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January 11, 2000

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The Rediff Business Interview/ Stephen Byers

'There is need for a negotiated settlement of trade issues'

Stephen Byers, British secretary of state for trade and industry, is in India to attend the CII Partnership Summit 2000 being held in New Delhi. Byers is known for his keen interest in developing a practical trade relationship between his nation and India. He has, in fact, been pushing hard for British firms seeking a foothold in the Indian insurance and civil aviation sectors.

Byers was a member of the British Parliament in 1992 and 1994, was appointed wopposition whip. In 1998, he was appointed chief secretary to the treasury. He is the first British minister to visit India in the new year, and is the third to do so in the last three months.

Byers spoke to rediff.com on his plans to boost Indo-British trade ties and his views on globalisation and the role of WTO in the changing scenario.

After the Indo-British ties got murky in the aftermath of the nuclear tests in 1998, where exactly does the trade relations between the two countries stand today?

At the outset, I want to tell you British Prime Minister Tony Blair has made it clear that he regards building and broadening the relationship with India as top priority. He believes that there is a natural partnership between the two countries. I think we have a broader and deeper relationship today. This is for two reasons. One, we are mighty impressed by the economic reforms that India has gone ahead with, and two, the approaches of our two governments converge in crucial areas.

What kind of trade growth are you expecting between the two countries?

To begin with I am setting a target of 20 per cent increase in trade to over 5 billion a year.

How will you go about achieving that?

We have several measures to achieve this. The specific steps are: One, the Global Enterprise Initiative which will bring together small and medium-sized businesses from the two countries. In fact, I will be signing the first two agreements on this visit. I have set a target of 200 such new partnerships within the next two years. Two, we have offered support and assistance to your economic reform programme.

How do you intend to support and assist the economic forum?

There is enough scope for joint action in infrastructure. The power sector is of great importance to a growing economy like India. And I believe the time is to establish an Indo-British Power Project Development Forum. The aim of this forum would be to bring forward projects to help supply reliable and cheap energy which is needed by both industrial and domestic consumers.

You have also been pushing for some British companies trying to enter the Indian market. How exactly are you going to facilitate Indian and British corporates seeking joint ventures?

To encourage British companies to enter into contracts with businesses in India, I am looking at ways in which my department can extend the range and variety of export credits it makes available to underwrite contracts between our two countries. Another of my proposal harnesses the skills, experience and expertise of major British companies in a way which will benefit India by creating jobs and making a real contribution to India's growing prosperity.

In fact, a new Indo-British Partnership Business Council is being set up involving ten major global companies -- Rolls Royce, FI Group, British Gas, Glaxo Wellcome, JCB Bamford, Excavators, British Airways, PowerGen, HSBC Holdings, British Telecom and Smithkline Beecham.

What are your views on the growing mood for privatisation in India? Does increased competition always mean quality growth?

Indian ministers tell me that India's economic policy is driven by the need to achieve growth -- but it must be growth combined with equity and employment in equal measure. And public private partnerships work towards equitable growth. I know India is looking to reform its competition policy and I think there are lessons that you can learn from the UK. We have recently revised our competition laws to ensure that we build world class companies through stronger competition and as a result provide a fair deal for the British consumer.

What kind of role will the WTO play in the emerging global scenario?

Bilateral trade and investment are vital to nations, but they can flourish only within an agreed, rules-based international trading framework. That is why we need the WTO. And that is also why the Seattle outcome was such a disappointment. That failure meant that all WTO members, including developing countries, missed a clear opportunity to improve the functioning of the world trading system. But that is not the end of the story. The lesson for us is that all countries need to pull together to strengthen and reinforce the world trading system.

But India's anxiety at the WTO is that its specific concerns are given step-motherly treatment by developed nations like yours.

We all failed equally at the Seattle Round. The fact that Mike Moore, director-general, WTO is here today is an indication of India's key role in future negotiations. In fact, I agree with Prime Minister Atal Bihari Vajpayee's views that there is need for a negotiated settlement of trade issues. And yes, the solution must be based on consensus, not dominance.

Does this mean the WTO needs to be given a new perspective?

Well, we must get on with reforming the WTO to ensure that it emerges from this testing time stronger than ever. We need to address the concerns expressed by developing countries about their full involvement in the decision-making process. That means we must review existing structures, and must look at the wider issues of communication and transparency, both internal and external. This is a political agenda. We should address it at a political level.

What, according to you, will be the agenda at the next round of WTO?

First of all, we must work to build a consensus for the launch of a new round. It will need to have a comprehensive agenda because it is the best way of delivering a substantial liberalisation package to promote growth in the world economy. And this is probably the only way to ensure that the new round actually delivers a worthwhile result for developing countries. A broad-based round will include discussion on key issues for India such as anti-dumping and tariff reductions on textiles. The immediate matters to which we must now pay attention are: liberalising agriculture and services as part of the built-in WTO agenda. These negotiations must start as planned this year. We must build support for further comprehensive liberalisation of industrial tariffs as part of the new round.

What kind of role can the European Union play in reaching a consensus on these hot issues, as there is discord within the EU too?

The British government is working hard within the EU to ensure that it adopts a constructive approach on both tariff and anti-dumping. In fact, I think the Commonwealth can play a significant role in shaping the future trade agenda. The member countries can work more closely together to promote agreement by consensus on trade and developmental issues. I have called for the EU to move forward with the initiative to provide duty-free access to essentially all products from least developed countries.

Do you think social issues such as labour and environment must be addressed to at the WTO talks?

Well, we must build consensus to include the trade/environment interface within the new round. There will be problems here. But we need to be clearer about what we want the WTO to do and demonstrate conclusively that it would not be protectionist. This is a highly political issue which must be dealt with by consensus.

Another great concern in India is about the WTO being used to implement labour standards. But let me make one thing clear: the British government is firmly opposed to the use of trade sanctions to enforce labour standards. Driving countries into deeper poverty through trade sanctions will not improve their labour standards. It does not make sense.

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