Is WTO waiting for a decent burial?

Source: BMS      Date: 7/22/2012 2:20:47 PM

7th ministerial conference of WTO

7th Ministerial conference of World Trade Organisation was held in Geneva, Switzerland on 30th of November, 1-2 of December, 2009. Ministers and officials from 153 countries participated in the Conference. Russia, Iran and Iraq are the three important countries that have not yet joined WTO. Official delegation from India under the leadership of the Commerce Minister Anand Sharma attended the conference. About 340 NGOs and 210 journalists also participated in the conference.

BMS attended the conference at its own expense for the first time as an NGO (Non Governmental Organisation). Before inviting BMS, NGO centre of WTO have asked for information about the activities of BMS in relation to WTO. BMS gave all information about our protests and resistances done so far against WTO including our Kolkata resolution as well as a published book viz. "India should Quit WTO". Despite the fact that BMS had opposed WTO tooth and nail, the NGO centre of WTO gave accreditation to BMS to attend the Ministerial. Saji Narayanan C.K., Vice president and Dr.Awshani Mahajan attended on behalf of BMS. Others from our friendly parivar organisations are Muralidhar Rao and Prof. Kumara Swami (Swadeshi Jagaran Foundation of SJM), Dr. Dhanpat Agarwal (SRI-Swadeshi Research Institute, Kolkata), Adv. Shirish Patwardhan and Adv. Vidyadhar Kulkarni (SSN- Shram Seva Nyas, Pune) participated.

When Pascal Lamy, the Director General came to meet the NGOs, there were several questions from India and other developing countries including those from Bhartiya Mazadoor Sangh (BMS), Swadeshi Jagaran Munch (SJM) and Shram Seva Nyas (SSN) about the pro rich agenda of WTO, mass suicides of the farmers, reducing food output and increasing hunger and food scarcities, which were all ascribed to the heavy agricultural subsidies by developed countries and dumping on the developing countries. Pascal Lamy in fact has to admit the shortcomings.

NGO Participation

WTO officials were keen in separating NGO meetings from WTO Ministerial meetings unlike in the previous meetings which is against the claim of WTO leadership about democratic process and transparency; and it was a mockery of the “FIT” (fairness, inclusiveness & transparency) as declared by the Chairman of the general council. WTO officials have arranged purposely a small meeting place for the Ministerial even though large meeting halls are available in Geneva. NGOs also faced unprecedented hurdles from security personnels. BMS, SJM & SSN leaders from India and NGO representatives from other countries protested against this. The entry of NGO participants to the opening session was restricted to only 42 members. But BMS was given entry into the 42 seats in inaugural session of WTO. Frequent NGO Briefings which happen to be the real and meaningful tool of their participation were cancelled.

When the plenary session of the WTO conference was about to commence, NGO participants started shouting slogans “DOHA ROUND, DOWN-DOWN”. There is a clear tactical move to avoid detailed discussion at Ministerial. The attempt was to somehow to conclude the Doha Round through Mini ministerial and through other undemocratic process. The whole proceedings lacked transparency and democratic process for the discussion on the work programme.

Final Phase of WTO?

The founder of BMS, Shri Dattopant Thengadiji predicted the demise of WTO. He also demanded the Government to come out of WTO. BMS representative had the fortune to directly witness a sinking WTO in this ministerial; thus the prediction becoming a reality.

After the Uruguay round of talks which culminated in the formation of WTO, a new round was started called the Doha development round in 2001. But it miserably failed in the Ministerial of Cancun in 2003 and Hong Kong in 2005. After the last Hong Kong ministerial in 2005, WTO has almost become defunct, even though attempts were made to give oxygen to it under the leadership of its present Director General Pascal Lamy. The rule that the Ministerial has to be held every two year could not be adhered due to the impasse. The present ministerial was convened after a gap of 4 years instead of 2 years, that also without any usual agenda. The present ministerial was in fact an attempt to retain its life.

The conference started in a dull note devoid of any kind of enthusiasm on the side of the organisers as well as the negotiating partners whether developed or developing countries including LDCs. It saw poor participation of the Government delegation of the member countries coupled with a very thin participation from the NGOs. The two days’ ministerial was against the usual five days, because there is nothing much to discuss. The director general Mr. Pascal Lamy looked defeated and gloomy. The DG in his speeches constantly expressed his doubt about achieving the deadline to conclude the Doha round by the end of 2010.

The latest position of WTO is that gross conflict of opinions and onslaught of financial crisis has made its future uncertain. This time also the Ministerial did not actually take any decisions on the Doha Trade Round. No trade discussion could be held. In this conference, the focus of the Doha Round has been shifted from development to financial crisis and non trade related subjects like climate change. Deadlock remained on substantive issues across all three areas of negotiations—agriculture, Non-Agriculture Market Access (NAMA) and services. There were two working sessions on the "Review of WTO activities, including the Doha Work Programme" on the 1st day and "WTO's contribution to recovery, growth and development" on the 2nd day.  In the end, both of the sessions turned out to be a repetition of governments’ formal positions and nothing of substance was discussed or tabled. 

US has its proclaimed policy that it will give more respect to its domestic laws than rules and agreements of WTO. China has a history of violating and quitting GATT the forerunner of WTO. Even a study by World Bank says developing countries and LDCs will incur losses more than gains from WTO agreements. Countries in the world have realised that the agenda of WTO are set by developed countries to cater their needs.

Future of World Trade

Next Stock-taking exercise of the Doha Round is proposed to take place in March, 2010 called 'March stocktaking'. The March stocktaking may review whether there are any 'development' aspects to the existing Round.

When it is widely felt that WTO has failed, countries of the world have taken a two prong strategy. Firstly they are meeting in small groups and are deciding to have trades in between the members of the groups. Secondly they are opting for bilateral trade through FTAs (Free Trade Agreements). Most of the countries have formed coalitions in the WTO. They are mainly Cairns group, African Group, G-22, NAMA 11, EU, LDC etc.* Thus WTO is being cut into pieces. The expectation that WTO Doha round will be successfully completed by next September 2010 would require miracles to happen.

When multilateral system is failing, trading giants are moving towards more dangerous bilateral agreements generally called “FTA”. Present Government wants India to sign free trade agreement with the European Union (27 country block) and Japan this year itself. This would be even worse than the WTO proposals since they would seek to bring customs duties down to zero for 90% of all agriculture and non-agriculture goods.  The EU has very aggressive demands on investment, services and TRIPS.  FTA with Japan will cause dumping of toxic waste into our country and bring commitments more than TRIPS. 

Indian position in WTO- For whom the bell tolls?

It was India that took initiative to give oxygen to WTO lying in the ICU.  Indian Commerce Minister Anand Sharma wanted to get the credit of reviving WTO which was almost a dead horse for the last 4 years. At his initiative a mini ministerial of WTO was convened on 3rd and 4th of September, 2009 at New Delhi. But Pascal Lamy, the Director General has not appreciated Delhi Mini Ministerial in his last speech before the starting of Ministerial Conference in December except a passing reference that Delhi work programme has come to an end. Moreover Indian Commerce minister who wanted to champion himself as the reviver of WTO, has not found any prominent place in the leadership of the Ministerial in Geneva, may be because of his unfriendly and arrogant nature that can easily create adversaries. The Chilean Finance Minister Andres Velasco was the Chair of the Ministerial. India should not have taken initiative in reviving WTO negotiations especially in areas like agriculture when farmers are committing suicide in large numbers in India. Efforts of BMS & SJM in lobbying within the journalists have prompted them to ask Anand Sharma questions on farmer suicides in India, where Anand Sharma bungled.

Indian Government should have played a leadership role among developing countries. Government of India should realise that reviving WTO is against the interest of the suffering majority of the world. Government should not have made any commitment that adversely affects the socio-economic development goals of the country as it happened in many previous WTO negotiations. Livelihood and not market is the primary concern of the world today. Since the change in government, India is willing not only to finish the Round at all costs but also claim to have broken the “impasse.”  The Government of India appears to be in haste to conclude the round even at the cost of giving more concessions without negotiating for any benefit or outcome for the agriculture and the services sector. This means that India is willing to accept almost everything in the Doha December Texts.  Officials made public announcements that India only had minor problems with the Texts. India should not accept proposals like December Texts prepared to protect the interests of rich countries. If a development audit of the Doha Round is undertaken, the development deficit will definitely come out. The outcome of any commitment of the Government of India may affect our crisis-struck agricultural sector and our industrial sector especially our workers, small farmers, and small and medium enterprises.

It is highly unfortunate that even concerns of developing countries and LDCs like food crisis, loss of employment, movement of professionals and migrant workers, reduction of subsidies by developed countries etc have neither surfaced in the agenda nor raised by countries like India. Negotiations which are under way in the line of Doha agenda and the 2008 December text in areas of Agriculture, NAMA, Services, TRIPS and Environment are all detrimental to the interests of common masses in developing countries like India. Government of India has to answer why it had conceded so much in subsidy reduction when US and EU are not reducing their agriculture subsidies at all. Commerce Minister Sharma’s speech does not criticize the December Texts on agriculture or NAMA (industrial products), per se.  This means that Minister Sharma is willing to accept reducing over 60% of our industrial tariffs while developed countries would only reduce about 28%. 

Crisis in Agriculture

Government should not surrender livelihood and food security to protect corporate agriculture of developed countries. India's agriculture sector is already in a crisis. In India about 1.83 lakhs (0.182 million) farmers committed suicide between 1997 and 2007 according to our National Crime Records Bureau. Two third of our population depends on agriculture. For Indians agriculture is not a business, but the life line of existence. Our Government had been following certain measures to discourage agricultural imports to protect the crisis struck agricultural sector like reduced imports, higher tariff on imports, agricultural subsidies etc. Developed countries in WTO demands developing and Least Developed countries like India, should withdraw all these measures. At the same time developed countries like EU & US are not ready to withdraw them like their high rate of agricultural subsidies. In agriculture, India must rethink the SSM (special safeguard mechanism). We need much higher tariff protection in agriculture than what has been accepted in the December text. Indian Government is willing to accept only 35 of our agriculture crops as “special products” rather than demanding that our agriculture crops be protected from unfair competition and import of subsidized products.

State of our Foreign Trade

India is a poor trader in the international scene. Already we are known to be a net importing country, i.e. our imports are much more than exports. Our foreign trade deficit has hit all time record of Rs. 1.84 lakh crores. The WTO Director General Pascal Lamy has proposed countries to increase imports to the tune of 40%. But studies reveal that an increase of even 10% can topple foreign trade and economy of Nations. Still India has agreed to increase it up to 15%. 

India's stake in NAMA

NAMA or Non Agricultural Market Access deals with many areas other than agriculture. The main purpose is to facilitate exports without any National barriers. Indian Government delegation to WTO could not secure either a fair and equitable outcome in the NAMA negotiations. Developed countries are mooting an idea called "Swiss formula" to resolve disputes regarding NAMA. In effect Swiss Formula and official text pressurises developing and LDCs to reduce their tariff too steeply whereas the developed countries need reduce their tariff only very little. Developing countries like India will have to cut its tariff nearly double than that of Developed countries. NAMA in industrial goods and fisheries will sharply bring down industrial tariffs in developing countries. Tariff reduction according to “Swiss formula” in NAMA negotiations will be a blow to developing countries having higher protective tariffs as developed countries have low tariff level. Developing countries will be burdened with low tariffs, low world market prices and large import volumes. 

The NAMA coefficient ranges given by the Chair are unfair. Any tariff cut based on the present lower coefficients will retard the manufacturing sector and result in job loss. Reports are coming that India has cooled down its objection on this issue of NAMA coefficient. The coefficient for developing countries should be higher to achieve the principle of less than full reciprocity. Any deal on coefficients, which violates less than full responsibility principle, is detrimental to India. Government should reject the formula cuts being demanded in NAMA.  Right now it is willing to accept as low as 22.  Only higher coefficient is beneficial for a country like India. NAMA 11 has taken a position to have a coefficient of at least 35. 

India is a large market. Even now our revenue income is in deficit. Hence Indian Government has asked the WTO not to impose NAMA on developing countries. We have also asked developed countries like US to stop quota system especially on textile imports from India. Similarly India's National interest is at stake while negotiating the anti-concentration clause and the issue of sectoral initiatives linked to flexibilities.

Service Sector

In service sector, third world wants to raise visa related issues in WTO. The WTO clause names this as "movement of natural persons". WTO has not so far recognised the free movement of technical experts, skilled workers etc. For example people from many advanced countries do not require visa to go to Europe. But Indians have to get visa to enter Europe. On the contrary, foreign law firms, chartered accountants are being permitted to enter India as our country is ready to accept the service clause. India has also liberalised many domestic service sectors like telecommunications, banking, insurance, energy etc. so as to enable foreign MNCs to operate freely in India.

The report of the chair on services compels countries like India to bind the present level of liberalisation under the general agreement on trade in Service (GATS). This proposal undermines India’s policy space in critical areas like health, finance, telecommunication, insurance etc. In Services, the government is eager to lock in the existing level of market opening that we have.  This will be disastrous to the future development of our services industries

BMS Demands

Through a resolution in its Kolkata CEC during last August, BMS has urged the Government of India, before proceeding further in WTO, to bring out a white paper explaining the impact of WTO, the current state of affairs in the WTO negotiations and the implications of 2008 December Text proposals on India with special reference to Indian agriculture and industry including the livelihood concerns of workers and farmers. BMS also urged the Ministry of Labour to conduct an audit on the above implications on the livelihood and social security concerns of workers of India especially in the poverty stricken unorganized sector with the active participation of BMS.

Financial Crisis and WTO

This Ministerial spent much of its time to discuss how to tide over the current financial crisis. The two noteworthy aspects of the conference was the inaction of US in the conference and the lack of interest of EU to finish the round before it comes out of the crisis.

The Financial crisis that had its beginning in US has affected most of the countries in Europe, Asia and other continents. But India has the rare distinction that it is the least affected country. Till 1990s Japan was the world model for industrial progress. But when Japan was in the midst of financial problems in the beginning of 1990s, financial media turned to China as a world model for economic growth. But after the mid September of 2008, when China also was badly affected by the financial crisis, countries saw India as one of the least affected countries in the world. They also found that it is the strong regulatory control of institutions like Reserve Bank of India over Banks and financial institutions that is responsible for such a miracle. Particularly the performance of our PSU Banks has been a wonder during the era privatisation. Now the world is realising it’s the Indian model of regulation that will give guidance to the future world. Indian paradox in the economic scenario is that it has the maximum number of rich people in the world; at the same time it has the maximum number of poor people too.

Relating Climate Change to Trade

World is in the midst of an acute food crisis, starvation deaths and poverty especially in the LDCs. Then it is wrong to bring climate change as a priority subject in trade negotiations in WTO. Bringing environmental issues in trade negotiations were objected to by civil organizations from Seattle Ministerial Conference onwards.

Still countries like US are converting their fertile lands to produce bio fuel. Countries like India are being asked to reduce industrial production in the name of carbon emission, where as we are conceding to the concessions given to countries like US on such environmental issues. In Copenhagen, India decided to be a party to a backroom deal with the US and four other countries to undermine the Climate Treaty that requires developed countries to cut carbon emissions. 

Role of US

The US was asking for more and more market access particularly targeting the ‘advanced’ developing countries like India, Brazil, China, South Africa and ASEAN countries. US Trade Representative Ron Kirk unambiguously stated: ‘meaningful market opening is required to complete the Round’. US has openly opposed the idea of having more meetings to take stock until there is further movement on the modalities. Hence US was singled out by many delegations as the one problematic party.


'Development Round' without Development

The eight year long Doha Round is known as the 'development round'. But it has failed to yield any outcome for the development of the poor countries. Even Indian Commerce Minister Anand Sharma said, “A major concern of developing countries is that the development objectives of the Round continue to be diluted or ignored…..Major issues like duty free, quota free, SSM, Cotton trade, preference Erosion, Fisheries subsidies, Mode-4 access in Services, the TRIPS-CBD relationship need to be dealt with sympathetically as they have a major bearing on the development outcome of the Round.”

South African minister was strong and vocal against signing a deal that does not really have development benefits.  South Africa is the only country who openly rejected the highly problematic July and December 2008 Texts.  He said, “Recent engagements have been dominated by unfair demands placed on major developing countries to enhance market access for the benefit of narrow commercial lobbies in parts of the developed world.   South Africa was not part of the agreements reached by some members in the July 2008 package….Our view is that even these texts are imbalanced and reflect too much accommodation of the sensitivities of developed countries in agriculture while demanding too much from developing countries in terms of reducing their applied industrial tariffs and reducing necessary policy space for industrial development”.


* Different interest groups in WTO are: 1. Cairns group: a trade group of 17 agricultural exporting countries under the leadership of Australia, accounting for one-third of the world's agricultural exports. They are interested in successfully completing the Doha round of talks.
2. African Group: includes all African WTO members.
3. G-22: a coalition of developing countries in which India is also involved under the leadership of Argentina, pressing for ambitious reforms of agriculture in developed countries with some flexibility for developing countries.
4. NAMA 11: including India is a group of developing countries seeking flexibilities to limit market opening in industrial goods trade.
5. EU (European Union): in the WTO is officially called the European Communities.
6. LDC (Least developed countries) group: include the world's poorest countries like Bangladesh, Haiti, Maldives, Mali, Myanmar, Nepal etc.
Then there are 7. CARICOM (Caribbean Community and Common Market); 8. ACP: consists of African, Caribbean and Pacific countries; 9. APEC (Asia Pacific Economic Cooperation forum): consists of nineteen WTO members and two governments in accession negotiations; 10. MERCOSUR: a Customs union of Argentina, Brazil, Paraguay, Uruguay; 11. G-10: Coalition of countries lobbying for agriculture; 12. G-33: Also called “Friends of Special Products” in agriculture- a coalition of developing countries pressing for flexibility for developing countries to undertake limited market opening in agriculture; 13. G-90: Coalition of African, ACP and least-developed countries; 14. Cotton-4: Main African cotton producers Benin, Burkina Faso, Chad, Mali; 15. SVEs: Small and vulnerable economies; 16. RAMs: Recently acceded members; 17. Paragraph 6 Countries (of the first version of the NAMA text- Except Macao, China); 18. Low-Income Economies in Transition: Seeking to secure same treatment as LDCs; 19. Friends of Ambition: Seeking to maximize tariff reductions and achieve real market access; 20. Tropical products group: Seeking greater market access for tropical products.


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