Hissing in the Mexican Snakepit
By now, the world has come to
know that in the native Mayan language, Cancun means “snakepit”.
And so the summit of trade ministers of the 146 members of the WTO at
this Mexican resort destination turned out to be. Talks to further liberalise
global trade especially in agriculture and services collapsed dramatically
on September 14th. Posturing aside, this is undoubtedly a setback, particularly
for India. Clearly, the atmospherics at Cancun were different than at
Doha where the last WTO summit took place in November 2001. Doha laid
out the negotiating agenda. It took place in the sombre backdrop of
9/11. The anti-globalisation brigade was in retreat then. But in the
last year or so, international solidarity has frayed and the WTO-phobes
have regrouped.
At
Doha, India stood in splendid isolation and was clearly cast as an obstructionist
villain. This time around, India played it a little better allowing
Brazil to don the mantle of leadership of the so-called G-22 or group
of 22 developing countries that also included countries like Indonesia,
South Africa, Egypt, Pakistan, Nigeria, Chile, Thailand and Mexico.
But India did not exert its influence to clinch a deal. China, as always,
made little noise and maximized self-interest. It was part of the G-22.
But at key moments, it made statesmanlike pronouncements to placate
the Americans, conscious of the importance that the American market
has for the Chinese economy. Actually, there is a lot of hypocrisy in
the G-22 stand. They maintain substantial trade barriers against imports
from other poor countries. India fought for the right of its drug companies
to sell cheap anti-AIDS drugs elsewhere while it denies HIV/AIDS patients
at home access to such drugs as part of it national AIDS control programme.
The interests of the G-22 diverge among themselves. Nor are they identical
to the interests of the 50-odd least developed countries, many of whom
are actually economies with high exports:GDP ratios but whose exports
are almost entirely commodity-based. If global trade is to alleviate
poverty, the interests of G-50 or G-51 have to be centre-stage.
The Europeans and the Japanese prevented the breakthrough. Sure, there
was progress in agriculture with an agreement in sight on the elimination
of export subsidies. A compromise on issues like trade facilitation
and transparency in government procurement insisted upon by the Europeans
and resisted-wrongly– by the G-22 was also possible. But positions
were intransigent on two other issues-on a multilateral agreement on
investment linked to trade and on a competition policy. The Americans
baulked at an agreement on cutting cotton subsidies. The USA spends
almost $ 4 billion a year subsidizing some 25,000 cotton farmers. This
hits the interests of over 10 million small farmers in poor African
countries like Burkina Faso, Benin, Chad and Mali.
Negotiators will try and resolve their difference in a much less surcharged
and hyped setting than at Cancun when talks resume in Geneva. Meanwhile,
the US will try and push bilateral and regional free trade agreements.
But with an American Presidential year ahead in 2004 and with growing
fears of unemployment, the extent to which such agreements will carry
out significant liberalization in areas that matter like agriculture
remains to be seen. What should India do? It should, first and foremost,
give up Third Worldism. Its negotiating stance in global trade negotiations
are not positions that a rapidly growing, self-confident, demonstrably
resilient economic power seeking world influence should adopt. It should
learn from the Chinese in this regard. Sustained engagement with the
US is critical. More than this, the real tasks are at home. The WTO
is at best a facilitator. The fundamental determinants of international
competitiveness are domestic policies whether it is in textiles, agriculture,
labour-intensive manufactured goods and services.
