Indians will be the winners

Now, India stands a near-zero chance of coming out winner in such a dispute. Its chance to get away with just loss of face lies in offering an import-control phaseout schedule acceptable to these countries in the next two months. It could pass this up in favour of a real tight spot. For, with characteristic perverseness and as if they did not abound at home, the Indian political establishment appears to enjoy cultivating tight spots.

The reason why India has so little chance of success in an outright confrontation is that it is wrong to use endangered BoP as an excuse to restrict imports, simply because India8217;s BoP is not endangered. Yet India has merrily abused the clause of the General Agreement on Tariffs and Trade GATT which allows countries with endangered BoP to control imports.

25 billion of foreign reserves is not a sum India could even begin to dream about six years ago. It is a measure of how far it has come that it now has the audacity to plead that foreign reserves enough to cover six months8217; imports make for precarious foreign reserves. Ambition is a good thing, but mendacity is not. Even if this bare-faced lie was beneficial to India 8212; and it is not 8212; it would not be allowed to walk away with it.

Perhaps this beleaguered Government will suddenly find the conviction to persuade its allies and opponents that India had better offer an acceptable timetable for phasing out the so-called quantitative restrictions QRs 8212; ceilings and quotas 8212; on imports. But perhaps it will not. Commerce Minister Bolla Bulli Ramaiah8217;s blase declaration that India will tide over this on account of the flexibility it has shown does not give confidence.

Suppose the scenario shapes up this way. The matter goes into dispute resolution. India is directed, say, a year or a little later on after dragging out the WTO process as long as it can, to dismantle QRs in a short period. How short is impossible to say but it could range between three to five years. That is when we must be prepared to hear macho calls for taking our departure from the WTO.

Now for the good 8212; or bad 8212; news, depending on which way you look at it. Mostly such histrionics are for public consumption, of course. Parties which make such demands out of power are known to behave with greater sobriety in power. The BJP proved this in only a fortnight, when it declared that it would legislate a patents law that is another bone of contention between India and the US. But if the hysteria were to gather such momentum as to generate talk of non-compliance or a walking out, let it be known that it would do India8217;s protectionists not a bit of good.

Defiance of a WTO ruling mandates sanctions against the offending country. Since in this case the plaintiffs are so many and account for such a large proportion of India8217;s trade, combined sanctions from them could cripple India8217;s exports. Consider textiles, an area where India is terrified to open up its own imports. Textiles now make up roughly a third of its exports. At a growth rate of 30-40 per cent projected for this fiscal by a CII study, they will soon count for even more.

Now consider that the EU alone accounts for half of India8217;s textiles exports. Imagine what it would do to them if the EU doubled tariffs on them at a time when they are already struggling against increasingly competitive Asian rivals. Add similar sanctions from the US, Australia, New Zealand and perhaps Japan, and know why no one will thank the politicians for this mess.The point, if it is lost on anyone, is that defiance would cripple India8217;s exports and surely precipitate the BoP crisis which this country8217;s so-called leaders now only pretend to face.

Assuming that the two intervening months do not yield a solution 8212; here is fervently hoping they do 8212; is such a disastrous scenario inevitable? No. There is an even possibility of India obeying an adverse WTO ruling, tail between its legs, in acknowledgement that the costs of defiance do not bear counting.

Opening up imports to a hasty timetable would be equally disastrous, some will say. Now who will these people be? Those spoilt rotten all these years by government cosseting and used to charging high prices for low quality.

And those who make political capital from protectionism by convincing the people that protectionism is in the people8217;s interest. Joining their leaders in perverse behaviour, let the Indian people hope that if a dispute there must be, let India lose. There is no dearth of patriotism here. The interests of politicians and industry do not equal the national interest, as long-suffering Indians should know better than most. 8220;Sovereignty8221; is the tired weapon these groups take recourse to when cornered. It really is time someone asked: 8220;Whose sovereignty is it anyway 8212; yours or ours? What are you planning to do with it? Wave it so you are free to be arbitrary, discriminatory and corrupt? Or protect crooked producers at the expense of hapless consumers?8221; It is a relief India signed away much of this pernicious sovereignty in the Uruguay Round agreement. Indians need protection from their governments, not for their goods: these will survive, and be more fit for the competition.