lndia Murasolitary at the WTO
The former commerce minister of
Thailand, Supachai Panitchpakdi has just taken over as the Director-General
of the World Trade Organisation (WTO). He is the first representative
of a “developing country” in the 54 year-old history of the GATT/WTO
to hold this post. Supachai is derived from the Sanskrit Su+upacaya–good
accumulation/growth/prosperity. But celebrations here will be out of
place since the developed-developing country dichotomy in global trade
negotiations has become obsolete: there are advanced countries, there
are Asian and Latin American countries that are pragmatic, there are
African countries that require special treatment and then there is India
isolated internationally because of its domestic politics.
The WTO is in the news for another reason. It has just ruled in favour
of the European Union (EU) in a crucial trade dispute with the USA.
The Europeans had challenged certain provisions of US tax laws by saying
that such tax breaks to corporates for exports was an illegal subsidy.
The WTO has allowed the EU to impose sanctions worth $ 4 billion on
its imports from America. This latest ruling should demonstrate the
ludicrousness of the popularly held belief that the WTO is part of some
American conspiracy to keep countries like India enslaved. There have
been numerous other instances when the WTO has upheld complaints made
by many other countries against the USA.
Dispute settlement is really at the heart of the WTO. The procedure
is elaborate. Put simply, a complaint is first investigated by a panel
chosen in consultation with the countries in dispute. The panel’s findings
become a ruling unless a consensus rejects it. Either side can then
approach the Appellate Body that comprises seven independent experts
serving a four-year term-one of whom, incidentally, now happens to be
India’s former Commerce Secretary A.V. Ganesan. The Appellate Body’s
report is finally accepted or rejected by all members of the WTO, with
rejection being possible only by consensus. This ultimate decision is
binding. The entire process is expected to take 15 months but in actual
practice, it can take upto twice or thrice that time.
In the last seven years, India has won disputes against the US relating
to import restrictions on woven wool shirts and blouses, on shrimps
and shrimp products, against the European Communities (EC) concerning
anti-dumping duties on cotton-type bed linen and against Turkey in the
matter of import restrictions on textiles and clothing. India has also
complained against the imposition of anti-dumping duties by South Africa
on pharmaceuticals, by Brazil on jute bags and by the EC on cotton fabrics.
The USA and the EC have successfully won cases against India on patents
in pharmaceuticals and import restrictions on agriculture, consumer
goods and automobiles. This is the way it should be-you win some and
you lose some. And the more trade you have, more will be the trade disputes.
In the next few years, the WTO’s dispute settlement machinery might
well be inundated with disputes relating to China.
The dispute settlement system is also throwing up new jurisprudence.
In the now-famous “Shrimp Turtle” case, for example, that involved a
dispute concerning American restrictions on the import of shrimps and
shrimp products from countries like Malaysia, Thailand and India on
the grounds that the shrimp harvesting technology used killed sea turtles,
the panel had ruled against the USA. But in October 2001, the appellate
body took a different view that could be interpreted as legitimising
unilateral trade sanctions on environmental considerations. The WTO
is as much about law as it is about trade; hence, India needs to develop
a strong cadre of international trade lawyers. More than that, a policy
that combines constructive criticism in multilateral forums with deal-making
through bilateral channels particularly with the USA will pay rich dividends.
