For this, India needs to broaden its national interests and undertake a coalition-building role in matters of trade governance. India is an active and visible participant in international trade negotiations, often positioning itself as a stalwart proponent of the concerns facing developing and least developed countries. It has, however, often expressed these concerns — which emerge from domestic political and economic considerations — in broader terms.
For example, during the seventh ministerial conference in Geneva, the Indian commerce minister demanded the elimination of distortionary agricultural subsidies in developed countries, along with more flexibility for developing-country government action to protect domestic agricultural markets.
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At the ministerial conference in Bali, India used defence of its food subsidy policy as a negotiating chip on a general trade facilitation agreement. Clashes between India and the West have been an important component in the stalling of further efforts to build up global trade governance.
A new political climate in the West pushes additional responsibility for global trade governance on to developing nations, including — perhaps especially — India. This would need India to redefine its national interest more broadly, and take up a similar coalition-building role in global trade governance that it has begun to espouse in other international fora.
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Beginning with the Uruguay Round, the paper elaborates on the issues of relevant interest to India and negotiating strategies adopted by its ministers during all the ministerial conferences held during the Doha Round Finally, Section 3 examines a future direction for Indian participation in world trade, and ways for India to take on a leadership role in global trade governance. In pursuit of inward-oriented development policies, along with its reluctance to open its markets to the developed economies, India failed to take advantage of the increase in world exports during the long post-war expansion of Radical policy reforms began following a balance of payments crisis in — but even before that, a significantly pro-business attitude had crept into the national government during the s in India which brought about a new regime of liberalisation of controls over industrial production, foreign trade and investment.
For one, developing countries were actively engaged in the design of trade rules. Nearly developing countries participated in negotiations at the beginning of the Uruguay Round — about five times the number of participants in The scope of trade negotiations in this round also expanded to include new issues such as non-tariff measures, trade in services, intellectual property, and dispute settlement, among others.
The most drastic change came with the inclusion of sensitive sectors such as textiles, clothing and agriculture, which hold immense importance for both developed and developing countries. He describes the role of GATT as:. GATT is designed to deal with only trade in merchandise. It cannot be stretched or extended to areas alien to it.
GATT is only an agreement and not an organization under the auspices of which disciplines can be developed in such areas. The approaches and disciplines of GATT cannot be transposed to the services sector. The proposal to hold negotiations on services in GATT is, therefore, untenable.
Singh , p. India eventually acquiesced to the demands of the developed countries to include services and intellectual property in a trade-off for improving market access in areas of comparative advantage for developing countries, particularly textiles and clothing. Thus, in the negotiations over trade in services, India moved from holding a reluctant position to a more constructive one over the period Although India participated constructively in the negotiations after undertaking liberalisation reforms in , the focus of discussions remained limited to trade in goods. With the establishment of the WTO, a fundamental change in the working of the multilateral trading system was certainly expected.
Moreover, India was of the view that the global trading system largely reflected the interests of the developed nations and a new round would be no exception. Yet, India agreed to a new round of negotiations, although half-heartedly, in the hope that it would strengthen the multilateral trading system of the WTO by recognizing the existing development deficit amongst countries.
Murasoli Maran, who led the Indian delegation at Doha in remarked in his opening statement that:.
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After the setback at Seattle, all of us want Doha to be a success. Maran , p. India has consistently positioned international trade as an instrument for development, which would require a negotiating process that is more inclusive, equitable and fair. The Doha Development Round, which began in , is the current round of global trade negotiations. Framed in response to the concerns expressed most vociferously by India, the Doha Round nominally places the needs and interests of the developing countries at the forefront. For example, India raised concerns in the Geneva ministerial conference that it faced difficulties in implementing some of the WTO agreements and decisions due to inadequate financial and human resources.
In addition, at Singapore and Seattle , India firmly refused to entertain any discussion about whether labour issues, in any form, could be brought within the purview of the WTO. Additional Indian concerns regarding greater access in agriculture markets of developed countries, movement of people Mode 4 in services , among many others, were duly acknowledged in the Doha agenda.
The September terrorist attacks on the US led to a climate in which solidarity between developing and developed countries was prioritised. This pressured India to deviate from an inflexible position as it did not want to be regarded as an obstructionist in international economic cooperation Panagariya , p.
Opinion is divided, however, on the nature, extent and utility of this shift. About 20 developing countries 5 , including many African ones, came together and formed a coalition called then the G, and later the G in response to the European Commission EC and US text on agriculture trade liberalisation dated 13 August Jaitley It was noted, however, that while a strong stance on certain issues relevant to developing and least-developed countries would help in creating a significant place for these countries in the WTO, it would also stall the progress of multilateral negotiations.
India recognised this concern, as a stalwart supporter of the multilateral trading system. The discussions held at Geneva did not produce any substantial outcome but paved the way for future trade negotiations in Hong Kong. Also, it witnessed rich nations EU and US acceding partially to the farm sector demands of the developing countries such as India Times of India , 4 August The establishment of the G helped India to build a robust representation in agriculture trade negotiations at the Hong Kong ministerial conference.
Another coalition, the G, emerged before this ministerial specifically to advance food security and livelihood interests of the developing countries. Through these coalitions, India succeeded in finding broader support for its position — a position that owed a great deal to the exigencies of domestic politics —on protecting the interests of large rural communities.
At Hong Kong, India not just voiced its concerns but also presented these as a spokesperson for the least-developed countries. The issues with the highest priority for India at the Hong Kong ministerial included negotiations on agriculture and services, non-agriculture market access, trade-related intellectual property rights, trade and environment, trade facilitation, and other issues of the Doha mandate. The developed world conceded to the demands of the developing economies to eliminate export subsidies by the end of , with substantive reductions planned by A notable change came about in the services sector, with the Hong Kong ministerial declaration freeing the developing countries of any obligation to liberalise it.
Kamal Nath, who led the Indian delegation at Hong Kong, appreciated this outcome:.
As far as India is concerned, the Hong Kong Ministerial Declaration finally agreed upon addresses our core concerns and interests and provides us enough negotiating space for future work leading up to modalities. The text has positive development content, which would need to be built upon and fully realized in the next stage of negotiations. Nath It was unanimously agreed to in the ministerial that the modalities for negotiations on agriculture and industrial sector liberalisation would be established by April However, due to differences between developed and developing countries, this deadline could not be met.
Certainly, it was clear that India used its position as a leader of the developing countries to create a declaration that reflected the priorities of its swiftly growing economy — subject to the constraints of domestic politics. Since India is a firm supporter of a rules-based multilateral trading system, it demanded a resumption of Doha Round trade talks in February The talks collapsed again as India and the US failed to reach consensus on issues such as agriculture trade liberalisation and non-agriculture market access.
India was seen as being the sole holdout at the conference, as it insisted on an easier trigger for the special safeguard mechanisms that protected domestic farmers from sudden price changes. The next ministerial conference at Geneva in , however, marked the breakthrough in trade discussions among developing and developed countries.
Trade and services
It was a regular conference in the sense that it was not organised to hold negotiation sessions, but rather to review and assess the progress of WTO activities in all member countries. India, with a freshly re-elected government, participated in the meeting with a more constructive agenda, suggesting a way forward in concluding the Doha Round by the end of The protectionist response in certain quarters to the onset of the global financial crisis in late led unsurprisingly to calls to resist protectionism through reviving multilateral trade talks. If not for the financial crisis, the Doha Round might well have been declared dead.
But, as it happened, the Indian government took the lead in re-infusing energy in the process, gathering trade ministers from over 30 countries in New Delhi in September Indian Express , 5 September , p. This may have been the first time that India pro-actively took the initiative in re-launching global negotiations. It reflected also its increasingly important status at the G grouping formed after the financial crisis in arguing against protectionism, even as world trade stagnated. India had a responsibility not just to the G group of food producers and consumers, but also to the G that now saw itself as running the world economy.
The policy stance adopted by India at Geneva displayed more flexibility than earlier, in order to push for the resumption of trade talks, along with an implicit message to adhere to the Doha development mandate for any negotiations and demands. India was steadfast in advocating for full implementation of duty-free, quota-free market access to the least-developed countries, preferably by July At this ministerial conference, India prioritised calling for services waivers and other concessions for the least developed countries, along with finding ways to move forward on the Doha Development Round.
This conference, for the first time, saw the BRICS grouping — which had just been formed in April with the addition of South Africa — meeting to coordinate their positions at WTO negotiations; India, although it continued to be the poorest member of BRICS, and had substantively different interests historically from some of the other BRICS countries, was looking forward, and repositioning itself away from presenting itself solely as the champion of the least developed countries at the WTO.
The Bali ministerial conference held in December is of specific importance to developing and less-developed countries as it took a step forward in addressing their long overdue concerns in areas of agriculture, food security, among others. During this conference, the member countries established consensus on the first ever multilateral agreement on trade facilitation and India sought to aid in the process of consensus. It was perhaps the first time in many years that India did not act primarily as a visible spoiler in multilateral trade talks Palit , p. India claims some improvement in horizontal offers that is, offers which apply across all sectors received in Mode 4.
Requirements of economic needs and labour market tests have been relaxed, albeit only for intra-corporate transferees. The Canadian and New Zealand offer has extended the period of stay for business visitors, executives and senior managers. The US response or lack of has been frustrating for India. Commerce Ministry officials stated recently in Delhi that if nothing was forthcoming from the US, India would contemplate scaling down the ambitious offer it was formulating to meet the July 31, deadline. Whether we will put them on the table depends on the feedback we get from our trading partners," said a senior trade official at a meeting organised by the ministry and a neo-liberal think tank on July in New Delhi.
Officials said they were not fooled by US rhetoric that Mode 4 will happen irrespective of the GATS and there was no need to bind quotas in schedules. The Indian demand is removal of various obstacles that Indian companies face in sending their professionals abroad and for legally binding de-regulation and a higher quota. In cross-border supply of services primarily business process outsourcing , India's plurilateral requests make the following demands to its trading partners both developing and developed :.
India sees domestic regulation as the main market access impediment on cross border supply. Its attempt in the negotiations will be to ensure that regulations on data privacy, jurisdiction, standards, recognition and government procurement keep "market access" open in Mode 1 and do not undermine commitments. The Hong Kong declaration calls for an intensification of this process and has a specific mandate for developing disciplines before the end of the Round.
India is actively involved in these negotiations. Its logic is to ensure that the market access it gets in Mode 1 and 4 is not nullified by domestic regulations but rather complemented by it. Ministry officials cited the case of US domestic regulations in banking which were successfully used to stymie the efforts of ICICI, a major Indian private bank that wanted to set up a branch in New York.
Ministry officials claim that there has been significant momentum in the last six months on the rule-making front. They also clarified that the understanding among member countries is that the resulting new disciplines on services will apply only to sectors where commitments have been undertaken. Officials claim that one of the key reasons for India's confidence is due to the level of autonomous liberalisation in services that has taken place over the last 15 years. In fact we have steadily gone ahead and bound them in the GATS," said a senior official.
Earlier this year, delegates to the World Economic Forum arriving at Zurich airport were greeted with a billboard 2 that proclaimed, "15 years, six governments, five prime ministers, one direction". This underscores the commitment of all Indian central governments to this agenda. Despite the government's buoyancy there are a few sectors in which India will not be able to make any GATS commitments in the coming round.