US, EU put protectionism before trade in WTO talks
It is only hoped that commerce minister Kamal Nath won't do a U-turn and try to find an alibi in the US statement to be part of a bad deal on Doha 'modalities' that could cost India dearly.
By KG Narendranath, ET Bureau |
NEW DELHI: Latest reports on the WTO front say that the US is 'willing to have a conversation' in the context of Doha Round about adopting a more liberal policy with regard to grant of temporary visas to foreign professionals. The proposal is rather vague and far from an irrevocable commitment.
It could be a trap only for the naive and the pretentious. It is only hoped that India's commerce minister Kamal Nath who has so far taken a circumspect approach to the Doha Round talks (despite his being blamed by the rich countries in the ongoing ministers' meeting in Geneva for blocking the talks), won���t do a U-turn and try to find an alibi in the US statement to be part of a bad deal on Doha ���modalities��� that could cost India dear.
It may be noted even though Doha Development Agenda is a single undertaking (which means nothing is decided until everything being discussed is agreed upon), the developed world is bent upon virtually fixing the modalities in agriculture and market access for industrial goods (two areas where it has clearly substantial offensive and defensive interests in that order) even as a host of other areas that could have serious economic implications for developing countries ��� such as investment, government procurement, competition norms, intellectual property regulations ��� are put in abeyance. In practical terms, a deal struck will be a fait accompli, nothing less.
The current drafts on agriculture and non-agricultural market access (Nama) are clearly biased against the developing world. Window-dressing of these drafts ��� which is the maximum that could happen ��� doubtless won���t restore balance.
Side by side with this mute aggression on the WTO front, the developed countries are using other means also to further buttress the protection to their domestic industries.
A recent KPMG survey of India���s preparedness with regard to climate change warned that ���the EU and US are considering using trade-related measures to protect the competitiveness of their domestic industries, which operate under domestic regulations from similar industries in developing countries that have weaker environmental regulation.���
One obvious question is if the measures that EU is planning are WTO-compatible. Most experts say since the proposed carbon tax could take tariff levels above the bound rates, they violate the WTO. Of course, Article 20 of GATT allows WTO members to take certain measures for environmental reasons and it is doubtful whether the proposed EU measures would qualify under this exception.
Even among the so-called adherents of the Kyoto Protocol, the compliance level is actually low and slipping. Since the compliance is dropping, there is now much less prospect of developing countries like India benefiting immensely from the Clean Development Mechanism (CDM) ��� which allows developed countries with a greenhouse gas reduction commitment under the Kyoto Protocol to invest in emission reduction projects in developing countries as an alternative to more expensive emission reductions in their own countries.
Worse, the EU, now engaged in bilateral talks with India for a comprehensive economic agreement, has already dropped hints that it would like India���s IPR system to be reinforced. Since India���s patent law is fully Trips-compliant (even the World Intellectual Property Organisation has endorsed this), it is clear that the EU wants to make Trips-plus for the benefit of Europe-based companies, eyeing the Indian market.
They don���t act in anticipation of something adverse on the way, rather wait for it to befall on the country and then take remedial measure. This has to change. India should have holistic awareness of its position, aspirations and the required level of flexibility as it willingly embraces free (global) market, especially since there are many out there to out-manoeuvre it.
It could be a trap only for the naive and the pretentious. It is only hoped that India's commerce minister Kamal Nath who has so far taken a circumspect approach to the Doha Round talks (despite his being blamed by the rich countries in the ongoing ministers' meeting in Geneva for blocking the talks), won���t do a U-turn and try to find an alibi in the US statement to be part of a bad deal on Doha ���modalities��� that could cost India dear.
It may be noted even though Doha Development Agenda is a single undertaking (which means nothing is decided until everything being discussed is agreed upon), the developed world is bent upon virtually fixing the modalities in agriculture and market access for industrial goods (two areas where it has clearly substantial offensive and defensive interests in that order) even as a host of other areas that could have serious economic implications for developing countries ��� such as investment, government procurement, competition norms, intellectual property regulations ��� are put in abeyance. In practical terms, a deal struck will be a fait accompli, nothing less.
The current drafts on agriculture and non-agricultural market access (Nama) are clearly biased against the developing world. Window-dressing of these drafts ��� which is the maximum that could happen ��� doubtless won���t restore balance.
Side by side with this mute aggression on the WTO front, the developed countries are using other means also to further buttress the protection to their domestic industries.
A recent KPMG survey of India���s preparedness with regard to climate change warned that ���the EU and US are considering using trade-related measures to protect the competitiveness of their domestic industries, which operate under domestic regulations from similar industries in developing countries that have weaker environmental regulation.���
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The European Parliament will likely take up a legislative proposal that will envisage what are called ���carbon equalisation measures��� by the year-end or early next year. As per the proposal, these carbon equalisation measures could be either in the form of a carbon tax or an obligation on developing-country exporters to purchase international reserve allowances to sell their products in the EU���in either case, the measure would inflate the cost of exports from developing countries to the 27-country bloc. On the face of it, this is an attempt to ���provide incentive to emerging economies to reduce the emission intensity��� of their industries through ���market-based measures.��� The noble intentions notwithstanding, the fact of the matter is such measures could be legitimately seen as disguised protectionism. Of course, even if the law is enacted in 2009, it will come into effect only in 2013, after the expiry of the Kyoto Protocol.One obvious question is if the measures that EU is planning are WTO-compatible. Most experts say since the proposed carbon tax could take tariff levels above the bound rates, they violate the WTO. Of course, Article 20 of GATT allows WTO members to take certain measures for environmental reasons and it is doubtful whether the proposed EU measures would qualify under this exception.
Even among the so-called adherents of the Kyoto Protocol, the compliance level is actually low and slipping. Since the compliance is dropping, there is now much less prospect of developing countries like India benefiting immensely from the Clean Development Mechanism (CDM) ��� which allows developed countries with a greenhouse gas reduction commitment under the Kyoto Protocol to invest in emission reduction projects in developing countries as an alternative to more expensive emission reductions in their own countries.
Worse, the EU, now engaged in bilateral talks with India for a comprehensive economic agreement, has already dropped hints that it would like India���s IPR system to be reinforced. Since India���s patent law is fully Trips-compliant (even the World Intellectual Property Organisation has endorsed this), it is clear that the EU wants to make Trips-plus for the benefit of Europe-based companies, eyeing the Indian market.
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Of course, the India-EU pact, if it sticks to the principle of free market under fair rules, will benefit India. But the Joint Study Group that has drawn the contours of the pact has already made major concessions to the EU, the willingness to modify IPR laws exclusively for the EU, being only one of them. Informed readers of the JSG document say there could be problems for India in areas such as government procurement, competition and investment as well. The sad thing is that India���s policymakers, who are now very competent negotiators in multilateral forums (thanks to the early failures) are rather complacent when it comes to bilateral give-and-take. They don���t act in anticipation of something adverse on the way, rather wait for it to befall on the country and then take remedial measure. This has to change. India should have holistic awareness of its position, aspirations and the required level of flexibility as it willingly embraces free (global) market, especially since there are many out there to out-manoeuvre it.
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