CHALLENGES AND OPPORTUNITIES OF WTO

Raghunath Rau*

   Two recent events have underscored the value and validity of the World Trade Organisation (WTO) as far as India is concerned. At the same time, they have emphasized the challenges which lie ahead in adapting ourselves to the new global economy, especially at a time when the war in Afghanistan has created uncertainty about the world economy.

    The first development has been the removal by the WTO of the social clause in its agenda relating to child labour and environment. Very rightly, as has been advocated by India all along, these matters will be referred to the International Labour Organisation (ILO), where it rightly belongs.

    The second development is the admission, barring last-minute formalities, of China and Chinese Taipei to the WTO. This was a longstanding demand but was repeatedly held up because of both economic and political roadblocks created by Western countries.

    Now, China could be an official competitor on the economic scene. But more important it could be a collaborator with Indian in playing a decisive role in defining the international economic agenda in the aftermath of the Afghan war. Even America cannot afford to ignore the combined might of these two big Asian countries on the world economic front even if it has the wherewithal to crush any opposition militarily.

    The next set of WTO talks is scheduled to be held in Doha, Qatar, next month. There have been some doubts about the conference being held on schedule because of the situation in Afghanistan, but Qatar is not a terrorist-prone state, and in any case the issues involved are too important to be put off indefinitely.

    Even if it were to be held, the official nomenclature of the talks has already given rise to controversy. Many Third World countries, including India, have objected to the term Doha Round, like the Uruguay Round, which got the WTO off to a kick-start some years ago. Their argument is that too many contentious issues are still to be resolved to call the confabulations an official round where the results would be binding on all countries.

    As a result, the ministerial meeting at Doha may fall short of going into official economic tones on the subject. But there is little doubt that the deliberations at Doha will be a definitive step forward from the Uruguay Round and India will have to be prepared for that.

    Of the two developments noted above, the removal of the social clause by the WTO in its agenda relating to child labour and other labour-related clauses is of more immediate and particular relevance with regard to India. In fact, India and other developing countries have scored a major point in this issue.

    The inclusion of labour and environmental issues had been a point of discord between developed and developing countries since 1995 when the Uruguay round of the WTO formally came into operation. The developed world was pushing for their inclusion on the ground that developing countries had unfavourable labour and environmental standards which provided them with a competitive edge in international trade.

    On their part, the developing countries said that labour and environmental issues on a trade agenda amounted to erecting non-tariff barriers against exports from these countries. The WTO would thus become a rich man’s club with an international stamp attached to it.

    It is no one’s case that child or cheap labour should continue to be pushed solely to increase exports. In fact, India has been in the forefront of countries which have enacted strong legislation against child labour both where domestic and international markets are concerned.

    The case of the Sivakasi firecracker units in Tamil Nadu is a particularly telling case in this regard. These units, operated almost wholly by children, supply the bulk of firecrackers to the country during Diwali and other festivities. But a sustained campaign against the indiscriminate use of firecrackers on health and environmental grounds, as well as, of course, international opprobrium, has resulted in a dramatic fall in the sales of these items over at least the past two years.

    That, though, has been accompanied by a steep increase in unemployment and even deprivation among the families of such children. This argument can also be extrapolated to say the totally unacceptable practice of carting night soil on one’s head and of hand-drawn rickshaws as prevails in Kolkata.

    But that is a price Indian society will have to pay for getting attuned to the modern world. Manifestly inhuman practices cannot be justified on the grounds of loss of employment if they are done away with. The Government of India is alive to that problem and has chalked out programmes for the rehabilitation those who will be dislocated in the process.

    However, recognition of a problem cannot lead to instant removal, as has been demanded by the developed countries. The process has to be gradual, and will involve formulation of complex labour laws instead of being turned into a tariff affair which will only make matters worse.

    That is why India and other developing countries have been pushing for labour and other related matters to be transferred to the ILO rather than be dealt with by the WTO where the developed countries will inevitably have the upper hand given their hold on world trade. The Third World has finally won a significant battle on this issue and all these matters will be handled by the ILO where they belong in any case.

    However, some important issues still remain to be resolved and it is not clear whether they will be even properly tackled at Doha. The two most prominent among them relate to the farm sector and environmental matters. Even though agriculture is the biggest factor in the Indian economy and has a full-fledged ministry for itself at the Centre despite being a state subject, it is woefully disorganised. Pitifully small farm holdings are tilled by illiterate villagers who are the mercy of landlords and money-lenders.

    By the very nature of these holdings, modern technology and economies of scale are virtually impossible to adopt. Even superior products thus get relegated to what amounts to the backwaters of a domestic economy where middlemen thrive at the expense of the farmers.

    The case of basmati rice being adapted, packaged and patented by American farmers is a particularly galling point in this regard. The Indian Government is working hard to overcome the patents granted in some cases, but it may have been a case of waking up too late. After all, superior technology cannot wait on inefficient and outmoded farming methodology.

    Similar is the case with genetically modified food. This is being resorted to on a large scale in the developed countries to buttress the size and weight of vegetables and fruits even though their nutritional value may be harmed in the process and may even pose danger to people consuming them. But they look far more attractive on super market shelves than "natural" products, and that is what sells.

    No less a person than Prince Charles, heir apparent to the British throne, has warned against the dangers of genetically modified food to human health. But Indian farmers are ill-equipped to fight such a battle, as the hasty and ready acceptance among consumers of attractive-looking fruits and vegetables, even though costlier than domestic products, after the opening up of imports under WTO rules has shown.

    The crying need is for a quantum strengthening of the cooperative sector on the agricultural front. For that, help from big industries will have to be taken. Only then can the resistance of small-time landlords and money-lenders be broken and farmers gain from the efforts they put in on the soil.

    China, despite being a Communist country, has shown the way, though in a limited way, by involving foreign companies in setting up farm cooperatives in select areas of the country. The farmers get assured wages as well as productivity bonuses, while the companies look after processing, marketing and other areas which farmers are ill-equipped for. A team of Indian parliamentarians had recently gone to China to study the economic set-up there, and these parliamentarians should be able to provide valuable inputs to the government on maximizing the use of farm resources.

    It is in this context that China’s entry into the WTO should be doubly welcome for India. There is a view in this country that India may be the loser in the process because of perceived views of China as a past master in replicating foreign products and "dumping" them on other countries and that the admission to the WTO will heighten such problems.

    But that is a blinkered and short-sighted view of the matter. The WTO will actually enforce more discipline on China’s manufacturing industry, so that the dumping charge will perforce be phased out, if not eliminated altogether.

    India should rather be more concerned with teaming up with China to put up a joint front against the developed countries on the agricultural front. Western countries subsidize their own agriculture when it suits them, on various pretexts, but want to enforce a strict market regimen for Third World countries.

    It is here that India and China can get together to thwart the West. The combined might of the two biggest Asian countries will be difficult, if not impossible for even America to overcome.

    It would be all to the good if those intimately connected with the Indian economy, whether it be on the agricultural or manufacturing fronts, view the WTO as a challenge and not as a threat. We have gone too far to withdraw now, and in any case the Indian economy has to be fully part of the modern world, even if it results in temporary problems.(PIB Features)

* Senior Journalist