|Important Issues for India’s Negotiations in WTO|
|November 14, 2005|
|An interactive seminar was organized by ICRIER on November 14, 2005 jointly with the Ministry of Commerce and the Sir Ratan Tata Trust (SRTT) on ‘Important Issues for India’s Negotiations in WTO’. The objective of the seminar was to facilitate discussion on important negotiating issues before the Hong Kong Ministerial Meet of WTO to be held in December. Honorable Minister of Commerce, Mr. Kamal Nath was the Chief Guest for the occasion.
With a view to undertake a dialogue with the Minister of Commerce and other relevant ministries, an in-depth interaction on key issues relevant for the current round of negotiations was carried out on Agriculture and Non Agriculture Market Access, Market Access Negotiations in Services and distribution services in particular India’s retail sector. The session on Negotiations was chaired by Dr. Isher Judge Ahluwalia, Chairperson, ICRIER. The seminar also discussed and disseminated some of the ICRIER research on key WTO related issues including Impact of Tariff Reforms, Cross Modal and Cross Sectoral Issues in Services, Trade Facilitation, Anti-Dumping and Subsidies in Services. This session was chaired by Mr. S. N. Menon, Commerce Secretary.
The Commerce Minister started by stating that the awareness level of developing countries is much higher than the Uruguay Round with developing countries being more prepared and voluntarily engaging in the negotiations.
On Agriculture, Commerce Minister opined that it still remains the most distorted sector. It should be asserted that domestic support and subsidies areas are also an obstacle, since they are illegitimate instruments in a rule-based, fair and equitable multilateral system, and it would be better, the sooner they are dismantled. India is asking for a substantial cut in trade distorting domestic subsidies and eventual elimination of export subsidies. Tariffs remain the only instrument of protection and for safeguarding food and livelihood security and rural development. Appropriate policy space must be intrinsic to any agreement at Hong Kong and beyond. The discussion pointed out that India should be aggressive in Agricultural negotiations and tie up tariff reduction to subsidy reduction in developed countries. Mr. Anwarul Hoda, Member Planning Commission mentioned capping of high tariff lines is extremely important.
In NAMA, the Minister pointed out that India is seeking significant market access through reduction in tariff peaks and tariff escalation and reduction in non tariff barriers in the developed countries on products of our exports interest. As India has already undertaken unilateral tariff cuts and is planning to bring the existing tariff to the ASEAN level, its bargaining strength in NAMA negotiations is quite high. There is a misconception that only tariffs are an obstacle to market access; it is the non-tariff barriers which are gaining in significance.
Regarding Services, the Minister was of the view that India needs to open in some sectors to gain meaningful market access in Services in developed countries. Unfortunately, there is not much improvement in areas of interest to India viz. Movement of Natural Persons (Mode 4) and Cross Border Supply (Mode 1) in the offers, but discussions in the Friends Group co-chaired by India have been positive, and better results are expected. Mr. B. K. Zutshi, former Ambassador to GATT, pointed out that India has the option and strategy for market access negotiations in services to leverage its market size and its reform process for its engagement in the services negotiations to secure access in sectors and modes of export interest to it in the members’ markets. With the submission of the revised offer, we have started moving in the right direction. Mr. Kamal Nath added that coupled with market access (Mode 4) commitments, it is equally important to have disciplines on domestic regulations.
On the future strategy for liberalization in the retail services with respect to distribution services, it was emphasized that India has two alternative approaches: multilateral liberalization followed by unilateral liberalization (which improves the bargaining position but is has its risks), or vice versa. The Minister added that investment was needed for back-ended logistic management and foreign investment was required to supplement domestic investment.