Making Struggling India Pay for Shining India:

UPA Government and the WTO Hong Kong Ministerial

 What are the major issues involved in the forthcoming Hong Kong Ministerial Round of the WTO?

In the impending Hong Kong Ministerial Round of the WTO, the official view has tended to focus on three issues in the main – agriculture, non-agricultural market access (NAMA) and Services. In this view, TRIPS is a closed issue. Even the developing countries have confined themselves to raising the issue of Para 6 of MOTA in the TRIPS at most (which relates to problems of the using compulsory licenses to supply patented medicines to countries that cannot produce them). But such a perspective is inadequate – several other issues including that of TRIPS need to be raised even at this stage.

 How important are Agriculture issues to the negotiations? What are the main issues involved?

In the last decade of the WTO’s existence, it has spelt crippling coercion for developing countries, and has further widened the yawning gap between the developed and the developing nations. As we approach the Hong Kong Ministerial Round of the WTO, the need of the hour is solidarity of the developing nations against the pressures from the imperialist nations, and a radical rethinking on the WTO institution itself. Is the UPA Government likely to act in keeping with these needs? Liberation interviews S P Shukla, Convenor, Indian People’s Campaign Against WTO, for views on the negotiations in the Hong Kong Ministerial.

Even from the point of view of the developed countries, agriculture is a major issue. According to the dominant discourse in the media of these countries, “success” is said to depend on a “breakthrough” with regard to agriculture! Negotiations are on between the US and the European Union on the one hand, and Brazil and India representing the G-20 on the other; smaller countries in the G-33 have written to the Chairman of the General Council as well the Chairman of the Agriculture Group protesting against the non-transparency of small group negotiations.

The founding paradigm of the WTO (its Agreement on Agriculture (AoA)) is biased in favour of capital-intensive and corporate agribusiness-driven agriculture. Within this paradigm, the three issues in the agriculture negotiations are – domestic subsidy, export subsidy and market access. The current negotiations concentrate on the kind of offer being made by US and EU – mainly in the area of domestic support reduction and market access improvement. Apparently, dramatic offers were made both by the US and EU of 70% reduction in domestic support and ending of subsidies by 2025, but these promises are very likely to be highly misleading.

Australia and New Zealand emphasise the question of reducing tariffs and improving access to markets in US and the EU, and of putting pressure on the US and EU to reduce their domestic support and export subsidies. Brazil also has a similar position to Australia and New Zealand – only 26% of its labour forces are deployed in agriculture – its labour is thus far less dependent on agriculture that most other countries.

 Can we expect the impending negotiations to have some solutions for the agrarian crisis being faced by India? Can we expect some positive intervention by the G-20 grouping?

India’s central agrarian concerns (given its labour intensive agriculture where agriculture is the crucial livelihood issue) are far from being central in the G-20 negotiations. Most of the proposals in these negotiations concern how to monitor compliance of the US and EU – that is, to plug the loopholes and prevent camouflaging in regard to the domestic support and exports. But the emphasis on these questions puts our main concerns in agriculture on the back-burner. In India, agriculture is mostly for subsistence, rather than trade, and so the main question for us is of how to protect the Indian small and marginal peasantry. The phrase “food security and livelihood security” continues to figure in our policy statements, but the actual steps taken are nothing commensurate with the magnitude of the problem.

G-20 (of which India is a member) had raised hopes at Cancun as an emerging platform of developing countries, but these hopes have been dampened by the July 2004 Framework Agreement, whereby the G-20 had already moved away from the Cancun positions and onto a conciliatory path. It is taking positions more or less in a manner designed to protect the interests of the agriculture exporting countries. In a large measure, India should be held responsible for the weakness of the G-20 process, for since the Cancun days, India is increasingly guided by the paradigm of corporate agriculture – which fits in with the Brazilian approach of ‘least resistance’ which coincides with the WTO’s founding paradigm.

 What should India’s approach be to the negotiations in agriculture?

Since the WTO’s founding paradigm has no solution to our real agrarian problems, our emphasis should have been on ensuring our right to selectively delink our economy on the same lines as the right provided within GATT to developing countries to delink their manufacturing sector through quantitative restrictions on imports. The justification provided in GATT for this exceptional dispensation was in terms of safeguarding the external financial position of the member country and overcoming the Balance of Payments problem. This safeguard, (under Article 18B of GATT) was not one devised out of concern for the developing countries, but was an extension of a similar one provided to EU countries in the post-war period under Article 12 of GATT. European countries then faced BOP problems, and were therefore allowed this exceptional regime of imposing quantitative restrictions.

The neo-liberal paradigm abhors quantitative restrictions, founded as it is on the geometrical/mathematical model based on the assumption that maximum consumer satisfaction could be had by optimal use of production without any extraneous interference (such as Government quotas, subsidies etc…) allowed. The GATT agreement of 1947 reflected, to some extent at least, the actual concerns of reality. Article 18 was introduced in 1955, even before the 60s when the developing countries had begun to assert, yet it reflected the reality far more effectively than the GATT agreement of 1995. In 1995, the concern was how to bring it in line with free market principles, rather than how to tailor it to suit the actual needs of its time.

Reality tells us that the need for subsidies in developing countries is increasing, yet the emphasis of the agreement was on reducing subsidies and opening up the markets of developing countries. In the face of this, the Government of India has not really taken any radical position of selective delinking.

The offers and concessions made by the EU or the US are merely paper calculations, and for such paper offers, they want us to give up the right to protest our real interests!

The differences between the EU and US (at the moment quite large) may lead to a temporary deadlock. Prior to Cancun, the US and EU had come together, they may do so again before Hong Kong, and pressure on developing countries will increase. The current deadlock may only mean a postponement of the heat. The idea that “success” lies in ending the deadlock is quite false; we should in fact aim to add to the deadlock! But will the Government of India do so? The GOI aims to be a partner of the US, co-chairing the Services Group, and so they see their salvation in helping negotiations to “succeed”. The rhetoric about protecting Indian farmers carries no conviction since it is not backed up by any actual proposal on part of the Government.

 What about the negotiations on NAMA (Non Agricultural Market Access?

The situation is even worse: developing countries are on the point of losing the only available instrument to protect their small industries. For the first time in the history of the GATT negotiations, a formula has been introduced for tariff reduction, involving:

• Universal binding of tariffs: Once bound thus, one nation can’t come out of it without compensatory satisfaction to the other partner. Develop ing countries had used tariffs as an instrument to develop their capabilities; now this instrument is blunted.

• General formula for tariff reduction, according to which every tariff line is vulnerable to reduction. Earlier, if average tariffs are 60-80%, we could agree to bring it down to 50-60%. Now, instead of reduction of average tariffs, we’ll have reduction of every tariff line. As a result, the flexibility of tariff instruments is reduced substantially, and there is much greater exposure to competition. Closure of industries and de-industrialisation is bound to follow.

This is being justified by saying that in any case, India is closing down industries, why not use the fact to bargain for some gains. Even if one fails to see the consequences of the policies that are already causing de-industrialisation, the fact remains that if we accept the current proposals, they will be binding on all future governments: we will be giving away policy space for all time to come in a crucial area affecting industrial development.

Services in India are already in the process of being recklessly opened up for liberalization. How will the negotiations on the Service Agreement impact on this process?

The GOI has gone far beyond what the Services Agreement (forced by the Uruguay Round on developed countries) expects. That agreement, despite its draconian features, had some saving features: it had left some room for independent policy decisions. It built in special and differential treatment in favour of developing countries and provided a large measure of flexibility (to choose which sectors to offer, to put conditions) to developing countries as a right. This meant that the member country had some discretion as to which sectors to offer for negotiations. Now, in addition to the liberalization that has already taken place in crucial sectors in the last decade, developed countries want the developing nations to be locked in through a legally enforceable provision in the GATS.

Now the developed countries have put forward a proposal for ‘benchmarking’ in order to take away the flexibility and change the structure of the GATS. All developed countries know this. Yet, India, by co-chairing the Core Group on Services, has actually taken the initiative to push through these changes! India’s issue paper in October has been criticized even by Brazil and Argentina; only the US has approved of it. India is effectively attacking its own interests.

What is the logic being offered by the Indian Government? The argument is that the Indian market has huge potential prospects (examples of IT, BPO and H1B visas are cited). In order to lock in the US, we are told, we must prepare not only to ask for this sector, but also to provide quid pro quo in NAMA, Agriculture etc…In other words, the entire negotiations are being pegged on capturing this so-called “prospective” market.

How real is this assessment? Let’s take a look even the NASSCOM has cited total prospective employment figures as 3 million jobs: compare that with 40 million unemployed! The fact is the MNCs view us as a cheap source of labour – and as long as we offer to be cyber coolies, this process will continue. The moment some other country offers a cheaper source of labour, these MNCs are most likely to shift there! To imagine permanent improvement to access to this market is NOT tenable. The US provides 65,000 H1B visas as of now, and in their offer, they haven’t offered to increase this number even by one! Even assuming that they double it (according to their own industry’s requirements) and half of those visas come to us, it means 50,000 people get a visa to go and work in the US. Compare that ‘gain’ with the what cost the labour force back in India is being asked to pay, due to the other rights (to safeguard our agrarian and industrial interests) we’re giving away in return. Is such a bargain worth it?

The small, elite ‘Shining India’ segment, which is interested in such illusory results, is driving the negotiations, and using the interests of Struggling India (agricultural and industrial labour, who are not even part of the negotiations) as a bargaining counter! Compare this with the strategy of the developed nations: if they reduce subsidies, they are doing so for their own reasons, in their own interests; but they are using such reductions to bargain with us and secure concessions on our part!

 When the Amendment to the Patent Act was passed in India, the Left parties which supported it in Parliament had argued that while this was the best that could be achieved in the present unequal framework of TRIPS, ‘the war’ of fighting for the review/removal of TRIPS from the ambit of the WTO remained to be fought. What are the indications that the UPA Government will fight this war in Hong Kong?

 10 years is more than enough to show that TRIPS have militated against democratic access to science and technology, be it in software or biotechnology; in particular, the patenting of life forms, medicines and seeds have had deadly consequences. However, even the developing countries hardly seem inclined to radically question the TRIPS framework. At most, Para 6 (relating to how TRIPS provisions are interpreted in specific country laws) is being raised. There is very little interest in raising other issues. Whereas the fact is that a decade of TRIPS has passed, and we must insist on the mandated review, including the issue of microorganisms, and should take it as a basis to review the entire TRIPS agreement itself. We need to bring TRIPS back to the negotiations – to reopen the question of revising TRIPS to globally expand the public domain in Science and Technology.