WTO made easy, Cancun edition

AGRICULTURE is expected to be a core area of negotiations at Cancun, with a sharp line dividing the developed world — the US and the European Union, bonded by a recent pact — and the developing countries. The US-EU combine is expected to seek a slash in agri-tariffs in the emerging markets. This means, simply, that imports of American and European food will be easier.

But the twist is that the US and EU nations heavily subsidise their agricultural sector; they show no signs of dismantling this subsidy regime. Indeed, agri-subsidies make up 25-30 per cent of the national budget in the US. In India, the figure is less than four per cent.

This is where organisations like the Swadeshi Jagran Manch come in. Developed countries, they point out, have far fewer people dependent on agriculture than India, where 70 per cent of the population lives off farm incomes. So any deal at Cancun that settles on lower tariffs for agri-products in developing countries while overlooking high subsidies in the West will be regarded as a sell-out.

The consequence? Ajit Singh will lead his Jat farmers out on to the streets. Om Prakash Chautala will be up in arms. In Punjab, both the Akalis and Congress will be screaming. From Maharashtra to Bihar, they’ll be burning WTO effigies. Try winning an election in that scenario.

Of course, it could also mean cheaper American wheat and New Zealander frozen lamb at your local supermarket. But that’s another story.

A related issue is Trade-Related Intellectual Property Rights (TRIPS). Intellectual property regulations come into play in, in essence, two fields. One of them, pharmaceuticals, has been tentatively decided upon. So now the focus is firmly on the use of patented seeds in agriculture. Developing countries fear that accepting patented seeds — and easing out non-patented varieties — will put small farmers at the mercy of large MNCs. For India, that’s a taboo topic.

AS Commerce Minister Arun Jaitley says (see interview), the negotiations are just another name for give-and-take. If India is expected to give no quarters in agriculture, it wants some major concessions in services.

The WTO breaks up supply under four ‘Modes’: cross-border supply, movement of consumers, foreign commercial presence and movement of persons. India’s focus is sharply on the first — what is popularly known as outsourcing — and the fourth.

Simply put, this means India wants to run call centres for US firms and wants its skilled workers to be able to work overseas. But it isn’t as ready to allow foreigners access to its markets.

Both of India’s focus areas have recently been targeted by protectionist lobbies in the US. The resistance to Indian BPO service providers made headlines. Movement of persons — the great Indian hunt for an H1B visa — has been the subject of a more subtle campaign in Silicon Valley. A combination of economic ill-health and larger migration concerns following 9/11 may put a check on Indian technology workers moving to jobs in the US.

Services, then, is one area where India wants trade barriers to fall faster than anyone else.

NEXT comes India’s position on non-agriculture issues, such as auto part manufacture, leather goods or garment industries. Here too the developing world has been pressured to remove tariff barriers that impede import of goods from other countries. India is in a peculiar situation. While it has lowered tariffs in several areas — one reason why you get Revlon lipglides for Rs 350 — it has not given any official undertakings on the WTO platform.

So, effectively, in international eyes it has failed to comply with expectations — and this will almost certainly go against India when it demands the international market in services be opened up.

The negotiators at Cancun also have to counter the swadeshi argument about the need to protect the small-scale sector against global competition. Isolationist apologists plead that in the absence of social security, the SSI sector — unorganised units dealing, say, in textiles or toy-making — serves as the safety-net by employing a large number of poor people; they would not be able to stand up to mass-manufactured imports.

A tricky bag, indeed.

In it Together

WHILE India might be fighting its own battles on several counts, it is one with most developing countries on its reluctance to be drawn into a discussion on the newer items on the WTO list. Introduced at the 1996 ministerial meet in Singapore even before a consensus was reached was on pending subjects, the ‘Singapore Issues’, as they are called, revolve around the freeing up of investment and competition and touch on transparent government procurement and trade facilitation.

The first two issues touch a raw nerve with some old school Indians. They believe letting the WTO decide the FDI limits in various segments of the Indian economy would be akin to a surrender of sovereign rights. In essence, this would mean that the government will no longer decide if only 49 per cent of a telecom company could be foreign owned.

Progress report

EVEN as the stage was being set for Cancun, India has won a few tentative victories. At a pre-ministerial meeting at Geneva recently, the US came down several notches and allowed developing countries to produce cheap versions of drugs patented in the West to fight diseases such as AIDS, malaria and tuberculosis.

Though the West wanted to limit the largesse to drugs for a few specified diseases and give a select few countries the right to manufacture them, the developing nations succeeded in refraining from watertight commitments. The deal is expected to be ratified at Cancun.

INDIA says it wants to be part of the developed world by 2020. If so, it has to nuance its strategy at the WTO negotiations. It will not help India to take the hardline stance of a Uganda or Tanzania. Neither can it go hell-for-leather into a free trade regime.

Being not too poor and not too rich, India has to hedge its bets, weave and duck, score on the swings even if it loses on the roundabouts. Because WTO is more about posturing to get what you want, rather than what you give up to get what you want.

Hmmm … It sounds like Parliament on a good day.