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Rediff Business Bureau |
September 09, 2003
On September 10, 2003, representatives of 146 nations will meet for five days at Cancun, Mexico to thrash out some of the most contentious issues on global trade.
The fifth World Trade Organisation Ministerial will conclude on September 14.
India is sending one of the largest delegations to the Cancun meet. Led by Commerce Minister Arun Jaitley, the Indian team will consist of over 50 members from various ministries, including agriculture and textiles, and the department of industrial policy.
While officials from other ministries will advise on sectoral issues, the negotiations will be handled largely by commerce ministry officials who would be joined by India's ambassador to the WTO K M Chandrasekhar in Cancun.
So what is this WTO Cancun meeting about? And what are India's demands and objections to the trade talks? Let us find out.
India and the WTO
The WTO ministerial conference in Cancun will set the course the Indian economy has to pursue inácoming years.
The three unresolved issues include:
- The four-point Singapore issues (trade facilitation, transparency in government procurement, competition policy and investment),
- Patents, and
- Compulsory licensing by countries without domestic manufacturing capacity and agriculture.
The term 'Singapore issue' was coined after working groups were set up by the 1996 Singapore Ministerial Conference to study these factors.
The current debate is mainly about whether there should be negotiations on these subjects (the four Singapore issues) and if so, how they should be handled, including whether they would only involve some members or all of them.
The discussion on investment and competition remained much the same as in the preparations in Geneva. On the one hand some developed countries and a few developing countries are in favour of negotiations as soon as possible, with the possibility for some developing countries to opt out.
On the other, developing countries in South Asia and Africa said that they are not ready for negotiations, that negotiations should only take place when there is an explicit consensus, which is not the case right now. They would like to continue the study in the working groups.
The positions of some Latin American and East Asian developing countries reflected a slightly different nuance Ś they indicated they could be persuaded to accept the text depending on what happened on other subjects. Some offered suggestions on how the process might move forward.
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The most contentious issue is the agriculture subsidy that the farmers of the developed nations get from their respective governments. India, for long has been urging both the United States and the European Union to cut and eventually stop giving subsidy so that there is a level playing field.
The large export subsidy being given by the developed countries does not allow the developing countries' farmers to export their produce and enter the international market.
On August 13, the United States and the European Union buried their differences and unveiled their joint framework for agricultural negotiations at the WTO. To counter the joint move, India's permanent representative to the WTO, K M Chandrasekhar, put together a coalition of 17 developing countries, which also consisted of Brazil, Argentina, China and South Africa. The new grouping, whose membership base has increased to 20, now, also had some members from the Cairns group supporting India.
United States said WTO members seeking higher cuts in agricultural subsidies should accept its demands for greater market access through greater tariff cuts.
The European Union attacked India and the framework charted by the group of 20 countries while trying to split the developing world saying New Delhi's proposal would limit market access for developing and least developed countries.
Now it remains to be seen how the Indian team weaves its way around the contentious issues at the WTO.
The World Trade Organization, which came into being in 1995, is the only global international organisation dealing with the rules of trade between nations.
One of the youngest of the international organisations, the WTO is the successor to the General Agreement on Tariffs and Trade or GATT established in the wake of the Second World War.
The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures.
The last roundá-- the 1986-94 Uruguay Roundá-- led to the WTO's creation.
The WTO has nearly 150 members, accounting for over 97 per centáof world trade. Around 30 others are negotiating membership.
1 January 1995
Uruguay Round negotiations (1986-94)
146 countries (as of 4 April 2003)
154 million Swiss francs for 2003
Supachai Panitchpakdi (director-general)
Decisions are typically through concensusáreached by the entire membership. A majority vote is also possible but it has never been used in the WTO. WTO's agreements have been ratified in all members' parliaments.
WTO's decision-making bodies include:
Ministerial Conference: Itá meets at least once every two years. The Fifth WTO Ministerial Conference will be held in Canc˙n, Mexico from 10átoá14áSeptember 2003.
General Council:áIt meets several times a year in the Geneva headquarters and normally consists of ambassadors and heads of delegation, but sometimes there are officials sent from members' capitals. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.
Goods Council, Services Council and Intellectual Property (TRIPS) Council:áThey report to the General Council.
The WTO Secretariat, based in Geneva, has around 550 staff and is headed by a director-general. Its annual budget is roughly 155 million Swiss francs.
It does not have branch offices outside Geneva. Since decisions are taken by the members themselves, the Secretariat does not have the decision-making role that other inter national bureaucracies are given.
The Secretariat's main duties are:
- To supply technical support for the various councils and committees and the ministerial conferences,
- To provide technical assistanceáto theádeveloping countries,
- To analyse world trade, and
- To explain WTO affairs to the public and media.
The Secretariat also provides some forms of legal assistance in the dispute settlement process and advises governments wishing to become members of the WTO.
Relationship between trade and investment
The Singapore declaration instructs the working group to focus on transparency, non-discrimination, ways of preparing negotiated commitments, development provisions, balance-of-payments safeguards and dispute settlement.
The declaration also spells out a number of principles including:
- The need to balance the interests of countries where foreign investment originates and where it is invested,
- Countries' right to regulate investment,
- Development, and
- Public interest.
It also emphasises support and technical cooperation for developing and least-developed countries, and coordination with other international organisations such as the UN Conference on Trade and Development.
Interaction between trade and competition policy