Jaipur 17 February 2004

“The British Government is not going to impose any protectionist measure on outsourcing,” asserted Sir Michael Arthur, British High Commissioner to India. He was delivering a public lecture on WTO (World Trade Organisation), which was held at the HCM Rajasthan Institute of Public Administration (HCM RIPA), Jaipur on Monday, the 16th February 2004. “Britain is one of the most open economies in the world, not only in terms of trade but also for foreign direct investment. It believes that open economy and FDI bring huge benefits,” he added.

The event was organised by “CUTS” International and HCM RIPA. More that 75 participants representing civil society organisations, business chambers, government bodies, etc attended the lecture. Initiating the discussions, Pradeep S. Mehta, Secretary General of “CUTS” International expressed that the WTO is perhaps the victim of its own success. According to him, Cancun was a stocktaking exercise and not much should be made out of its failure. More importantly, the trade community has to work hard to make the Doha round of negotiations a success with ‘development’ as its overarching objective.

According to Sir Michael, the momentum for the Doha round has not been lost. In Europe, political consensus on WTO is very high. He welcomed the emergence of G-20 group of developing countries as a healthy development in the international trading system. Other than this, he expressed that in future South-South trade will be an important element of international trading system. In the same vein, he supported the emergence of intra-regional free trade arrangements as one way of taking forward the international trading system. However, he was not much sure about the efficacy of inter-regional free trade arrangements.

On the so-called Singapore issues of investment, competition policy, transparency in government procurement and trade facilitation, he said that more flexibility is required and future negotiations on these issues, if at all, should be based on the principal of asymmetrical liberalisation commitments on the part of developing countries.

While concluding his lecture, Sir Michael made the following observations: a) the dispute settlement system of the WTO should not be misused and/or overused, b) regional trade brings huge peace dividends and its political importance should not be undermined, and c) the framework of trade liberalisation is becoming complex, as non-state actors are getting powerful and involved. In such an emerging situation, concomitant domestic reforms are necessary for trade to help achieve better economic growth.

Commenting on the lecture, V. S. Vyas, Professor Emeritus of Institute of Development Studies, Jaipur, expressed that though economic theory tells us about the virtues of free trade, we need to ponder seriously on the substantial public opinion that why free trade is not helping a country’s economic and social development. He cited two reasons for widespread scepticisms on WTO: a) lack of reciprocity on the part of many major countries, particularly on issues which are important for poor countries and b) lack of appreciation about the resilience of the system.

According to him, the main stumbling block to the progress of the WTO is agriculture. In countries like India, agriculture is indeed existential in nature. Other than arguing for asymmetrical reciprocity on agriculture, he urged that the WTO agreement on agriculture should have a food security box, with provisions to take care of not only the existence of a huge number of poor and marginal farmers, but also of peoples’ right to food.

B. K. Zutshi, former Indian Ambassador to the GATT/WTO was the other discussant. He expressed that the multilateral trade regime is like a bicycle and if we do not keep moving it will fall. According to him, in early 1990s, Indian policy with respect to international trade was inflexible.

On investment, he expressed that a multilateral agreement on investment is like a solution looking for a problem. In any case, almost 95 percent of all restrictions on FDI are in services and the General Agreement on Trade in Services of the WTO is taking care of them. Thus, there is no need for investment to be added separately in the WTO agenda. On transparency in government procurement and trade facilitation, he said that multilateral agreements on these issues would help developing countries in the long run. However, before entering into any multilateral obligations, we need to judge the implementation burden and dispute settlement mechanism.

He urged developed countries to liberalise their labour market under Mode 4 (temporary movement of workers). This issue has to be looked in the larger context of globalisation and demographic changes, in particular in industrialised countries.

The presentations were followed by floor discussions. Concerns were raised about the impact of agricultural liberalisation in India on oilseeds and dairy sectors. According to many participants, though Indian agriculture is changing and getting integrated into the global market, there remain stumbling blocks. Reforms in domestic agriculture should be carried out in all earnest before making further liberalisation commitments in the multilateral context.

Concerns were also raised about the erosion of trust, particularly among the poor countries, on the multilateral trade regime under the WTO. The forum called upon the trade community to devise and implement confidence-building measures for getting the Doha round of negotiations back on track.

While delivering the concluding address, Arvind Mayaram, Director of HCM RIPA said that though the WTO is the manifestation of a multilateral trade regime, its impact is getting increasingly felt at the national and sub-national levels. In this emerging situation, all stakeholders, particularly at the sub-national level, should be better equipped to understand the meaning and implications of the regime, what are the challenges and how changes can be introduced to reap benefits out of the system.