India, WTO lock horns over FTAs
Financial Express, India
India, WTO lock horns over FTAs
RTAs will drive global trade: Kamal Nath
OUR ECONOMY BUREAU
7 December 2004
NEW DELHI, DEC 6: India made it clear on Monday that it would aggressively push for more regional trade agreements, though it attached importance to the multilateral trading system.
Addressing the plenary session on international trade, commerce and industry minister Kamal Nath said, “Economic co-operation agreements will be building blocks and drivers of global trade. The multilateral system cannot drive south-south trades.”
According to him, 60-70% of world trade will come through RTAs in the next 10 years. “There are over 200 RTAs in operation, and it is estimated that over half of global trade now takes place within the umbrella of some RTA or the other,” he said.
Indicating that agriculture will remain a contentious issue in the course of WTO negotiations, Mr Kamal Nath pointed out that the developed world extended $1 billion as subsidies to farmers. Indian farmers could not compete with western governments, he said.
The minister also said that the government would soon come out with a new technology transfer policy in a bid to attract state-of-the-art technology. India welcomed FDI both as a source of capital as well as a vehicle for technology transfer, he said, adding, “Technology alone can enable developing countries to do the catching up.”
The minister also said that India will resist all kinds of pressures for any new form of protectionism in the world textile trade following the phase out of quotas under the multi-fibre arrangement and expiry of the Agreement on Textiles and Clothing.
The phase out would be effective from January 1.
“The expiry of Agreement on Tetiles and Clothing does not ensure that protectionism will disappear from the stipulated date. While developing countries poise themselves to fully exploit the opportunities that will open up before them, there are forces as well to negate this and we shall not allow it,” Mr Nath said.
The minister said that there is a growing need to consolidate the gains while being vigilant on the emerging trade policy conditions to be able to collectively resist pressure for any new form of protectionism in the sector.
Don’t go whole hog on FTAs: Supachai
Our Economy Bureau
New Delhi, Dec 6: WTO director-general Supachai Panitchpakdi on Monday cautioned India against going the whole hog with regional trade agreements and free trade agreements. He said WTO would institute a mechanism to ascertain whether FTAs and RTAs contributed to the multilateral process of integrating and easing world trade.
Speaking at the India Economic Summit, Mr Supachai said that India would benefit more by using its energy for early conclusion of the Doha Round in WTO, rather than entering into FTAs and RTAs. Making his choice clear, the WTO director general said,” “Multilateralism should retain its primacy over bilateral trade agreements.”
He added,”These agreements (FTAs and RTAs) have brought down tariffs by 10%, or so, whereas the multilateral process under the WTO has reduced tariffs by around 25%”
The rules of orgin - meant for adversarial trade deflection - and complexity of tariff lines that the FTAs would bring in are “both confusing and costly,” Mr Supachai said, adding that member-countries of the WTO have rights as well as obligations to fulfill in order to strengthen the multilateral trading system.
Developing countries must realise that with their new authority as “emerging markets”, they cannot let the organisation (of world trade) move forward in multiple tracks. At the same time, he conceded that special treatments are needed to safeguard the interest of poor nations, as many countries have not benefitted from multilateral trade as they should have. “The WTO must look global,” he said.
Mr Supachai advocated a five-pronged approach for developing countries. Through their powerful grouping G-20, developing countries are increasingly asserting their rightful place in multilateral negotiations, he said, referring to the agriculture package in the August 2004 framework agreement for further negotiations on Doha Work Programme.
Mr Supachai said that there were no longer any irreconcilable conflicts between the north and the south, and there should not be any either among the developing countries. Many countries, for instance, believe that with liberalisation of agriculture, many will lose tariff and other preferences they currently enjoy.
While he was appreciative of the fact that South-South trade had increased from 6% to 10%, interests of the least developed countries’ must also be taken care of. “Apart from benefitting they (countries like India and South Africa) must lead and uplift the lesser developed countries”, he said.
