain. The industrial countries are fighting a losing battle.
