India at the WTO negotiations: friend or foe of the third world? - Abigail Dymond

Having collapsed in 2003, been revived by an interim agreement adopted in Geneva in 2004 and due to be concluded in the Hong Kong Ministerial this December, the current, so-called ‘development' round of WTO negotiations has been nothing if not eventful.

Agriculture is the most important sector of developing countries’ economies

Coverage of the negotiations has been equally dramatic. Some commentators claim they are nothing short of ‘historic,' and will ‘make life better for millions of our citizens, in developed and developing countries alike'. Others argue that the development title of the negotiations ‘refers only to further development of the developed countries' (ActionAid, 2004; 11). They cite deep-rooted problems with the principle behind, and the outcome of, the negotiations that cover everything from agriculture to industry, from service liberalisation (the general agreement in trade in services, or GATS) to trade facilitation.

This has been accompanied by criticism over the way in which the negotiations have been conducted. Much criticism is focused on the fact that India and Brazil , as heads of the G20 (a third world country block extremely powerful in Cancun ) are the sole representatives of the third world in agricultural negotiations conducted with the EU, the US and Australia (so-called 5Ips).

Agriculture is especially important within the WTO—not only is it the sector of most importance to the third world; it is also the ‘deal-maker or deal-breaker,' without which no

other agreements can be reached. Despite this, it is extremely hard for third world countries to resist, or to modify agreements which the 5Ips produce. They have no direct input into the process, they do not have the opportunity to democratically vote on the finished product and cannot realistically say ‘no' to an agreement if everyone else says ‘yes'—to do would be tantamount to economic suicide.

West coast fishermen sort their catch

‘So what?' you might be tempted to ask? Surely this matters little if the third world's interests are accurately represented within the agricultural negotiations and thus within the talks as a whole? A valid point…but unfortunately the third world's interests are not. Instead, the Indian government has betrayed those who they are meant to represent, emphasising their own, narrowly conceived national interest over the good of the third world as a whole—and it has done this in two main ways.

First, the Indian government has not only passively acquiesced in, but has actively helped to create, an agricultural agreement that is extremely harmful to the third world as a whole. India has a large amount of small-scale subsistence farmers and, as such, is concerned primarily with protecting its agricultural markets from cheap first world imports. This means that India 's primary focus is to maintain high tariffs, an aim it shares with the EU. India could thus not afford to lose the EU's support by asking them to reduce their subsidies. The Indian negotiators then took this a step further, not merely ignoring demands for subsidy reduction but actually giving the EU permission to increase their (already enormous) subsidy systems by 29.2 billion Euro (Berthelot, 2005).

And although on the one hand India has allowed the first world to increase their subsidies, on the other hand it has agreed to decrease the amount of subsidies exempt from reductions (the ‘de minimus' in WTO-speak). The third world is currently allowed to subsidise 10% of their agricultural production with immunity—and the first world is allowed 5%--but under the Geneva agreement this amount is likely to decrease by 20%. This will scarcely impact upon the massive subsidies of first world countries—who, in any case, have a number of tricks they have successfully used in the past to avoid subsidy reductions—but will be disastrous to the third world whose minimal subsidy programmes will be reduced even further. And in case you're wondering why India has allowed such inequity, it may well because they themselves use only 1% of their de minimus so do not care what happens to the other 9% (Zoellick, 2004)!

Second, the irony is that, in return for these (largely illusionary) first world concessions in agriculture, the third world has been forced to make far-reaching concessions in the areas of industry and services.

In the first instance, third world countries have been forced to sign an industrial agreement they had already rejected at Cancun for being extremely unbalanced. The agreement states that the highest industrial tariffs will be subjected to the largest cuts and that these cuts have to happen on 95% of tariff lines. This all sounds perfectly reasonable until you realise the third world has, on average, tariffs 4x that of the first world, that these tariffs are critically important in allowing them to protect their infant industries and the 5% of industrial tariffs exempt is virtually nothing. India had previously complained that this agreement ‘ignores…many developing countries…arbitrarily disregard (es) views and concerns expressed by us' ( India 's statement at Cancun in ActionAid, 2004; 11) but has now played a crucial role in getting other countries to sign it.

In the second instance, India, in it's role representing the third world, has agreed to acceleration in service liberalisation (it is now mandatory to make liberalisation commitments under GATS, whereas prior to the Geneva Agreement it was a voluntary process). This may benefit India through allowing the continued expansion of it's phenomenally successful software industry (which totalled $1.75 billion in 1998) but it also opens the door for the increased privatisation of water, education and health services—along with many others—worldwide.

Who represents the people of India?

To conclude, then, for a variety of reasons, the Indian negotiators have not so much represented the third world as betrayed them. However it is not too late for, and has never been more important to have, a change in government policy. The Hong Kong Ministerial and the months leading up to it consist an unprecedented opportunity for the third world to modify and correct many of the injustices with the agreement. However, this can only happen if the Indian government realises that it's true allies are not the wily, deceitful negotiators of the first world but the governments of the third world. Poor they may be in terms of resources, but they are positively rich in terms of the collective power they could wield at the WTO and India must play a crucial role in helping them to realise this potential.

Any questions or comments or for details of further reading, please email me at abidymond@hotmail.com .