Trial by power

India is right to declare that the American blacklisting of 40 Indian companies and their 200 subsidiary units is inconsistent with world tr...

India is right to declare that the American blacklisting of 40 Indian companies and their 200 subsidiary units is inconsistent with world trade rules and that it plans to lodge a strong protest with the World Trade Organisation. America has a tradition of demanding that other countries play by international rules while itself showing scant respect for them. India is hardly the only country to suffer as a result.

In recent weeks, America and the European Union have had a row about threatened American sanctions against the EU because the modifications made by the latter to its banana trade regime failed to satisfy the US. The infamous Helms Burton and D8217;Amato legislations have similarly been a bone of contention between the two, with America seeking to punish other countries8217; firms for doing business with regimes that the US views with disfavour.

Indeed, American unilateralism has never really yet been challenged in the WTO. What the world trade watchdog has to say in a case like this has a crucial bearingon its credibility. Failure to condemn the US action could create even greater political difficulties for developing countries to convince their people that the WTO is not a partisan body. On the other hand, the US would hardly welcome a WTO reprimand.

It is no surprise that Ramakrishna Hegde has been deliberately vague in his wording. He has spoken of a strong protest but not of a legal challenge. Clearly, the Indian government wants to keep its options open while conveying to the US that beyond a point it will not put up with conduct violative of world rules. But it is clear, and this is sensible, that New Delhi is not keen to force the issue if the US is willing to be reasonable.

It is now up to Washington to respond. As to the impact on Indian exports, the commerce minister is right that exports are in the doldrums more because of the global economic situation than because of US sanctions. That does not mean that exports are not affected by the US sanctions. By saying this he only dilutes the strengthof his own case. Actions such as the blacklisting of Indian firms will not send the Indian economy under but they do damage it. And whereas India is powerless to resist such sanctions as are not outlawed by world rules, it is both entitled and right to protest those that are in the appropriate world forum. It is tempting, incidentally, to make a point here that this newspaper has repeatedly made in the past: the WTO is valuable because it acts as a check on unilateral arbitrariness by powers that tend to the view that might is right.

The US blacklisting of companies, including those which patently have little to do with nuclear technology, just at this time is a particularly unfortunate business. Washington itself lifted a series of sanctions, citing progress by India and Pakistan on the full range of nuclear safety and non-proliferation issues arising from their nuclear tests. Why then this unprovoked backward movement? There never was any doubt that America has been far more willing to go easy on Pakistanthan on India. Its statement that it is not discriminating between India and Pakistan because the latter8217;s economy would collapse without financial institution bailout whereas India8217;s would not, is evidence of this perverse outlook. Surely no country deserves to be penalised for having a better economy.