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Business Commentary/Dilip Thakore

India and the WTO: Seattle is history, prepare for the next round, now

The exultation and euphoria of the government and Left-leaning intelligentsia, over the failure of the World Trade Organisation's Seattle round negotiations, is premature and unwarranted.

True, the developed nations led by the US were not able to steam-roll their expanded agenda -- freedom of global investment, and the linkage of universal labour and environment preservation standards with trade issues. But the seeds of these ideas have been planted within the WTO and it is only matter of time before they germinate and strike root.

Consequently, the Indian argument that labour and environment standards cannot -- and should not -- be linked with trade, has carried the day. However, it is in the national interest that a more credible effort be made to legislate (and implement) globally acceptable labour and environment preservation standards back home.

There is a global revulsion against the profit from child labour derived by a large number of firms producing goods and services for the global market.

The issue of child labour is unconnected with WTO negotiations. But the fact is that the employment of child labour violates the Universal Declaration of Human Rights proclamation of which India is a member signatory. So, pressure on the Indian government to fall in line with the declaration is justified.

I am not justifying the US gambit of expanding the WTO agenda. It is quite obvious that the professed concern of the developed nations for children's rights in developing countries is driven less by children's rights and more by the concern for preserving jobs in high-cost industries in their own countries.

The Indian delegation to the Seattle summit took the stand that labour and environment preservation standards is the thin end of the wedge to raise a large number of non-tariff barriers against competitive exports from developing nations. Its stand is entirely justified.

But this is also a good time to begin cleaning up our own act, particularly in relation to the widespread employment of child labour in the Indian economy on which account this nation is vulnerable in several international fora.

A determined initiative to get children out of sweatshops and into schools, which is their natural habitat, is overdue. More so because several powerful non-governmental organisations have emerged as pressure groups for labour and environment standards.

Several NGOs opposed to the establishment of a multi-lateral WTO almost sabotaged the summit. Unfortunately, US President Bill Clinton and the European Union's representative made sympathetic noises in favour of the the estimated 50,000 demonstrators by conceding they were making valid protests.

The opposition of powerful transnational NGOs to the very idea of a World Trade Organisation which will lay down some ground-rules for the regulation of international trade, and the receptive ear that this viewpoint is receiving in the US and Europe, is a grave threat to developing nations and India in particular.

The US negotiators are attempting to expand the WTO agenda, even as issues negotiated in the Uruguay Round of trade talks (1995) remain unresolved -- free access to textiles, garments and leather products to US and European markets. This raises suspicions that the US would not mind a toothless WTO, if the global trade body is not built in its own image.

Likewise, the EU which is notoriously protective about its heavily subsidised agriculture, would not be entirely unhappy if the WTO is reduced to the status of an ineffective cipher.

The countries which have the most to lose if the WTO does not get off the ground will be the developing nations, particularly medium development nations like India and China. For these are beginning to emerge as major trade and investment actors on the international stage.

The upside of the failed WTO ministerial summit in Seattle was that neither the US, the EU nor any of the developed nations has shut the door against further negotiations under the WTO banner.

Indeed, it is possible that US trade representative Charlene Barshefsky and her team may have learnt a lesson in the art of multilateral negotiations. She said these will be continued in Geneva. The Indian government-led delegation gave a good account of itself by resisting the temptation to play to the gallery and the Third World leader. It would do well to prepare the ground for the next round of negotiations by drawing up some worst-case scenarios to keep the talks going. At this point, in India's history, we need a regulated international trade order more than the US or the developed nations.

India and the WTO

Dilip Thakore

Business