Jaitley146;s Cancun

Ever since Seattle, the ministerial meetings of the World Trade Organisation have acquired a dramatic edge that may harm the cause of econom...

Ever since Seattle, the ministerial meetings of the World Trade Organisation have acquired a dramatic edge that may harm the cause of economic liberalisation and globalisation in the long run more than they would benefit the interests of the world8217;s poor. Ironically, the villain in this drama is not the developing world but in fact the world8217;s most developed economies. After having quarrelled over Iraq, the United States and 8220;Old Europe8221; seem to have forged an alliance again at Cancun, much as they did in Seattle, to sabotage the multilateral trading system. Out to defend its entirely indefensible gargantuan agricultural subsidy monster, the EU is refusing to allow a consensual ending to the Cancun ministerial. Worried about falling domestic support, US President George Bush is also unwilling to pursue a more liberal trade agenda.

Faced with this duplicitous hypocrisy of the developed economies, the developing countries have forged a surprising unity not seen since the days of the non-aligned movement. What this means for multilateralism is still not clear since one must await the last hours and the fine print from Cancun. But, one thing is clear. Even if a patchwork of sorts is made possible at Cancun, the negotiations on the Doha Round will carry on to Geneva and then on to another ministerial.

What does all this mean for India? A breathing space, no doubt. However, stalling the multilateral process is not in India8217;s interest. Neither will it be better off in a world of bilateral agreements, nor can it afford to slow down the process of trade liberalisation, especially in sectors where it has acquired a competitive edge. Thus, while much of Union commerce minister Arun Jaitley8217;s energy must be expended on preventing the WTO from getting into new areas, it must also go towards strengthening it in traditional areas. India needs better market access. India needs a rule-based system of trading. India needs a multilateral disciplinary mechanism against dumping and unfair trade practices. Striking the right balance between what India needs and what India can get and give, is the burden Jaitley must shoulder. So far he has done well. Winning the debate in Cancun is, however, only half the battle. He must win an even more complex battle against the forces of protectionism and economic antediluvianism at home. India must move forward on reform and liberalisation. As Union finance minister Jaswant Singh told The Financial Express in an exclusive interview recently, India must further lower its tariffs. We must be more open to foreign investment and must invest more abroad. This is the challenge of economic reform at home.