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Home > Business > Business Headline > Report

Cancun failure is a big blow for India

TNC Rajagopalan in New Delhi | September 16, 2003 12:23 IST

The collapse of the World Trade Organisation talks at Cancun is a serious setback for India, which is widely perceived as one of the most protectionist economies and thus not courted for a free trade agreement of any substance.

Undoubtedly, it was the intransigence of the European Union on the issue of farm subsidies that led to the failure of the talks. Surprisingly, the Cancun meet made no serious efforts to address the key issues related to agricultural trade.

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Perhaps, the unusually hot summer in Europe and the spectre of drought this year made it more difficult for the EU to offer any tangible commitments. However, the EU did not make it any easier by taking the developing countries for granted.

Even so, rich countries have more options at their disposal. As the Cancun talks headed towards collapse, over two-thirds of Estonians voted in favour of joining the EU by May next year. "We have a long line of people at our door seeking bilateral trade agreements," said a senior member of the EU delegation.

After the setback in Cancun, United States Trade Representative Robert Zoellick said the US would redouble its efforts to reach bilateral trade deals with favoured nations.

India needs a multilateral trading system more than others. Most major economies are members of meaningful trading blocks. The failure at Cancun means that more countries, including some that supported India, will proceed to integrate more strongly within their own trade blocks and those trade blocks in turn will seek greater co-operation among themselves.

India is not a member of any significant trading block. The South Asian Association for Regional Co-operation is a remarkable failure. Smaller Saarc countries view India as an ungenerous neighbour.

All member countries of the WTO will have to do some soul searching. At the WTO itself, questions will be raised on the process of negotiations and backroom manoeuvres. Some countries might push towards plurilateral agreements. The EU itself is divided between those countries that lose out due to farm subsidies and those that gain.

The Swedish rejection of the euro amounts to a 'no confidence' in the European Central Bank. In hindsight, the US might appreciate that the decision to push through the Doha round under the threat of "either you are with us or against us" had its shortcomings.

We need to appreciate that we need trade facilitation for our own good. Our exporters and importers suffer more because of rigid procedures, insensitive bureaucracy and corruption than any other factor. We need transparency in government procurement for our own benefit.

Our rural infrastructure, credit delivery systems, procurement policies, fertilizer pricing etc. make our farmers uncompetitive. Elections or WTO, notwithstanding, we have to proceed with reforms for our own good. Then, we might possibly not feel threatened by the 'Singapore issues' or rich countries.

It will be difficult to resist the temptation to celebrate the unity of developing countries at Cancun and the fact that they stood up against the rich and powerful countries.

But, such celebration has to be tempered with the realisation that the G-21 unity can be short-lived and that most other poor countries are not party to the celebration.

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Sub: WTO failure: Big Blow for India

Of the big issues on the Cancun agenda --freeing farm trade from tariffs and subsidies, cutting industrial tariffs, and writing new rules on Singapore issues-- ...

Posted by Shyam Bhatia



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