Search the Internet          Tips  Sites: Finance, Investment

Isolated, India may agree to new WTO talks launch

On the eve of a ministerial conference of the World Trade Organisation, analysts say India stands virtually alone in its opposition to a new round of world trade negotiations and hence may buckle.

The top priority for meeting of the ministers from various countries, that begins on Friday in Doha, is getting consensus for a new round of talks that focus on non-trade issues like competition, investment and environment.

Third world nations such as India have long opposed the idea, seeking instead the implementation of issues agreed in the Uruguay round of WTO talks, particularly commitments on cutting agricultural subsidies by developed nations.

Indians fear these issues will expose them to more competition, cut their exports, endanger the huge rural economy and the small-scale sector and result in wide unemployment -- all of which are politically highly sensitive issues.

But analysts say India has neither the clout nor the support of other voting members to continue the fight, and may give its consent notwithstanding tremendous pressure from labour unions, farmer lobbies and leftist opposition parties back home.

WTO director-general Mike Moore said in Qatar that a draft text for a declaration by the ministers was in the works. It would set out an agenda for a WTO negotiating round that would emphasise solving the problems of developing nations.

Analysts said the Indian delegation, led by Commerce Minister Murasoli Maran, will adopt a give-and-take approach.

"Our weak point is our overdependence on capital flows from these developed nations which limits our ability to withstand their pressure, and our low involvement in world trade" said B B Bhattacharya of the Delhi-based Institute of Economic Growth.

"It is there that China scores over us," he said.

Most other East Asian opponents have given in to the pressure from the bigger powers for the start of a new round of talks.

Arch-foe Pakistan, once India's ally on this issue, has turned fickle after wresting trade concessions and capital commitments from the West in return for its support in the fight against Afghanistan's ruling Taliban.

NON-TRADE BARRIERS

Merchandise exports form less than a tenth of India's GDP, but the country imports a lot of its oil requirements, needs capital flows to bridge a wide trade deficit and has large overseas markets for its software, textiles and jewellery.

Yet many fear that by linking issues like environment and competition to trade, developed nations are introducing non-trade barriers through the back door.

In keeping with its commitments to WTO, India has over the past two years reduced its average import tariffs to around 24 per cent, a fourth of their levels a decade ago.

"Developed nations are in recession and saddled with huge capacities. They will use clauses on the nature of production, like hygiene, labour standards and education, to dump their products in the developing markets," said Bhattacharya.

That argument goes well with India's leftist proponents of economic self-reliance, who say India does not need the WTO or accompanying risks.

BARGAIN

But India may agree to a new round of talks and inclusion of issues like transparency in government procurement and some trade related intellectual property rights, if it gets better market access for its exports in return.

"Provided they too compromise and give us comfort about implementation of pending issues, we can also agree," said T K Bhaumik, economist with the Confederation of Indian Industry.

ALSO READ:
India and the WTO: News and issues