NEWS FROM CUTS

One-Nil In Favour Of Developing Countries

Cancun, 10 September 2003: was the first business day of the Fifth Ministerial Conference of the WTO. In a series of meetings over five days, 146 countries are trying to hammer out a new global order on trade – one that balances the contradictory demands of the rich and poor nations. Perhaps, it would have been for the first time in the history of the GATT/WTO Ministerial that all speakers in the inaugural session were from the developing world. This itself is an indication of the growing importance of developing countries in the multilateral trading system.

Agriculture, and within that the favourable treatment that rich countries afford their farmers, has been the main focus in the speech of every speaker. Developing countries want to see an end to the billions of dollars in farm subsidies in Europe, the US and Japan.

On the eve of the ministerial conference, India along with 20 other developing countries issued a hard-hitting joint communique on agriculture, which has asked the European Union and United States to agree to a phased elimination of domestic support and export subsidies on agriculture. The group has expressed strongly that high subsidies by the rich has depressed farm prices in developing countries to the detriment of millions of poor farmers. What angered the EU and the US most was the joining of Egypt to this group.

This masterstroke by leading developing countries has put developed countries, particularly the EU on defensive. Unlike the previous Ministerials, so far at Cancun, attempts by the EU and the US to split developing countries have been in vain. However, the EU vehemently criticised the G-21 developing nations including Mexico, for "asking for the moon" regarding the elimination of subsidies, and warned them not to have false expectations from the WTO Ministerial Conference in Cancun. Franz Fischler, the EU Agriculture Commissioner commented, “When considering the recent extreme proposal sponsored by countries such as Brazil, India, China and others, I cant help but think that we are in different orbits entirely. If they want to do business they should put both feet on the ground”.

Sensing the mood and realising a possible conflict between the EU and the developing countries on agriculture and Singapore issues, the US Trade Representative Robert Zoellick, in the meanwhile, has proposed that to keep the negotiations on track there should be yet another ministerial sometime in March next year to meet the deadline of completing the Doha Development round as scheduled by January 1, 2005.

In an article in the Financial Times a day before the key WTO trade talks get underway in Cancun, Pascal Lamy, the EU Trade Commissioner, said the EU offer on subsidies was “fair”. “We are ready to eliminate export subsidies on products of particular interest to developing countries if the US and others are ready to tackle their own means of export support,” said Lamy. In another article in the Financial Express, an Indian newspaper, on September 10, 2003, Pascal Lamy and Franz Fischler, the EU Agriculture Commissioner said, “As the Cancun conference nears, it is time for all parties to recognise the others’ legitimate interests. Name-calling is not going to deliver decisions. At best it is a way of evading one’s own responsibilities.”

Like Doha, at Cancun too, all eyes are on Indian Commerce Minister Arun Jaitley, who has taken a tough posture on contentious issues like agriculture, investment and competition policy and giving no indication of budging an inch from India’s stated position on these issues. In one-to-one meetings with Robert Zoellick and Pascal Lamy, he categorically said that the first priority for the EU and US should be reduction of farm subsidies. Until then, he said, India will not agree to any reductions in its agriculture tariffs. If he persists with this, then in all probability he will replay the act of Murasoli Maran.

As per the proposed business plan, statements in the first day of the Ministerial were made by 20 WTO members, the IMF representative and the World Bank representative, on Item 1 of the Agenda (General Statements). Mexican Minister of Foreign Affairs, Luis Ernesto Derbez, who was chairing the day’s meeting with regard to the process of this week’s discussions, has asked certain “Friends of Chair” to facilitate issue specific consultations.

Singapore has been asked to facilitate consultation on agriculture, Hong Kong-China on non-agricultural market access, Canada for Singapore Issues, Guyana for TRIPS and Geographical Indications and most probably Mauritius for development. The first meeting of the Heads of Delegations will convene in the morning of September 11th. It was underlined that the work of the facilitators will in no way substitute that of the Heads of Delegations. Derbez emphasised that the Friends of the Chair will have to report to the Heads of Delegations. The process he said should be totally transparent and inclusive. At the NGO briefing at the end of the day by the WTO Secretariat a developing country NGO representative expressed concern that it wasn’t a very good idea that Canada, a strong advocate of the Singapore Issues, will be facilitating the discussions on Singapore Issues.

The day’s meetings proceeded peacefully, with only a handful of demonstrators staging a protest in the centre of the conference room at the Opening Session. There was bad news, however, from downtown Cancun. Demonstrations were being held by farmers’ organisations from all over. The agreement with the WTO was that if these organizations would stage peaceful demonstrations, a couple of them would be allowed inside the ‘conference zone’ to make their petition to the WTO. However, a demonstration that started off peacefully became more violent than expected in the course of the afternoon. At the heights of the demonstration, a Korean farmer climbed the high security fence waving “WTO Kills Farmers”, took out a knife and stabbed himself in the chest. Incidentally, he was the same farmer who had camped outside the WTO headquarters in Geneva a few months ago.

With agriculture once again occupying the frontal seat and the informal consultations process adopted being no different from the previous ministerials, things are not very heartening at the end of Day one. In the overall, however, developing countries, by further cementing their alliance on agriculture, have scored over developed countries.

Time To Get Down To Real Business At Cancun

Cancun, 9 September 2003: The Ministerial Conference will commence ten hours hence, in a milieu that suggests mixed feelings. The past few months saw much apprehension about Cancun going the Seattle way. The fear seems to have mitigated. The general mood in Cancun is neither very pessimistic nor very optimistic.

Caution in one’s approach seems to be the name of the game. On the one hand, Pascal Lamy, trade commissioner of the European Union is talking about sustainable development. On the other hand, the Indian minister of state for commerce spoke of just and equitable trading system. Just the day before D-day, everyone is keeping his fingers crossed and waiting for the others to make the first move.

What worries one are rhetorics: enough is enough. Now its high time ministers address real development problems with real policy changes. In the opening session of a side event titled “Sustainable Trade Day”, Pascal Lamy said: “We all should send a clear message out that sustainability matters and we all have the responsibility to ensure that what comes out of this week’s discussion should support sustainable development.”

We may recall that at Doha the EU agreed to sign the agriculture text only after getting environment into the work programme of this round of negotiations. Though the negotiations may not have moved much since then, the EU has been consistently trying to expand the Doha mandate on environment. It seems that the EC did not find the gains on environment at Doha good enough to make concessions on the agriculture front. Hence, it looks like that by raising the issue of environment just on the eve of Ministerial, Commissioner Lamy is trying to indicate that any progress on agriculture could be made only after further expansion of environment agenda.

The Indian minister of state for commerce, S. B. Mukherjee, highlighted the importance of mobility of labour for developing countries such as India and emphasised the lack of commitment by many developed countries towards this. In this context, a developed country delegate asked a thought-provoking question: “Is India equally serious in opening up its labour market to Bangladeshi and Nepalese workers?”

The WTO’s director-general, Supachai Panitchpakdi also delivered a speech, which was full of optimism. His central message was that trade is necessary for the poor to escape poverty. He mentioned the recent agreement on drugs as a historic agreement, which is a concrete proof of the seriousness with which WTO members have addressed a crucial issue such as public health. It will be interesting to see what reciprocal measures will be asked from developing countries under the pretext that developed countries have made a huge ‘sacrifice’ on issues of concern to the poor. It is worth noting that just a few days before the Ministerial the US, who was adamantly opposed to a deal to provide cheap drugs to the poor, suddenly agreed to it. Nobody seems to aware what’s up in US trade representative, Robert Zoellick’s sleeves.

At another level, India under the leadership of commerce minister Arun Jaitley is trying to build up alliances with many developing and least developed countries on contentious issues, like agriculture. Expectedly, he went into offensive by alleging that the US and EU were responsible for depressed farm prices that are harming the interests of developing country farmers.

Amidst all these NGOs are arriving in huge numbers and are active in organising a plethora of meetings. Other than the deals, they are demanding an equal focus of the undemocratic and irregular decision-making process of the WTO. Not much hope was expressed in a meeting organised by Action Aid to launch a book: “Behind the Scenes at the WTO: The Real World of International Trade Negotiations”. They were raising fear against the practice of informal consultations among the big few. The gloominess of this discussion underlied a fear that Cancun, in all probability, could be no different.

Government Move On S’pore Issues Pragmatic: “CUTS”

New Delhi 9 September 2003. It is indeed pragmatic and farsighted for the Government of India to arm the Cancun WTO ministerial delegation to unbundle Singapore issues and go ahead on negotiating trade facilitation and transparency in government procurement, and also competition policy.

In a press statement released here today, the CUTS Centre for International Trade, Economics & Environment said that such an authority will enable the Indian delegation to be constructive rather than obstructionist. This will also allow the delegation a huge flexibility to get better deal on the key issues up for grabs at the meet.

“There is no economic case for an agreement on investment”, said Pradeep S. Mehta, Secretary General of CUTS and a leading expert on WTO issues. “An effort by the rich countries under the OECD in 1995-1998 had also flopped, thus India’s strong opposition on investment makes eminent sense. This position is being backed by nearly 40 countries, and surprisingly by the US also. It needs to be buried forever at Cancun”.

According to a recent study by CUTS and University of Sussex under a project: EU-India Network on Trade and Development ( EINTAD: Bridging the Differences-Analyses of Five Issues of the WTO Agenda which is being released at Cancun), it established that an investment agreement cannot enhance capital flows and will lock in policy spaces of countries, which they can ill afford.

With a new and modern competition law, India should not have any problem with a multilateral framework on competition with a peer review mechanism rather than the more onerous WTO dispute settlement provisions. The CUTS-Sussex University EINTAD study also shows that this will not be such a problem.

Further, as a positive agenda at the Cancun WTO ministerial, India should strategically focus its negotiating energies on export of Services than frittering it on issues which will not result in any commercial gain.

The draft ministerial statement notes that the negotiations shall give special attention to sectors and modes of supply of export interest to developing countries, but does not explicitly state that concessions should include better market access for temporary workers under Mode-4. This limitation reflects the US intransigence against Mode-4.

“India should mould a Cairns-type alliance with about 50 developing countries having a similar interest and get a better text in the final ministerial declaration. We also have another problem on Mode-1 on export supply such as business process outsourcing and call centres, where protectionist pressures in the west are rearing their ugly head, which needs to be tackled headlong at Cancun”, said Bipul Chatterjee, Director of CUTS.

The CUTS-Sussex EINTAD study also showed that, in the future, India’s gain inter alia lies in export of services under Mode-4 (movement of temporary persons) and Mode-1 (export of services across borders) of the General Agreement on Trade in Services (GATS). Regulation under GATS can take care of ‘brain drain’ and visa problems for movement of temporary workers. These are serious problems, which the negotiations should address.

“We should strategically seek a cotton sectoral initiative type approach to GATS opportunities for developing countries at Cancun”, added Mehta. The cotton initiative has been pushed by affected West African countries in the draft ministerial statement against the heavy subsidies provided by the US, thus affecting their farmers’ livelihood concerns.

This push could be a trade-off with Singapore issues, which threaten to be a deal breaker. Getting isolated will not get us anything but we will lose on what we want. The recent US move to unbundle Singapore issues and go ahead with transparency in government procurement and trade facilitation is something which we can live with.

In the run-up to the Cancun ministerial, India put it’s weight behind a proposal on agriculture prepared by a group of developing countries, including China and Brazil. It opposed the proposal jointly put forward by the US and the European Union. By doing so, India made a ‘strategic mistake’. In the WTO agriculture negotiations, India has nothing much to gain or loss and therefore, could have been a passive player. That would have given better negotiating rope on other issues, like services and non-agricultural market access, and would also preserve negotiating capital.

Even the EU has started making moves to make agriculture a low-key affair at Cancun and instead trying to focus its energy on other areas. “There is no reason to hurry to close negotiations on agriculture, on which we are not asking for much, by comparison to other areas where we’re asking for much more,” expressed EU’s trade commissioner Pascal Lamy in a recent interview to French television LCI.

“In the past WTO ministerials, India was left alone at the end of the day and should not repeat the mistake of alliance building at Cancun,” expressed Mehta and Chatterjee. “Not being a member of any formal regional trading bloc or group, India’s position at the WTO is unique and any attempt of building alliances on issues, where they can be temporary would not be worth the while”, he added. “In the ultimate analysis, India needs to understand realpolitik and not rely blindly on alliances which often disappear under lures and pressures. However, getting isolated can be worse for both the system and India”.

Focus Energies On Services: “CUTS”

New Delhi 8 September 2003. At the Cancun WTO ministerial, India should strategically focus its negotiating energies on export of Services than frittering it on issues which will not result in any commercial gain.

In a press statement released here today, the CUTS Centre for International Trade, Economics & Environment said that in the future, India’s gain inter alia lies in export of services under Mode-4 (movement of temporary persons) and Mode-1 (export of services across borders) of the General Agreement on Trade in Services (GATS).

According to a recent study by CUTS and University of Sussex under a project: EU-India Network on Trade and Development ( EINTAD: Bridging the Differences-Analyses of Five Issues of the WTO Agenda which is being released at Cancun), regulation under GATS can take care of ‘brain drain’ and visa problems for movement of temporary workers. These are serious problems among others, which the negotiations should address.

“We should strategically seek a cotton sectoral initiative type approach to GATS opportunities for developing countries at Cancun”, said Mehta. The cotton initiative has been pushed by affected West African countries in the draft ministerial statement against the heavy subsidies provided by the US, thus affecting their farmers’ livelihood concerns.

“There is no economic case for an agreement on investment, the study has pointed out”, said Mehta. “An effort to draft an MAI by the rich countries under the OECD in 1995-1998 had also flopped, thus India’s strong opposition on investment makes eminent sense. This position is being backed by nearly 40 countries, and surprisingly by the US also. It needs to be buried forever at Cancun”.

“In the past WTO ministerials, India was left alone at the end of the day and should not repeat the mistake of alliance building at Cancun,” expressed Mehta. “Not being a member of any formal regional trading bloc or group, India’s position at the WTO is unique and any attempt of building alliances on issues, where they can be temporary would not be worth the while”, he added. “In the ultimate analysis, India needs to understand realpolitik and not rely blindly on alliances which often disappear under lures and pressures. However, getting isolated can be worse for both the system and India”.

Address Consumer Issues: CUTS Pleads With PMO

New Delhi, 14 July: The chaos surrounding CAS has not died yet. It is lying dormant after news of it being deferred till September 2003 is out.

Consumer organisations however, are not keeping quiet. In a letter to Sudheendra Kulkarni, Additional Secretary in the PMO, Rajan Gandhi, Director, Consumer Unity and Trust Society on behalf of consumer organisations from across the country has raised two very vital issues concerning consumers at large and has made subsequent demands. Firstly, that the Set Top Boxes be provided, maintained and serviced by the service providers namely the Broadcasters, MSOs and Cable TV operators. Secondly, that in the absence of competition, an independent regulator be set up primarily to address concerns related to price, quality and complaint redressal. (A copy of the letter is attached). CUTS has offered to hold talks with the PMO on this issue of consumer import.

At a national seminar held on first of July, Shri Sharad Yadav, Hon’ble Minister for Consumer Affairs, Food and Public Distribution assured that the government was committed to upholding consumer interest. The Minister delivered the inaugural address to a representative gathering of about 70 stakeholders in the cable TV industry (Broadcasters, MSOs, Cable TV operators and Consumer organisations) numbering over seventy.

Following the seminar, CUTS along with partner consumer groups will embark on a research to study the impact of CAS in the four metros. This would be the second step in the six-month project being supported by the Ministry of Consumer Affairs.

Has the CAS Chaos cleared?

New Delhi, July 02: The government is committed to upholding consumer interests and that is what brings me here, said Sharad Yadav, Union Minister for Consumer Affairs, Food & Public Distribution. While delivering the inaugural address at a national seminar ‘Towards a Consumer Friendly Cable TV System’ in the capital yesterday, the Minister said that it was the government’s duty to take consumer’s interest into consideration. The government also has the duty to provide an atmosphere for the growth of healthy competition. In a hard-hitting speech, he said that consumers and the media have to be vigilant to expose the fraudulent practices of unscrupulous elements in the trade.

Shri Yadav was addressing a gathering of over seventy people representing consumer organisations, cable TV operators, MSOs and Broadcasters organised by Consumer Unity and Trust Society (CUTS). CUTS along with partner organisations has embarked on a six month project supported by the Ministry of Consumer Affairs seeking to spell out ways forward to make CAS truly ‘consumer friendly’.

Wajahat Habibullah, Secretary, Department of Consumer Affairs called upon consumers to invoke the now amended Consumer Protection Act, for speedy redressal. He mentioned that the Minister had in a letter to the President of the National Consumer Disputes Redressal Commission, requested the commission to give priority to cases pertaining to the implementation of CAS in the consumer courts.

Delivering the welcome address, Rajan R. Gandhi, Director CUTS spelt out the three most important consumer concerns: price, quality of reception and an effective complaint redressal mechanism. Even the amended Act, he felt, had failed to adequately address these issues.

Ravi Kohli, Vice President of Cable Network Association threw light on several pro-consumer steps taken by cable operators for providing better services. Playing the blame game, he said that Broadcasters and MSOs had arbitrarily increased prices thus forcing local Cable operators to charge more subscription fees. I welcome CAS, Kohli said, as this will bring transparency into the system.

Is CAS the acronym for Chaos, Anarchy and Strife asked Paranjoy G. Thakurta, Director, School of Convergence while spelling out the scenario as it exists today. He queried the need for rushing through with CAS when convergence technology – by which TV, telephony and internet access would be available through the same cable – was a definite and near-term possibility. Sudhir Damodaran, Director Catvision made a very interesting comment that though technology-wise the analogue and digital STBs were different, there was little or no difference in the quality of reception that each delivered.

S.Y. Quraishi, Director General, Doordarshan explained that they were working towards providing DTH to households especially in far-flung areas where cable TV had not yet penetrated. Subscribers to this would get at least 15 DD channels and some 15 more, all of which would be FTA. The total cost would be only Rs.4000 with no recurring monthly expenses. MMDS or Microwave Multipoint Distribution System was another alternate technology being considered for small villages, he mentioned.

Bharat Jairaj, Coordinator, Consumer Action Group, Chennai, suspected that CAS was turning to be a win –win situation for all except the consumers. Whilst consumer groups were not against CAS per se, they felt that an independent regulatory authority was essential to protect consumer interests. Other representatives of consumer groups commented that CAS was being brought in to resolve disputes between the broadcasters, MSOs and LMOs, with the Government supporting CAS for earning revenue. Meanwhile, consumers were being penalised by being asked to pay for buying STBs. They were apprehensive that CAS would become a regime where the consumer will be asked to pay more for viewing less.

Habibullah set to rest the concern raised about bundling of channels. He informed the gathering at the Valedictory address that he had been advised by Pawan Chopra, Secretary, Ministry of I & B that broadcasters had announced individual channel pricing as opposed to a la carte pricing in a meeting with the I & B ministry.

Consumer activists met after the meeting to discuss ways to study the introduction of CAS in the 4 Metros and to arrive at a quick-reaction strategy which would highlight violations of consumer rights.

Civil Society's Role In Promoting Competition And Fair Trading

Geneva 18 June, 2003. Competition policy aims to promote economic and social development and leads to sharing of benefits to consumers, was the cry which emerged at a parallel session at the WTO public symposium being held here from 16-18 June. It is not a luxury for industrialised countries, but a necessity for all countries.

The session was organised by CUTS, India, Consumers Association, UK and the International Network of Civil Society Organisations on Competition (INCSOC), where over 100 delegates, including parliamentarians from developing countries, participated.

Phillipe Brusick of UNCTAD, Allan Asher of Consumers Asscn, Simon Evenett of World Trade Institute and Pradeep S Mehta of CUTS spoke at the session.

Essentially, competition policy works through the enforcement of laws which contain prohibitions against "thefts from consumers". In many countries, civil society is absent from agenda setting and implementation, while state welfare and interest groups are protected at the expense of consumers.

Developing countries are losing millions of dollars as a result of cartels, and poor consumers in particular are losing out because of high prices on basic food articles, services and pharmaceuticals. More importantly as governments no longer intervene directly in the marketplace, competition policy is needed if liberalisation has to succeed.

It was noted that the consumer movement has an important role to play in drawing attention to problems at the domestic level. In fact, all civil society groups have a moral responsibility to advocate for a competition policy. Without consistent monitoring and agitation by civil society, competition institutions will fail in their task.

Flexibilities can be built in to a progressively implemented competition law which can ensure national development goals, although exceptions for "national champions" should be used carefully. In the WTO context, it will be useful for developing countries to define the type of flexibility and special & differential treatment required.

Concerns expressed at the session included one major fear that a competition policy is a plot to let in multinationals. In fact, a properly designed and enforced competition policy can prevent anti-competitive take-overs or mergers of domestic firms by multinationals.

It was concluded that a competition policy and law is not a luxury for developing countries. In fact the gains available from implementation are proportionately greater for developing countries where the policies are applied seriously.

Calls were made for education of opinion leaders in developing countries to understand the imperatives of having a good and properly enforced competition policy and law at the domestic level. Ends.

Indian Informal Sector to Keep Pace with Changing World Economy

New Delhi, 11 June 2003: “92 percent of total employment in India is from the informal sector,” said Prof. T. P. Bhat of the Institute for Studies in Industrial Development, New Delhi, while speaking on the theme of a seminar titled, “The Competitiveness of Indian Informal Sector and Cottage Industries in the Era of Globalisation and Economic Liberalisation”. The seminar marked the launch of the Globalisation, Economic Liberalisation and Indian Informal Sector (GELIS), a network based project conducted by Consumer Unity & Trust Society and Oxfam GB in India.

The extensive one-day dialogue not only brought together network partners from 4 states, but key persons from the informal sector engaged in agricultural, fisheries, home-based crafts and handloom activities; other grassroot organisations closely associated with the informal sector through their involvement in women entrepreneurship, environment, education and social development, and persons from research institutions.

Interestingly, the proportion of the active population in this sector in India (excluding agriculture) increased from 75 percent in 1990 to 94 percent in 2000. This increasing importance of the sector makes it vital for us to assess the impact of dynamic changes in the world economy on the informal sector. A heterogeneous sector with multiple dimensions, the efficiency of the informal sector was identified as crucial for the survival of the formal sector due to their dependence.

Increasing unemployment in the organised sector as a result of privatisation of state-owned enterprises was identified as one of the key reasons for the surge in informal sector activity. In the foreseeable future, one can expect more deregulation and future growth of the informal sector. The issue then will be “protecting the unprotected in the informal sector,” argued Prof. Bhat.

“The bulk of foreign exchange in India is earned from the informal sector,” said Prof. B. B. Bhattacharya of the Institute of Economic Growth. Bringing in the dimension of multilateral trade rules, he said that the World Trade Organisation (WTO) was flawed in making two assumptions: firstly, as soon as you open trade, trade will boom, increase incomes and further production. Secondly, that globalisation is needed for improving efficiency.

The WTO, he said, espouses the globalisation of capital, when production is an interaction of capital and labour. In reality, developing countries are characterised by low capital bases and a host of other institutional constraints that make it difficult for them to derive equal benefits from the multilateral trading system, as compared to developed countries. There is already a worldwide backlash and call for a rethinking of the way multilateral trade rules are formulated and implemented. India, he said, should exploit its grossly underutilised skilled scientific manpower, which is largely unorganised.

“Formal lending has given way to informal lending,” said D. S. Negi of the Small Industries Development Bank of India, who professed the importance of mobilising funds informally, rather than through the formal banking structure, to meet the credit needs of the growing informal sector. He raised the crucial point that inspite of the huge network of commercial bank lending and lending through rural banks in India, the informal sector is starved of finances. The rural poor only too often in unable to fulfill the several conditions of commercial bank lending.

He cited the example of SIDBI as successful informal lending operation, which identifies well-accredited non-governmental organisations that understand the ethos of the informal sector environment best. SIDBI prepares these NGOs with the capacity to provide micro-finance to the informal sector. The micro-credit approvals obtained by SIDBI are more than 112 Crores since 1994. The credit is returned with a default rate of less than 1 per cent. When asked how the credibility of borrower is established, he said that it was based on commitment, honestly and peer pressure from the borrowers’ community.

Samar Verma of Oxfam GB in India reiterated a point raised by several of the participants the international trade rules are heavily skewed towards developed countries. Several products that fall under the informal sector, including items such as handicrafts, bed linen etc are facing increasing non-tariff barriers in the form of environmental, health and labour standards and other technical regulations, which often turn out to be too high or illegitimate.

The day culminated in a vibrant discussion of various domestic and external factors affecting the informal sector. The role of the banking sector in generating capital in the informal and home based sectors, the role of government policies in ensuring healthy growth of this sector and in facilitating competitiveness of the informal sector in the international market, were discussed extensively. The one-day seminar set the direction in which further regional dialogues will be held involving different stakeholders active in the informal sector, home-based production and cottage industries.

Emphasis on Joint Role of Government and Non-Government Organisations in Environment Protection

Jaipur, 6 June, 2003. There is a need at the government and non-government level to work in coalition towards environment protection. The above views were expressed by Sub-Divisional Magistrate, Virat Nagar, Mr. Ramjilal Verma at a workshop organised by Jaipur based consumer organisation ‘Consumer Unity and Trust Society’ (CUTS) in association with a local voluntary Organisation ‘Jagriti Sansthan’ on the occasion of a workshop organised to commemorate ‘World Environment Day’ in Virat Nagar as Chief Guest. Mr. Verma has stressed on noise, air and water pollution to be taken on priority. He also expressed his deep concern over fast vanishing forests, excessive water exploitation and on pollution created by vehicles.

On this occasion our special guest Mr. Prem Singh Meena, Tehsildar spoke that in this machine age special emphasis should be given in protection of trees and plants and this work could be performed by school children and non-government organisations.

Mr. Bajrang Lal Gupta, Vice-President and Mr. Dhunilalji, sub-member, Virat Nagar Tehsil took reponsibility at the programme to plant trees on behalf of Municipal Corporation.

In the presence of about 80 participants who attended the workshop, various sessions were organised on government, non-government and common people’s participation in environment protection. Discussions were held on various aspects of environment protection such as its problems, solutions and its role. Lastly work-plan was designed for future.

Some of the highlights of the work-plan was that it was decided to go through people’s participation in work related to water, forest and land protection. It was also decided to use communications media in creating awareness towards environment among local residents.

To ensure participation of non-government organisations, organisation from the region has decided to conduct programmes in environment protection in creating awareness among local residents.

In the beginning of the programme ‘CUTS’ representative Mr. Deepak Saxena and Mr. Dharmendra Chaturvedi gave an introduction of the organisation and also detailed the aim of the programme. Mr. Maliram Saini, Secretary, ‘Jagriti Sansthan’ welcomed the Chief Guest and anchored the event. In the end Mr. Saini whil laying out the work-plan for future, stressed on implementation of the work-plan in protection of natural resources and appealed to non-government organisations to come under one roof in for the cause.

CUTS Initiative on CAS

June 2, 2003, Calcutta: Adopt a “Wait and Watch” policy to Conditional Access System that would come into force in India from July 14, 2003. This was the idea emerged at the panel discussion titled “Cable TV Fiasco: The Way Out” organised by Consumer Unity & Trust Society, a consumer interest body, on June 2, 2003 at Calcutta.

The panel discussion brought together representatives of local cable operators, consumer organisations and MultiSystem Operators (MSOs) to throw light on the confusion over the implementation of CAS.

Mr. Mrinal Chatterjee, representative of cable operators admitted that in order to keep profit the local cable operators have been under declaring the number of subscribers. He mentioned that there is no fiasco regarding CAS. But the fiasco is present now when the consumers do not know how much they are paying for which channel.

Mr. Sudip Ghosh, Manthan Broadband Pvt. Ltd., a new MSO in the city, said that if a system works in the country without any law/act/code of conduct, there is bound to be loopholes and exactly that has happened in case of cable TV. He made a point in saying that in case of electric, telephone we do not pay a lump sum amount. Instead we pay as much we consume. This is what CAS aims at; pay as much channel you watch.

There is no real confusion regarding CAS; there is only a created confusion generated by vested business interests which is misleading the consumers, opined Ms Mala Banerjee, President, Federation of Consumer Association West Bengal. She said that there is no urgency in buying the set top boxes (STB) as the Free to Air channels would be sufficient for an average viewer and also more and more channels are going to be free over the next few weeks. She also informed that STB prices would fall further down.

Dr. Jayanta Basu, a journalist pointed out a very important point that compatibility of STB differs within manufactures and within MSOs. This implies that a subscriber of a particular MSO say RPG will have to purchase the STB from the manufactures with whom they have tied up.

Honourable minister, Dept. of Consumer Affairs and Fair Business Practices, West Bengal, Sri Naren De criticised this saying that the consumers should not be forced to buy STBs from the cable feed providers. The consumer must have the freedom to go to the market and select the STB. He opined that the central government should have provided enough time for implementation of CAS so that private Indian entrepreneurs can manufacture the set top box in the country. An extended deadline could have eased up matters providing enough time to all concerned parties to clear up confusions, De explained.

Pradeep S Mehta, Secretary General of CUTS, who moderated the discussion, said that one needs to be dispassionate and logical rather than becoming emotional and passionate to tackle the CAS issue. He informed the participants that this discussion in Calcutta is the beginning and CUTS would be organising series of discussions in Delhi, Chennai and Mumbai.

CUTS in WTO Advisory Board

May 23, New Delhi: Pradeep S. Mehta Secretary General, Consumer Unity and Trust Society has been appointed as a member of the Informal NGO Advisory Body by Dr Supachai Panitchpakdi Director General, WTO. Twelve members (leaders of NGOs) from around the globe constitute this Body.

One of the key functions of the Advisory Body is to add structure to the dialogue between the WTO and its stakeholders and provide a platform at which both members of the Body and the Director General can seek input and advice on WTO-relevant matters. Adding to this Mehta conveyed that the Body would be instrumental in providing intellectual stewardship and guidance within the context of the various activities conducted by the WTO.

The first meeting of the Advisory Body is to be held in Geneva on June 15 this year. The Body is proposed to meet twice a year, preferably ahead of major meetings of the WTO.

Similar to the NGO Advisory Body is the Informal Business Advisory Body. Noted industrialist Rahul Bajaj Chairman and Managing Director, Bajaj Auto Ltd is a member of this fourteen member strong body.

New Issues at the WTO: Let us put our fears on the table

New Delhi, 19 May 2003: “Let them put their fears on the table and that should guide the negotiations.” This comment was made by the UNCTAD Secretary General, Rubens Ricupero, just after the Doha ministerial meeting of the WTO held in November 2001. He was referring to India’s stand at Doha on the ‘Singapore issues’ and arguing that it was pointless in just opposing the ‘new’ issues at the WTO without putting forward constructive arguments. At the forthcoming ministerial meeting of the WTO to be held in Cancun, Mexico in September, a decision will be taken on modalities for negotiations on these issues.

“Putting Our Fears on the Table” is the title of a recently published report of the CUTS Centre for International Trade, Economics & Environment. It provides analyses of the proposals on investment and competition agreements at the WTO, especially in the areas taken up and/or proposed at Doha for possible future negotiations. The purpose of this publication is to provide inputs for negotiators and all other stakeholders who play a role in evolving negotiation positions of countries.

On multilateral framework on investment (MFI), it was argued that it might be premature to arrive at a comprehensive agreement with binding obligations at this stage. Hence, countries may explore the idea of agreeing to code of good practices. It may be recalled that during the Tokyo Round of GATT negotiations, the countries agreed on codes for both anti-dumping and technical barriers to trade and full-fledged agreements on these were arrived at during the Uruguay Round. Such a soft law approach may be the best way forward in the present context.

The report further argued that developing countries need to take the following into consideration before negotiating an MFI at the WTO:

· They must be convinced of the importance of foreign investment to their economy first before considering the necessity of an MFI within or outside the WTO.

· If the WTO proves to be a suitable forum for an MFI, then the developing countries must analyse the economic, social and environmental impacts of such an instrument. The GATS, which in a sense, is the first such investment instrument, can provide a model for that. An in-depth analysis of the impact of GATS should be able to provide trade policymakers with tools to develop a negotiating agenda and a set of policy options that can maximise the contribution of an MFI to sustainable development and minimise its potentially negative implications.

· Any negotiations must include discussions for establishing obligations of investors and rights of host countries. A legally binding international framework on corporate accountability and liability should therefore be considered as a concomitant requirement for negotiations on an MFI.

· If the decision to go ahead with negotiation is taken, then the proposed MFI must include a degree of flexibility with a development dimension that considers national policy objectives of developing countries, keeping in view their level of development.

· As regards the issue of checking the incentive race among the nations, i.e. balancing the TRIMs Agreement with provisions on positive TRIMs as well, a code of good practices can be annexed to it, as in the Technical Barriers to Trade Agreement.

On multilateral competition agreement (MCA), it was argued that countries should first comprehend the relevance of competition to their development priorities and national policies. Other arguments include: a) an MCA, if instituted, can adopt a hybrid TRIPs and GATS type approach in that while minimum standards would be incorporated and different time frames can be allowed for implementation of certain provisions. This would call for special and differential treatment and phase-in period; and b) an MCA, if instituted, should also have exemptions and exceptions that allow countries to regulate in public interest/address public interest issues.

FDI Policies, Performance, Perceptions and Prescriptions

“Some WTO members point to the success that countries such as China have had in attracting FDI, without any multilateral investment framework (MIF), and they do not believe that a WTO agreement would lead to increased flows of FDI to developing countries”, said Roderick Abbot, Deputy Director-General of the WTO at the inaugural session of the Review Seminar of the ‘Investment for Development’ project held in Geneva, Switzerland on 9-10 May 2003. Highlighting the debate on the proposed MIF at the WTO, Abbot said that the outcome of the Cancun Ministerial could not be predicted.

The seminar was held as part of the “Investment for Development” project (www.cuts-international.org/ifd-indx.htm) being implemented by Consumer Unity & Trust Society (CUTS) with the support of Department for International Development (DFID), UK and in collaboration with UNCTAD. The aim is to raise awareness and build capacity of civil society organizations on investment issues in seven developing and transition economies, viz. Bangladesh, Brazil, Hungary, India, South Africa, Tanzania and Zambia.

About forty delegates gathered to discuss national, regional and international investment issues. The delegates were representatives of civil society organisations including media and academia, and intergovernmental organizations and were from countries such as India, Bangladesh, Nepal, Malaysia, the Philippines, Hungary, UK, Germany, South Africa, Zambia, Tanzania, Egypt, Argentina and Brazil. IGOs such as UNCTAD, ILO and WTO were also represented.

Researchers working on the project discussed the issues that had come up in their country research such as FDI policies and performance, perceptions of FDI among civil society, hurdles to FDI, and privatisation. Civil society, it was noted, generally has a positive perception of FDI but they feel that foreign investors do not care about the impact of their investments on the domestic economy so there is a need for well-defined regulatory policies.

The researchers also discussed FDI experiences for two sectors: telecom and mining. The telecom sector experienced a boom in 1990s with large-scale privatisation, deregulation and initiation of competition around the world. However since 2000 the sector has been facing a downturn. Mining is an important sector for many African countries. Two contrasting experiences were highlighted: the sector has been performing well in Tanzania but not in Zambia. Given the fact the Zambian economy is heavily dependent on copper mining, the country needs to diversify its production structure to avoid a possible economic breakdown.

The other issues that were discussed were regional experiences with FDI in Latin America, South East Asia, and Central and Eastern Europe, and the relationship of FDI with economic development.

Discussing the relationship between FDI and growth, Peter Nunnenkamp of Kiel Institute of World Economics, Germany concluded: “Policymakers should not expect too much from FDI. It is far from being a panacea, especially in developing countries in which FDI-induced spillovers are likely to remain weak”. He said that the relationship between FDI and economic growth is weak particularly in low-income countries with poor economic growth, i.e. the countries, which require to attract growth -inducing FDI the most.

The seminar concluded with a discussion on FDI policy advocacy points prepared by CUTS on the basis of the project research and national advocacy points prepared by project researchers. These are directed to governments, civil society and intergovernmental organisations. The final advocacy document, to be prepared on the basis of the discussions, will be released at the final meeting of the project to be held in Geneva in January 2004.

How would FDI Benefit Transition Economies?

Istanbul, 6 May 2003: Hungary’s success in attracting the software chip giant, IBM, to set up a plant in the country was an inspiring example of attracting foreign direct investment (FDI) to the transition economies of Eastern and Central Europe, and Central Asia. However, the company’s decision to shift its manufacturing plant to China and, the ensuing unemployment and uncertainty, has forced these economies to wonder about the development dimensions of FDI. It is now said the company did not even have linkages with the Hungarian economy since its plant was more of an assembly unit.

A few such issues were discussed at a one-and-half-day Regional Roundtable with the theme “Foreign Direct Investment in Transition Economies: Challenges, Policies and Good Practices” on 5-6 May 2003 in Istanbul, Turkey. It was co-organised by the CUTS Centre for Competition, Investment & Economic Regulation, Jaipur, India and the Organisation for Economic Co-operation and Development (OECD).

More than 40 participants from Hungary, Czech Republic, Serbia Montenegro, Romania, Poland, Georgia, Azerbaijan, Kazakhstan, Spain, Sweden and India participated in this meeting. They represent civil society organisations, including consumer organisations, academia, and governments. There were also representatives from the inter-governmental and regional organisations such as the OECD, Trade Union Advisory Committee (TUAC) to the OECD, UNCTAD, UNIDO-Turkey, UNDP-Turkey and Black Sea Economic Co-operation (BSEC)-Business Council. Representatives from the Turkish government and business chambers also participated.

Pradeep Mehta, Secretary General of CUTS outlining what is at stake for developing and transition economies in a possible multilateral investment agreement (MIA) at the WTO said, “The relationship between FDI flows and a possible MIA is not clear”. He expressed that a number of developing countries such as such as India, Malaysia and to some extent China are against an MIA at the WTO. In contrast, Ambassador Marino Baldi, Chairman, OECD CIME Advisory Group on Cooperation with Nonmembers highlighted why trade and investment are important in the context of bilateral investment agreements and regional trading arrangements.

The other issues of discussions were corporate social responsibility (CSR), privatisation and enterprise restructuring and, transfer of technology and know-how. The role of OECD Guidelines for Transnational Corporations and UN Global Compact were debated in the context of CSR: whether enforcement should be voluntary or mandatory. Costas Masmanidis of BSEC Business Council gave the example of a chemical company, of which he had been the General Manager, rigorously implementing the business code of conduct “Responsible Care”. The code has been promoted by Chemical Manufacturing Association (CMA), USA and CEFIC, UK.

A case of an unsuccessful privatisation and subsequent renationalisation of the telecom company, TELECOM Serbia, was highlighted in the context of privatisation of essential services. With regard to technology transfer, the contribution of foreign companies to research and development (R&D) in transition economies was discussed with the conclusion that in Poland it is the domestic companies who contribute more to R&D. While in Hungary it seems foreign companies have important contribution in this regard. In this context it was noted that technology transfer could also be measured by demonstration of competition effects, and downstream and upstream links with suppliers. Roy Jones, Senior Policy Advisor of the TUAC put forward arguments for making transfer of technology an issue of concern for public policy. He stated, “Adoption and diffusion of technology is important for economic growth”.

Policy conclusions from the OECD study “Foreign Direct Investment for Development: Maximising Benefits, Minimising Costs” and preliminary findings of the multi-country two-year project “Investment for Development”, being implemented by CUTS, were also discussed in the Roundtable.

How safe is your honey?

New Delhi, May 06: Concerns have recently been raised of contaminated honey from China entering the Indian market. This concern stems from the fact that the contaminated honey was being exported with the ‘produce of India’ label thus jeopardising export of Indian honey. Further, there is the possibility of the good image of Indian honey in particular and agro-based products in general being tarnished.

Says Rajan R. Gandhi, Director, Consumer Unity and Trust Society, the issue is more of public health. Regular consumption of honey contaminated with Chloramphenicol might render a person resistant to antibiotics used in the treatment of typhoid and paratyphoid (diseases for which Chloramphenicol was extensively used until it was banned worldwide in the 1970s). What is cause for major concern is that much of this contaminated honey may have found its way into the breakfast table of several Indian homes as well as overseas. He holds the Ministry of Agriculture responsible for not having tested and rejected the Chinese honey when it hit Indian shores in the first place.

Every agro-based consignment entering the country should get a sanitary certificate endorsing it fit and safe for human consumption. However, this requirement is clearly not being taken seriously or acted upon by the Trade Division of the Ministry of Agriculture. The provision of undertaking such checks and charging for the same is provided for under the Indian livestock importation Act according to a senior official at Centre for International Trade and Agriculture.

Chinese honey is banned in several countries including the United States, Canada and Germany, UK and the European Union as it contains Chloramphenicol. This antibiotic used in animals to cure certain diseases can cause life threatening a plastic anemia in humans.

Finding no market in the West led to a downslide in the price of Chinese honey a fact that some Indian traders used to their advantage, as honey in India was in short supply. In the past few years the price of Indian honey has increased three fold in the domestic market.

A few companies in India are circumventing this price rise by successfully blending the contaminated honey imported from China and exporting it under their name with a ‘produce of India’ label. This amounts to mislabelling, falsification and cheating of consumers in India and across the globe says Selvi Roy of CUTS.

Bipul Chatterjee, Director CUTS called for an immediate stop to such wrongful practices, which harmed the interest of consumers and the nation at large.

For the concerned Ministry it is time to wake up, take stock of the disturbing situation and ACT FAST to curb this practice, which is against the interest of the consumer at large and the nation as a whole.

EU-India Network Narrows Rift on Contentious Trade Issues

New Delhi, April 30: “Brain drain is a serious concern for India but GATS framework provides the necessary safeguard against it,” said Prof. L. Alan Winters of University of Sussex. He was speaking at an outreach meeting of the EU-India Network on Trade and Developed (EINTAD) organised by CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE) in association with the University of Sussex and the European Institute for Asian Studies, Brussels. The Network was launched at Brussels in May 2002.

Speaking at the inaugural session earlier, Stefano Gato, Head of Trade & Economic Affairs Section of the Delegation of the European Commission to India said, “We now understand much better, why India is reluctant on some issues, especially investment”. “This network in some respect was able to sort out differences between the researchers of EU and India on key WTO issues.”

He referred to EU Trade Commissioner Pascal Lamy’s visit to India in March 2003, when he assured that he would push for liberalisation of temporary movement of natural persons under the General Agreement on Trade in Services (Mode 4 under GATS). He informed the audience that EU, in its latest offer on services, proposes to widen the scope of sectors covered and the duration of stay under Mode 4. All 15 member States have made commitments on a range of sectors, including legal, accounting, architectural, engineering and computer services.

On Singapore issues, he said that they are very much a part of the Doha Development Agenda as ‘single undertaking’ and the modalities for negotiations will be decided at Cancun. “We demand a very minimalist set of rules on these issues and especially on investment we just want a framework,” he added.

EINTAD in its first phase has undertaken five areas for research by respective research teams comprising of both European and Indian researchers. They are: mobility of labour, anti-dumping, textiles & clothing, investment, and competition policy. The research findings will be provided as inputs to trade negotiators and trade policy officials before the Cancun ministerial conference of the WTO.

On mobility of labour, the research team selected medical services, particularly migration of doctors from India to UK. The research findings say that between India and UK the mobility is already very high and the GATS visa would be very useful as it facilitates only temporary movement of labour. In case of textile & clothing, two issues have motivated the research – life beyond 2004, when quota will be lifted completely and China’s accession to the WTO.

Regarding a possible multilateral agreement on investment, Manoj Pant of the Jawaharlal Nehru University, New Delhi, a researcher on this topic, said that as of now there is no proven or theoretical result, which says that a multilateral agreement on investment will be welfare enhancing, unlike that for trade in goods and services. On competition policy, the research findings substantiate the case for a minimalist multilateral agreement.

In future, the Network members and others intend to go deeper into these and other issues. The second phase of EINTAD is expected to be launched sometime later in 2003. One of the major objectives would be to encourage young researchers to work on WTO issues.

Not to focus on sanctions but build consensus to better understand linkages

Washington DC, April 23: “Who would make the decision that labour standards have been violated and what is to be decided on?” This is the primary question that needs to be addressed, said Prof. T. N. Srinivasan of Yale university while speaking at a two-day Conference on “Linkages: How do we bridge the gap?” jointly organised by CUTS Centre for International Trade, Economics & Environment and Carnegie Endowment for International Peace in Washington DC on 22-23rd April 2003.

There was participation from different countries: representatives of inter-governmental organisations, research institutions, civil society organisations, trade unions, etc. Through intensive discussions and debates, they addressed the issue of the polarisation of views of the North and South on issues of linkages between trade and non-trade concerns, like labour and environmental standards.

John Langmore of International Labour Organisation urged the international community to help countries achieve better economic and social development. There is a need to strengthen social and economic incentive structure, which would help countries to better comply with core labour standards as defined by the ILO.

Peter Bakvis of International Confederation of Free Trade Unions said that adherence to core labour standards reduces inequality. Sometimes use of sanctions can be successful in catalysing desired reforms and changes, particularly in societies with a low level of democracy. Responding to Bakvis, T. N. Srinivasan argued that if the rich countries want to help eradicate child labour then they should provide assistance and monetary help to the parents, build schools etc. The policy, based on sanctions-mode, will only create bottlenecks and retard the development of the child rather improving their conditions. We should aim for eradicating child-labour, while saving the child, he added.

Moderating the discussions, Pradeep Mehta of CUTS raised the concern that the Trade Policy Review Mechanism of the WTO (World Trade Organisation) is restricted to a typical set of issues, and social cost is not among them. He further mentioned the cost that a country like India would incur if it wants to put all out-of-school children into the formal schooling system: a hopping $18bn per year, which is far below the amount that the government is spending on primary education!

According to many participants, attempt to abolish child labour is laudable, but many developing countries are deeply suspicious about the motives behind linking this issue with international trade. Even if the motives were entirely based on moral grounds, the question of practicability was often un-addressed. Mehta cited the example of gunning down of children in US schools and said that with such things happening, the West was hardly justified in taking a moral stance relating to child labour.

The second issue at this discussion forum was that of the linkage between trade and environmental standards. The moot question was who will make policies in this regard: national government, local community or international agencies? Moreover, is it possible to make universally accepted standards when many countries simply do not have the capacity (financial, technical, etc) to comply with them and different countries have different approaches on standards? It was felt that the need is to have a balanced and proactive agenda for sustainable development, not a reactive agenda.

Many participants explicitly expressed that the issues of environment and labour standards were important and that change was definitely needed. However, they need not - and should not - be inextricably linked with trade. There are other bodies, more appropriate, competent and less burdened than the WTO, to tackle such issues. The referral of labour standards to the ILO was strongly suggested as an alternative. It was the insistence that all matters are trade-related and need to be referred to the WTO’s dispute settlement mechanism, which caused suspicion amongst many developing countries that the real motives were often those of protectionism.

The meeting was organised as a part of the CUTS-CITEE work programme on linkages between trade and non-trade concerns. The central message that came out of the discussions was that given the differences at the conceptual level, we might find value in building consensus and should continue the process of building consensus, rather than taking polarised positions.

EU-India Network holds outreach meeting in Washington DC

Washington DC, 21 April 2003: “Recent spurt of bilateral and regional trade agreements is a threat to the multilateral trading system under the auspices of the World Trade Organisation. In order to counter this and to highlight the virtues of multilateralism, research institutions and civil society organisations should come together to conduct research and advocacy with the policy-makers. For the civil society organisations, the imperative is to design advocacy agenda and strategy with solid, background research so that their voice is better heard and understood by the policy-makers,” said T. N. Srinivasan, Professor of Economics at the Yale University, USA.

He was speaking at an outreach meeting of the EU-India Network on Trade and Development (EINTAD), organised by the CUTS Centre for International Trade, Economics & Environment in Washington DC. More than 30 participants from among the research, policy-making and NGO community participated in the event. They were from the US, India and other North and South American countries. The purpose was to reach out to policy-makers and others, especially in the US, with the research results, which show the benefits of the multilateral trading system.

This Network was launched in May 2002 in Brussels, Belgium, with CUTS and the University of Sussex, UK as the lead partners. Other institutions in the Network are the World Trade Institute, Switzerland, Kiel Institute of World Economics, Germany and from India: Delhi School of Economics, Jawaharlal Nehru University, National Law School of India, National Council for Applied Economic Research. Prof. Srinivasan is the Chairman of this Network, while Prof. Alan Winters of the University of Sussex is the Research Director.

Under this initiative, researchers from Europe and India have conducted studies on five key WTO issues: anti-dumping, textiles and clothing, mobility of labour, investment and competition policy. The meeting in Washington was part of the first phase of the ‘outreach’ under EINTAD, where the researchers presented the results of their studies, followed by discussions.

The topics researched under the first phase of EINTAD have been in the forefront of debates and discussions in the multilateral trade scenario. For example, research on the potential benefits for developing countries from liberlisation of services under Mode 4 of the GATS (movement of natural persons – one of the four modes of service-supply under the General Agreement on Trade in Services) is a timely output, which is of immediate interest since developing countries such as India have both skilled and unskilled labour surpluses available for temporary work overseas and much awareness needs to be generated to push for greater mobility of labour. Issues concerning textiles and clothing were keenly discussed in the light of the phase out of the system of quotas by the end of 2004 and China’s accession to the WTO. How competitive is the Indian textiles and clothing industry to maximise benefits from these changes in the international trade scenario? – an issue that generated active discussions.

The increasing use of trade remedy measures such as anti-dumping provisions, as a tool of protectionism, was criticised by many participants. Recommendations for changing the provisions of the present anti-dumping agreement to avoid its growing use were an important part of the EINTAD research and its outreach. On investment policy and foreign direct investment, the researchers presented several arguments that suggest that a multilateral investment framework is unlikely to bring greater inflows of FDI for developing countries. The need for a multilateral competition policy, even if not harmonised across countries, was expressly felt. The problem was that the poor countries have very little by way of resources to adopt and implement one.

Many participants, while making floor interventions, echoed the point raised by Prof. Srinivasan in his opening remarks. According to a member of the Mercosur Trade Network, there is a need to replicate the EINTAD model in different parts of the world and urged CUTS to take the lead in establishing a network of networks. We have gained immensely while taking part in this meeting – both in terms of the process and contents.

A second outreach meeting will be held in New Delhi on the 30th of April with the final conference scheduled in Europe for the middle of the year. Phase II of EINTAD is expected to commence by the end of 2003, where post-Cancun issues will be taken up for investigation and intensive study.

Consumer body calls to an end to truckers’ strike

New Delhi, 21 April, 2003: “Both consumers and producers are suffering due to the on-going truckers’ strike and the loss to the economy is huge,” said Srinivas Krishnaswamy, Assistant Director of Consumer Unity & Trust Society, a leading consumer organisation in the country. The strike enters the eighth day today and has been costing the economy 20 billion rupees a day amounting to a ghastly figure of 160 billion. This is apart from the loss in taxes and fees on transportation and trade. And, no one is talking about the daily wage earners associated with loading and unloading of goods. With the All India Motor Transport Congress (AIMTC) and the government playing ‘passing the buck game,’ consumers and producers across the country continue to suffer.

For example, the poultry sector in Andhra Pradesh has witnessed massive damages as the state has mostly small and medium farmers who can store feed for a maximum of four days. The state produces 3.5 crore eggs per day of which 2 crores are dispatched to neighbouring states every day. About 2,500 trucks are involved in transporting eggs, chicken and feed ingredients to and from the state. And with all of them on strike, the domestic industry is bound to suffer a setback. On the other hand, consumers are suffering due to increase in prices of eggs and egg-products.

According to available reports, the government is likely to agree to seven of the ten demands put forward by the AIMTC. Yet, there is no sign for the strike to come to an end. Krishnaswamy added that consumer interest is synonymous with national economic interest and the government should take immediate steps to uphold consumers’ interest, which would ultimately benefit the national economy.

Meaningful Offers on GATS Need Domestic Regulatory Changes

April 18, New Delhi: India is trying to finalise its position on trade in services at the World Trade Organisation (WTO) and is currently consulting stakeholders for their views. India is likely to place her offers by May 2003, taking into consideration the requests received from about 24 WTO members. Fourteen countries including the US, Canada and Japan have already placed their initial offers.

As a part of the stakeholder consultation process, a National Workshop on “WTO Negotiations on Trade in Services” was jointly organised by the Department of Commerce, Consumer Unity & Trust Society (CUTS), Federation of Indian Chamber of Commerce and Industry (FICCI) and Associated Chamber of Commerce and Industry (ASSOCHAM) in New Delhi.

Inaugurating the workshop, S. N. Menon, Additional Secretary in the Department of Commerce said, India has already submitted its request in seven sectors: architecture, health, computer-related services, audio-visual, tourism, maritime services and financial services. India will submit fresh requests in accountancy services, and construction and related engineering services to its trading partners.

As regards requests made on India by other countries, most of them are in the areas where autonomous liberalisation has already taken place. Requests for horizontal commitments from India include areas such as professional services, telecommunications and financial services. According to Menon, in the area of professional services, India’s approach would be to play according to her comparative advantage.

Four special plenaries were organised at the workshop. The first deliberated on architectural services (construction and related engineering, engineering and integrated engineering services); the second on financial and accounting services; the third deliberated on social sector, such as health and health-related services, tourism and travel-related services, and educational services; and the fourth on telecommunication Services (computer-related services and audio-visual services). CUTS organised the stakeholder discussions on the social sector, which was chaired by R. Gopalan, Joint Secretary in the Department of Commerce.

Speaking on health and health related services, Rupa Chanda, Professor at the Indian Institute of Management, Bangalore said that healthcare is already a $4 trillion industry and demonstrating rapid growth. All four modes of service supply (as classified in the General Agreement on Trade in Services – GATS) are relevant for India, with Mode 4 (movement of natural persons from one country to another) being the most important.

Currently, service supply through Mode 4 is being affected by a) recognition and accreditation issues, b) labour market policies, c) disparity in standards, d) absence of professional bodies in some areas, and e) national residency requirements.

Nurses, physiotherapists, etc have an export potential, not because they are cheap but because there is a shortage of labour in other countries. Therefore, India needs to get more countries to schedule health services sector, get more liberal commitments in Mode 4, and extend the scope of our own commitments especially under Mode 3 (commercial presence in another country). It was suggested that health strategy such as insurance should be linked to GATS.

There is a strong need for setting regulatory bodies for testing the quality of nurses, physiotherapists etc. Currently, nurses seeking employment in the US have to undergo CGFNS training. There is a need for mutual recognition of qualifications of personnel providing health service. According to the Trained Nurses Association of India, the country has ample scope in providing primary healthcare services to countries like Japan.

Speaking on tourism and travel-related services, Shyam Suri, Secretary General of Federation of Hotel and Restaurants Association of India said that India does not have much concern or potential under Mode 1 (cross-border supply of services) as most tourism related services come under Mode 2 (consumption abroad). He felt that India should try to have maximum liberalisation in this area, with minimum visa restrictions. Another major problem is air connectivity within the country. As this is more of a domestic problem, it should be first sorted out before the country makes meaningful offers.

Under Mode 4, skilled personnel in the hotel industry, especially chefs are in great demand. This can be gauged by the fact that they face comparatively lesser visa restrictions. However, recognition of Indian qualifications emerged as an important issue and reservations were expressed for a common accreditation body as it might lead to discrimination.

Harkirpal Singh of Travel Agents Association of India shared that India has been producing skilled manpower as per IATA norms and some of them are now working in the Gulf region. In India, call centres have been started for providing tourism-related services. To promote tourism and tourism-related services, the country should also try to have more bilateral air travel agreements. Currently, 50 out of the 97 agreements are not operational.

Speaking on educational services, B. S. Chimni, Professor at the Jawaharlal Nehru University said that a decision on whether or not to link up education with GATS should be taken on the premise that it should not undertake market access conditions in higher education due to a) sovereign and cultural autonomy, and b) commodification of education. Distinction should be made between internationalisation per se and internationalisation through GATS, which is irreversible.

He added that ambiguity about the GATS text applies to all sectors and not just education. Such concerns should not hold India back from making offers and/or requests. However, for making such offers and requests meaningful, India should first make changes in her domestic regulatory framework.

Experts Call for the Adoption of a National Investment Policy

Lusaka, 17 April 2003: Stakeholders attended a national consultation on foreign direct investment (FDI) policy and practice in the capital on Wednesday called for the early drafting of a national investment policy for Zambia. The adoption of a national investment policy would be the immediate priority for Zambia to overcome the existing difficulties in attracting sufficient investment, said Mr. Richard Chavula of the Zambia Investment Centre (ZIC). He was presenting a paper on the role of coordination among sector regulators in promoting FDI to Zambia. Though there are several sectors regulatory bodies that deal with investment decisions in Zambia, they lack any workable coordination arrangements, which cause a lot of delay in the decision making process, he lamented.

The national consultation was hosted by Consumer Unity & Trust Society–Africa Resource Centre (CUTS-ARC), as part of a seven-country research study on Investment for Development (IFD). The findings of the study report titled ‘Investment Policy, Performance and Perceptions in Zambia’ and a National Advocacy Document for Investment were presented at this meeting.

Zambia needs to make use of Common Market for Eastern and Southern Africa (COMESA) regional integration arrangements as a base for attracting sufficient investment into the country even from within the region. At present Kenya and Mauritius are the largest beneficiaries of COMESA arrangements. For instance Kenya is the biggest investor in Uganda and investment by Mauritius is growing in Mozambique. Zambia should provide a comparative investment environment and base, which allows the investors to produce not only for the local market but also for the regional markets, suggested Mr. Watipaso Mkandawire, Investment expert of COMESA.

Recently, Zambia Investment Centre has taken some initiatives for revising its investment codes. Unfortunately many key stakeholders in the country are not involved in the process, commented Mr. Trevour Simumba of Africa Trade Advancement and Development. Commenting on the recent move by the authorities to reserve certain sectors for domestic investors, he said Zambia should not think of discriminating between foreign and domestic investors, as it would take the county back to the pre reform situation. He cited the example of Tanzania, which tried to do that in 1990s it, but was successful. Rather what the country requires is a comparative investment climate, which would foster investment by domestic and foreign investors. The Zambia Investment Act is a fragmented piece of legislation, which is inadequate for any business purposes. Mr. Simumba suggested that Zambia should emulate the investment promotion practices of Namibia and Botswana, including facilitating all the investment registration formalities under the same roof.

Mr. W. Lombe of the United Nations Economic Commission for Africa (UNECA) suggested that the investment policy of Zambia should focus on economic diversification from a mineral based economy to a knowledge based one. He suggested learning from the experience of previous mineral based economies such as Finland and Hungary.

If Zambia decides for foreign investment genuinely, it should permeate into the activities of every concerned government departments than keeping it in bits and pieces of legislation. Further, policies of various departments dealing with investment issues including the immigration, customs, environment and wildlife, etc. should be harmonized for attracting investment, said Mr. Chris Sealy of Private Sector Development Programme.

The CUTS-ARC study has proposed several changes in the existing investment policymaking process in Zambia with the view of not only making it development and investor friendly but also to keep pace with developments taking place in other countries. With the absence of a clearly defined investment policy, what exists at present is a set of fiscal measures for attracting new investments. This is evident, despite all the efforts at structural adjustment and additional foreign investor incentives; Zambia has not been able to attract large amounts of FDI. An investment policy should have a clear focus on technology transfer, national development, human resource training and job creation. Moreover, government should invest in education and skill development, which provides a better investment environment.

The national consultation was attended by 40 stakeholders hailing from a broad spectrum of activities, including regulatory bodies, government departments, donors, intergovernmental agencies, research organisations, business associations and civil society.

Cable TV Consumers Highly Dissatisfied: CUTS Survey

New Delhi 10 April, 2003. Cable TV consumers are a highly dissatisfied lot.

A recent survey by a leading consumer organisation: CUTS, has found that 64% of the respondents claimed an unreasonable increase in the service charges in the last one year and 54% expressed their dissatisfaction with the quality of services rendered by the cable operators. The survey covered large number of representative respondents from cities all over the country: New Delhi, Jaipur, Kolkata, Mumbai, Bangalore and Chennai.

No doubt the passing of the Cable Television Networks (Regulation) Amendment Act, 2002 is a step in the right direction but much more needs to be done to ensure a healthy pro-consumer scenario in the cable TV market.

“The dissatisfaction is compounded by the fact that cable operators do not even issue money receipts against payment of rentals. Nearly 54% respondents have complained against the lack of money receipt, by virtue of which they cannot even approach consumer groups/fora, when seeking redressal of complaints. One is not too sure if the money is actually accounted for, or even the so-called payment to pay channels is made. Thus clearly everyone is cheated: the government, the multi-system operators and the pay channels”, said Anjali Bansal, Researcher at CUTS, who prepared the report.

Adding insult to injury, only 13% consumers received a complaint docket number voluntarily. However, of the 18% respondents, who demanded such a docket, an impressive 54% of those demanding consumers were furnished a docket number by the cable operator. “This only shows the callousness and indifference which prevails in the unregulated industry”, Bansal added.

In order to promote consumer choice at lower costs, the Government has adopted the Cable TV Networks (Regulation) Amendment Act, 2002, which provides for the conditional access system. However nearly 70.3% respondents are not familiar with the system or its popular term: Set Top Boxes. The survey did not address the issue of the cost of set top boxes, as it was too premature.

However, the new amendment is inadequate to ensure a healthy market for Cable TV. For example the issue of standards of service, which should inter alia cover the system for registering complaints and the time for redressal.

“In an industry where there is a virtual monopoly at the consumers end, the Act needs to provide for an independent regulator which will ensure proper standards of service and performance and price capping”, said Pradeep S Mehta, Secretary General of CUTS. “In this connection, CUTS is preparing a draft comprehensive Cable TV Bill on the basis of good practices in other countries, and will submit it to the Government for consideration”.

What is extremely surprising is the Government’s washing off its hands from regulating the prices of Cable TV. A recent advertisement by the Ministry of Information & Broadcasting, which has asked operators in the four metros of India to transmit pay channels through set top boxes by 14^th July, 2003, also states that the Central Government will have no authority to fix the price of Pay Channels under the Amendment Act.

“This is extremely ridiculous as price capping is resorted to everywhere in the world including India, where natural monopolies operate”, said Mehta. “In India we have the Electricity Regulatory Commissions to fix tariffs. State governments fix fares for taxis, buses and autorickshaws. Even in a case like drugs and pharmaceuticals, where competition is not mortgaged to natural monopolies, the National Pharmaceutical Pricing Authority determines the prices in various cases”.

Secondly, in the current situation, consumers will have the choice of selecting only such pay channels as they want to see. However this will be defeated by the pay channels’ business strategy to offer single channels at very high prices, and making a bundle or a bouquet just about a little more expensive on a cumulative basis.

A glaring example of this is the premier tier of movies and fashion, etc (consisting of Star Gold, MAX, Star Movies, HBO, Hallmark and two others) being priced at Rs 50 while the subscriber would have to cough up Rs 280 for these channels if taken individually.

After all the pay channels make money through advertising and yet burden the consumers. Like in electricity or telecom regulation, there is a need to examine the costs, which will not burden consumers unnecessarily. There are various other shenanigans the industry will engage in to defeat the purpose of the 2002 amendment bill.

Nearly 70% of the respondents pointed towards yet another misery. They have no choice of changing the cable operator, if they desire to do so. This is because the cable operators form cartels and divide territories among themselves. The limited choice gives the cable operator the liberty to do whatever they want, including bad behaviour and consumers can do nothing but take whatever they are offered.

On the other hand many cable operators also complain of high handedness by MSOs and Pay Channels, but they do not have recourse to any redressal mechanism save and except the normal civil courts. Most of the mal-effects of that does get filtered to the consumers.

Furthermore, the Act fails to answer many questions which are natural to arise in a person’s mind when s/he reads about the Act. For instance, there is no mention about who will bear the cost of set top boxes needed for conditional access; who will monitor these costs; where will these set top boxes be available; etc.

“On an analysis of the Act as it stands now and the current scenario in the country, one has no hesitation in concluding that there is a need to draft a more comprehensive bill which will address not only the concerns of the subscribers but also of the cable operators and multi system operators. It should try to be as descriptive as possible and take into account all probable considerations”, highlighted Mehta.

Properly enforced competition law can aid growth and help the poor also!

New Delhi 1^st April: In spite of the economic uncertainties, it is yet possible to achieve a growth higher than the 5-6% being forecasted by our think tanks. For this, inter alia, one needs an effective competition law to ensure that the market imperfections are regulated and curbed, said Pradeep S. Mehta, Secretary General of CUTS, a leading NGO working on trade and economic isssues in India and abroad, in a press release issued here today.

“We now have a new and modern competition law in India. But, to get good results we need adequate resources and good professionals to implement the law”, asserted Mehta.

Is there a link between competition policy & law and economic development? Several studies from around the world have shown how a competition law has enabled the growth process by conserving scarce resources and raising efficiency in the economy.

For example, a study carried out for the Australian economy in 2000 estimates the benefits to be expected from a package of competition promoting and deregulatory reforms (including extension and revision of competition rules) to incur an annual gain in real GDP of about 5.5 per cent, or $23bn.

“The study showed that consumers gained by almost $9bn and there was an increase in real wages, employment and government revenue”, added Anjali Bansal, Programme Officer of CUTS, who had quoted this in a recent paper submitted by her at an international symposium on Competition Policy and Pro-Poor Development at Geneva.

In terms of expenditure on the competition regime, our approach has been to provide it with peanuts, under a mistaken notion that the presence of a regime will alone deter anti-competitive practices. One will need sufficient resources to ensure that the agency is not another lameduck. It can also pay for itself, and add to the national exchequer.

A soon to be published study in Korea establishes that as against the cost of implementing the competition law of US$18.4mn in 2001, consumer welfare increased by US$527mn through price reduction and increased availability of goods from a monopolistic market structure. The study also shows that the income transfer effect was about US$536mn due to good enforcement of the competition law. This included damages and penalties imposed on violators. “Thus the gain was a whopping 58 times the enforcement costs”, said Mehta.

In Peru, a study of the competition agency’s effectiveness in 2000 found that economic benefits due to its operations amounted to $120mn against operating costs of $20mn over a period of seven years.

The new law in India: Competition Act, 2002 has also been fashioned on an approach to regulate conduct. But there are very few people in India who would understand the change. And if the government were to appoint retired civil servants and judges to the new Commission, then one can be reasonably sure that their understanding of the difference will be quite wanting. For, they have been brought up with a control and command mindset. That will be bad for both the law and its ramifications on the economy.

It is sometimes argued that it will be difficult to attract young professionals on peon’s salaries. The retirees are happy to work on such low salaries, because their old salary and perks are well protected. They also retain their old bungalows, as we have seen in many recent sinecure cases.

“One sensible Minister who has come out very strongly against this pernicious system is Arun Jaitley” said Mehta. “He has been advocating for a long time that regulatory bodies should not become roosting places for retirees and that we need to pay market level salaries to attract good professionals. If only the government heeds his advice, then we can have a really effective competition law”.

Commuters find their Pockets Ripped off

New Delhi, 17 March: Petrol prices have been increased yet again with the price scale reading Rs 38.59 per litre in Mumbai. What is more alarming is that an exorbitant 57% of the amount paid (that is Rs 22) ends up in the coffers of the government in the form of sales tax and excise duty.

This is the second price hike this month and the fourth this year. The third hike being announced just after the budget. Indian Oil (IOC) however claims that even after this hike, the selling prices are lower than that warranted as per international oil prices.

With the dismantling of the Administered Pricing Mechanism (APM) in March last year one would have expected the prices to be justifiably decided by the operating market mechanism. However, this is not to be as Indian Oil, IBP, Bharat Petroleum and Hindustan Petroleum review prices of petroleum products every fortnight and put it forth with the government’s nod.

What the government was doing earlier is now being done by the oil companies with the knowledge of the government. One may well question if there is a ‘price cartel’ in the making.

The reaction of consumers at large has however been that of passive bystanders, mutely accepting what they feel cannot be undone. Most believe the price hike is largely due to the impending war. On the contrary, the people responsible for the hike and the gainers from it can be traced within national frontiers. The central and state governments are the ones who stand to gain the most from increased tax collections.

This is not to say that internal prices are not affected by external happenings. With India being 70% dependent on import to meet its crude oil requirements, fluctuations in the international crude oil prices naturally affect it. The threat of war in Iraq has resulted in a barrel costing $37. Every dollar increase in crude price inflates the oil import bill by $620 million a year, as India’s crude oil requirement is 1.7 million barrels a day.

While Indian officials extend surety that the country has oil stocks to meet its demand for 35-40 days and enough crude to keep refineries running for a month should there be disruption of supplies from the Middle-East, there seems no respite in the offing as far as tax and excise duty is concerned.

Tackling governance from top to bottom

New Delhi 14, March: As consumer organizations around the world commemorate World Consumer Rights Day on March15, one such consumer body in India is demonstrating the impact the civil society can have on raising awareness on the key issues surrounding development and poverty reduction.

This year’s theme for the Day is “Biotechnology and Consumers” and it shows just how far the consumer movement has come. Discussions are certainly not about which are the best brands of white goods, or misleading advertising, but instead take a three-dimensional approach to questions of international importance. This means considering the impact of biotechnology on the livelihoods of poor farmers, the monopolistic power of global agribusinesses and the effects of consumption patterns on the environment.

While events are taking place all over the world, in New Delhi, the Consumer Unity & Trust Society’s (CUTS) Partnership Conclave from 12-14 March shows what even a single dynamic organization can do. The Conclave celebrates two decades of the organisation’s work.

The conference captured all the prominent themes concerning poverty and pulled in many big names. CUTS, which started out as a tiny operation working out of a garage in 1984, has become one of the “major international NGOs from developing countries,” according to Mr. Pascal Lamy, the European Union’s Trade Commissioner who was speaking at the event and “a driving force in creating EU-India civil society dialogue.”

A clear message of the Conclave, entitled, “Governance and its Relationship to Poverty Reduction” was that governance has an important impact from the local right up to the international level. IK Gujral, Former Prime Minister of India, spoke of the inter-relationships between the two. “In India, though we have not failed entirely in achieving the aims of poverty elimination and good governance, we still have a long way to travel,” he admitted.

Minister for Commerce and Industry in the Indian Government, Arun Jaitley, drew attention to cases where well intentioned policy-makers had formulated policies that were inappropriate or could not be implemented because of political pressures.

Civil society has the power to initiate and shape debates, a strength which they can use to promote long-term poverty reduction. Erna Witoelar, Commissioner of the Earth Charter and former head of Consumers International, the world federation of consumer organizations, called on civil society organizations from North and South to work with their counterparts to advocate changes.

From trade liberalization and the WTO, through to the Millennium Development Goals (MDGs) and sustainable development, eminent speakers at the CUTS Conclave shared their expertise with an audience of over 300 civil society representatives from more than 30 countries.

Speaking on consumer rights and responsibilities, Wajahat Habibullah, Secretary, Department of Consumer Affairs, Ministry of Food and Consumer Affairs speaking on behalf of the Minister, emphasized the vital role that consumer organizations have to play in promoting good governance and making sure that the processes of globalization and privatization do not harm the poor.

Martin Wolf, Chief Economics Commentator of the Financial Times, pointed out how the World Trade Organisation Agreements are unlike any other trade system: they intrude on domestic policies on agriculture, investment and subsidies.

For Northern governments and multinational institutions, the challenge is to bring concerns about development and poverty into the mainstream of policy-making, including trade policy. These concerns have been relegated for too long to Development Ministries. Eveline Herfkens, Executive Coordinator for the UN Secretary General’s Campaign on MDGs, drew attention to the need for ‘coherence,’ which she was instrumental in pioneering in the Netherlands. This was a concern echoed by Charlotte Seymour-Smith, Head of the Department for International Development, UK office in India.

On trade and sustainable development, reforms of international governance systems were a recurring theme. S N Menon, Additional Secretary, Department of Commerce, India, calling for progress in the current round of trade negotiations, recognizing that rich and poor countries should make asymmetric concessions. Others called on India to use its influence at the WTO, as one of the ‘elephants’ of international trade negotiations, to bring forth the concerns of the smaller developing countries.

Problems at the international level do not absolve national governments of their responsibilities. The duties of national governments to provide regulation and safety nets ran through the debates on economic liberalization, foreign direct investment and labour standards that were conducted over the three days. In relation to the MDGs, Herfkens said that the next step should be for countries to secure ownership over the goals and tailor them to their national development objectives.

The importance of politics in governance cannot be ignored. Jaitley emphasized that the ultimate decision-making power lies with politicians and cautioned against the mental process of “populism and immediate returns” dominating many policy-makers in developing countries.

The political dimension was also emphasized by Abul Ahsam, former Foreign Secretary of Bangladesh. Good governance in South Asia has been distorted by chauvinism, corruption and the politicization of the bureaucracy, he said, which has hindered efforts at poverty reduction.

Initiatives at the local level are crucial complements to national and international policies. Case studies were presented over the course of the Conclave which highlighted the huge number of successful local initiatives which have addressed issues like farmers’ rights and innovative education strategies, and analysed the failure of other steps, like the privatization of energy in the state of Orissa, India.

The cases are being used by participants to inspire work in other countries and regions, and to avoid the repetition of mistakes.

Tying the grass-roots to the international is one of the key strengths of CUTS. Muchkund Dubey, former Foreign Secretary of India and Chairman of the Conclave Steering Committee, commended CUTS’ philosophy of constructive analysis of the issues. CUTS has been empowering people at all levels, from village communities in the state of Rajasthan, to providing inputs to WTO discussions on competition policy and law.

The story of CUTS, celebrated in its 20^th Anniversary this week, is an inspiration to civil society representatives everywhere.

Lamy Promises to Push for Liberalisation of Services

New Delhi, 14 March: “Movement of qualified persons across borders is to be seen in the light of trade and services”, said Pascal Lamy Commissioner for Trade, European Commission. Recognizing the importance of movement of labour for India, he mentioned that he was for opening up borders within Europe for migration of qualified personnel and lengthening the period of stay, but that this issue was closely linked with fears of immigration.

He was debating with Martin Wolf, Associate Editor & Chief Economics Commentator, Financial Times; S. N. Menon, Additional Secretary, Department of Commerce; T.N. Srinivasan, Professor of Economics, Yale University; T.K. Bhaumick, Senior Policy Adviser, Confederation of Indian Industry; and David Luke, Trade, Debt & Globalisation Advisor, UNDP at a Partnership Conclave ‘Governance and its Relationship with Poverty Reduction’ organized by Consumer Unity and Trust Society. The conclave witnessed a gathering of about 200 persons from 30 countries.

Speaking at the plenary session titled ‘From Doha to Cancun’ he along with the other panelists discussed the strategies for achieving an equitable and sustainable world trading system with global welfare as its goal.

We need to see how we can maintain ‘Trade & Development’ and ‘Development and Trade.’ While trade is very important for creating jobs and thereby poverty alleviation, it is not sufficient in itself. The challenge is how to integrate development into trade policy and while doing this, incorporating the three key elements - enhanced market access, balanced rules and well-targeted, sustainably financed technical assistance and capacity building programmes, felt Lamy. Market access is not only a North-South issue but a South-South issue as well

He proposed that peak tariffs be addressed and that developing countries should enter tariff reduction in a more sustained manner. Replying to this, Menon mentioned that the current budget brought tremendous tariff reduction and that it is expected to be brought down further in the next ten years.

Rules enable secure market access and increased trade and thus are a tool for development. Like India, the EU believes that agriculture is different and cannot be treated as a trade commodity like coal. Talking of technical assistance, Lamy pointed out that the EU has signed an agreement on Scientific and Technological Co-operation, and wants to embark on negotiating agreements on maritime transport, textiles and customs co-operation.

Luke emphasized the need for policy coherence and trade related technical assistance, particularly in the face of the challenges of poverty eradication.

Putting forward his views, Menon highlighted that we have a basic problem in market access and that domestic reform is needed, for example increased transparency in the system of government procurement. On the other hand, high protection boundaries were also called for.

Taking up the issue of preferential treatment in trade, Srinivas mentioned that it could be countered by laying down a five-year period by which time it should be mandatory for the country concerned to extend the same ‘preferential’ treatment to all member countries.

Lamy and Bhaumick wished CUTS a ‘happy anniversary’ and congratulated it on its twenty years of fruitful service to not just national but international policy building. CUTS has been the driving force between the EU-India civil society dialogue and as such one of the most important international NGOs observed Lamy. Luke expressed his appreciation of CUTS’ work in fostering South-South development on trade and policy issues specially through its offices in Nairobi and Lusaka.

Concerns Since the Johannesburg Summit

New Delhi, 13^th March: A wide range of issues affecting the poor were brought to light by delegates from over 30 countries participating at the CUTS Partnership Conclave being held in New Delhi from the 12^th – 14^th March. Eminent academicians, researchers and grass-roots level workers discussed cases which highlighted the need for policymakers to involve civil society from early stages of policy-making and legislation.

John Roughan of the Solomon Islands Development Trust detailed the destruction caused to natural wealth through short-sighted and ill-conceived development policies. There was great interest in the question of privatization of goods and services which are considered to be the traditional preserve of the public sector, such as water supply, education and health. The demand for privatization arose because of intrinsic factors, such as the shortage of funds with the State, or through extrinsic factors such as commercial pressures from domestic or overseas companies.

The OXFAM-sponsored workshop on the Make Trade Fair campaign also drew great interest, with presenters speaking of the rigged rules and double standards in textiles and clothing, and how such rules could deprive thousands of women from the developing world of their jobs. But for some developing countries, certain sector quotas could be a blessing in disguise.

For instance if the textile quotas are phased out by 2005 as envisaged by the WTO Agreement on Textiles and clothing, would Indian industry be competitive enough to survive in that non-quota market, asked several participants.

At a Plenary Session entitled ‘Beyond Johannesburg’ Erna Witoelar, Commissioner of the UN Earth Charter said, “It's difficult not to be pessimistic when looking at the progress of sustainable development at the international level, said, but there are successful local initiatives that can give us hope as they demonstrate what can be done.”

"There is no light at the end of the tunnel," she said, "only small points of brightness."

The process of environmental destruction is continuing and governments are showing little commitment to the process. Kirit Parikh, Professor Emeritus at the Indira Gandhi Institute of Development Research, pointed to the gap between goals and action and the asymmetry of power in the international system.

"Public-private partnerships are an insidious concept," Parikh said, a sentiment that was echoed by many of the speakers and participants who felt that national governments were trying to escape their obligations. While it is true that public provision may fail, the partnerships proposed will fail for the same reasons, he continued.

Leena Strivastava of the TERI struck a chord when she pointed out that both the rich and the poor that should be contributing to sustainable development. Philanthropy at the local level is often forgotten, but rich people in developing countries could be contributing much more to the welfare of their fellow citizens.

"Johannesburg demonstrated that there are a variety of regional characteristics, and that the world is not divided into two opposing blocs of rich and poor," Srivastava said. However, the Summit left us with watered-down commitments and many unresolved issues.

Even in those agreements that have been signed by Heads of State, there is a vacuum between the people who have negotiated the final terms and those who will have to implement it. Much clearer leadership is needed. Where this leadership was going to come from - the US, or elsewhere - was debated by the participants.

James Love, Director of Consumer Project on Technology presented the impact of the TRIPs Agreement on public health, especially the poor. The vast majority of patents were held by just two countries – USA and Germany.

Patenting has led to high prices for life-saving medicines. For many goods, this doesn’t matter, but for medicines it is a matter or life and death. In Thailand, for example, opening up competition in the pharmaceuticals market meant that prices dropped significantly.

The TRIPS Agreement of the WTO provides some important flexibility on the protection of intellectual property. At Doha, Members made a Declaration clarifying that countries have a right to grant compulsory licenses with an additional provision on the right governments to grant licenses during national emergencies.

Love stressed that licenses are not just for use in emergencies – the US and other governments regularly issue compulsory licenses outside of national emergencies.

Countries without significant manufacturing capability could use parallel imports, which come under ‘Paragraph 6’ of TRIPS, but discussions on how this is to be interpreted have not been concluded. The EU, US and Japan have introduced extra complexities to restrict the scope of the Doha deal. They are resisting any kind of deal on drugs with markets in the North, e.g. for heart disease, diabetes etc.

“No deal is better than a bad deal” on these issues, according to Love, as countries have other ways of solving the problem of importing drugs. The US and the other governments are pressuring vulnerable countries in Africa which are suffering from the AIDS epidemic to give in to a deal.

Love’s Access Gap Theory provides one way out of these arguments. It proposes treating these problems as competition law cases and establishing jurisprudence in the areas that allow countries to issue, with patents treated as refusal to deal. Cases would be based on public health data.

Goals Set Versus Goals Met

New Delhi, 12 March: “A large section of people are getting richer, but it does not necessarily mean that the number of poor people is falling”, said I.K. Gujral, the Former Prime Minister of India, this morning. He stressed the need to have better governance to reduce poverty. He added that though we have not failed entirely in achieving this aim, we still have to travel a long distance.

I K Gujral was delivering the inaugural address at an International Conference on ‘Governance and Its Relationship with Poverty Reduction’ organized by Consumer Unity and Trust Society (CUTS), one of India’s leading civil society organisations, to commemorate its twentieth anniversary.

Over 200 delegates from 30 countries attended the prestigious event whose theme was “Governance and its Relationship with Poverty Reduction”.

Arun Jaitley, Minister for Commerce & Industry and Law & Justice, in his opening address called on the need to “replace mind sets from wanting immediate returns to substantive measures that will have a long-term impact on poverty reduction”.

Focusing on the theme of the event, governance and its relationship with poverty reduction, Jaitley emphasized that the ultimate decision-making power lies with the policy-makers: it is their decisions that determine the quality of governance. Experience shows that policy decisions to tackle poverty have not always promoted good governance and have not been well thought through, even if they were well intentioned.

Muchkund Dubey, former Foreign Secretary of India and architect of the UN Development Decade, stressed that the State’s commitment to development is primary. Civil society also have an important role to play.

Dubey recognised the importance of taking a proactive and positive approach to the process of globalisation. He duly recognised CUTS work in empowering people to comprehend the dynamics of globalisation dispassionately and constructively and the need for targeted interventions to make sure that the benefits of liberalisation reach the poor.

At the first Plenary session, entitled “Countdown to 2015” speakers addressed issues pertaining to the Millennium Development Goals which were designed to halve poverty by the year 2015. Eveline Herfkens, the U.N. Secretary-General’s Executive Coordinator for the MDGs said, “In mere numbers, the world is making steady progress towards achieving the goals by 2015 as stipulated – basically due to the current positive trends in both India and China.

Charlotte Seymour-Smith, Head of the India Office of Department for International Development, UK, spoke on the relationship between globalisation and the Millennium Development Goals. In this context she emphasized the need for the State to ensure that basic needs of the poor are met. She highlighted the fact that policy coherence is required to ensure that the process of globalisation is oriented towards achieving poverty reduction goals.

Kaushik Basu of Cornell University drew attention to inequalities in the global system and stressed that the inequalities existed not just in income levels; they also affect the ability of the least developed countries to voice their interests at international institutions such as the WTO.

“If the Millennium Development Goals are to lead to action, the UN needs a body to coordinate poverty-alleviation and inequality reduction measures,” Basu proposed. Without this, the necessary changes would not take place.

David Kalete, Programmes Director of CIVICUS said “Not only policy-makers but also consumers and citizens with broad experience need to lend their voice to policy debates, which otherwise tended to be dominated by theories.”

New Delhi, 2 March: Trade policymaking process of India should be made more participatory, rather than relying upon inputs from business chambers alone.

This opinion emerged at a panel discussion on “High stakes at Cancun: India’s approach”, organised by CUTS Centre for International Trade, Economics & Environment.

This was the eighth in a series of quarterly New Delhi Working Group Meetings, which CUTS organises regularly on international economic issues.

“The decision to launch negotiations on the Singapore issues has already been taken at Doha”, said speaking at the meeting Mr. Anwarul Hoda, former Deputy-Director General of the WTO and chief negotiator for Government of India during the Uruguay Round.

At Doha, Ministers agreed to launch negotiations on the Singapore issues at Cancun after an explicit consensus on modalities. These issues are investment policy, competition policy, trade facilitation and transparency in government procurement.

All decisions in the WTO are taken with consensus and negotiations take place after agreement on modalities. Therefore, some decisions will be taken on Singapore issues at the next Ministerial, to be held at Cancun in September 2003, Hoda added.

On the recently released draft modalities on agriculture negotiations, Hoda felt that the Chairman of the Agriculture Negotiating Committee, Mr. Stuart Harbinson has proposed a decent proposal. However there was much tension between the antagonists and the protagonists.

As regards India’s interest on the Agreement on Agriculture, Prof. Manoj Pant of the Jawaharlal Nehru University pointed out that India has nothing to lose or gain out of agriculture negotiations. At present, the fight on agriculture is between the EU and the Cairns group (a developed and developing country alliance of agriculture exporters). India does not have export surplus and moreover the strong middle-class population won’t allow government to export farm products, as it will increase domestic price of those goods.

Emphasising on the broad negotiating strategy of India, Prof Pant stressed that India could make some common ground with US on industrial tariffs in the WTO. The US has already proposed a long-term plan to reduce industrial tariffs. If India can agree to reduce tariffs for getting a membership of ASEAN, then why not ally with the US on this issue.

The session took an interesting turn with a debate generated on how well versed the negotiators representing India are on the WTO issues. As the moderator of the session, Mr. Pradeep S Mehta, CUTS Secretary General, highlighted the issue of high transferability of civil servants within the various departments of the Government of India. Thus institutional memory is lost, and every time a new bureaucrat struggles with the fundamentals of the system.

Drawing from his personal experience, Mehta spoke of the reluctance with which industry stakeholders present their concerns and opinions to the concerned government officials. “While business lobbies have vested and sectoral interests, the consumer movement is the only lobby for the whole economy”, he asserted.

The discussion culminated in the participants agreeing to the point that it is of crucial importance for the Indian delegation to the WTO Ministerial to adequately represent concerns of all stakeholders, whether producer or consumer interests.

Experts felt that there is a need to include civil society representatives in the official delegation at the WTO. At this point Mr. Mehta added that this has been a practice in developed countries but now many developing countries like Kenya, Zambia and Tanzania are taking NGO representatives in their official delegation.

Geneva, February 21, 2003

Consumer groups and research institutions from around the world today launched an international network to promote a healthy competition culture.

“One of the major projects will be to prepare a World Competition Report by 2005”, said Pradeep S Mehta, Secretary General of the India-based Consumer Unity & Trust Society (CUTS) the initiators of the network. “The network intends to put civil society on the map of competition policy discussions at the international and domestic arena”.

Over 35 organizations that attended the first general body meeting of the International Network of Civil Society Organisations on Competition (INCSOC) held on February 20 at Geneva, expressed a strong support for such a network. These organizations came from diverse countries such as Zambia, Bangladesh and Nepal from the LDC category; India, Argentina and Brazil from the developing category and UK and the USA from the developed category of nations.

A growing realization amongst civil society organizations (CSOs) both in the North and the South that domestic competition regimes and a competition culture need to be both developed (where they are absent) and strengthened for consumers to benefit from economic development, came across strongly in a meeting of the first of its type.

Further, given the increasingly global nature of anti-competitive practices of “big business”, an acute need for international sharing of knowledge amongst CSOs in order to facilitate informed domestic intervention on cross-border anti-competitive actions by big business, was expressed vividly.

The network will work closely with other international organizations such as UNCTAD, WTO, OECD, International Competition Network etc, and will provide them with critical inputs which the existing debates are missing.

The idea of forming INCSOC was recently mooted by several CSOs in the wake of the dissemination of the results of a pioneering project on competition policy implemented by CUTS, an India based research and advocacy group, with the support of DFID, UK.

The project popularly known as “7-Up” has documented the competition policy and regimes of seven countries in South Asia and Africa. INCSOC has been conceived as a network that seeks to build coalitions of civil society organizations interested in promoting a healthy competition culture.

“Through capacity building of the CSOs themselves and catalysis of research and networking on competition issues, it will be a vehicle for sharing experiences and promotion of mutual learning on competition issues”, noted Allan Asher, the chairman of INCSOC.

At the first meeting the members discussed several critical issues. Firstly, areas of training and capacity building needs for the members were discussed and several areas identified. Secondly, the need for advocacy activities particularly in the critical area of well informed interventions on competition issues based on researched facts was identified as a critical element of providing credible interventions by CSOs.

Allan Asher of the Consumers Association, UK will be the first chairman of the Steering Committee of 24 members drawn from research and advocacy CSOs in the South and North to manage the work of INCSOC.

Conceived as a virtual network, it is planned that the network will work through working groups of which two co-chair persons were elected to coordinate the work of three groups: capacity building, advocacy and the preparation of a World Competition Report.

The working group on capacity building will be chaired by Albert Foer of American Antitrust Institute and Kwame Owino of Institute of Economic Affairs, Nairobi. On advocacy, the working group will chaired by Indrani Thuriasingham of Federation of Malaysian Consumer Associations, Kuala Lumpur and Grazyna Rockika of Association for Polish Consumers, Warsaw, while on the World Competition Report by Gesner Oliviera of IBRACC, Sao Paulo and Malathy John of Institute of Policy Studies, Colombo. Each of the working group will coopt members from the network maintaining a balance of regions, gender and research and advocacy.

CUTS will provide a temporary secretariat mainly for hosting the virtual communication hub. The three work groups will prepare a work programme which will be circulated amongst the members for discussion at a second meeting planned for New Delhi in mid-March 2003. The work plans will be finalized by end-March and donors approached to support it. Many donors have already expressed support for the same.

The key point of agreement at the meeting was that research organizations and advocacy groups need to work more closely together in enriching their competition advocacy activities, which emerged as a critical learning from the 7-Up project process. This is important since effective advocacy calls for a solid research base to enable advocacy groups to convince citizens and politicians that a competition culture is good for the citizens, particularly the poor.

“Poverty reduction has normally been seen as a specific measure and always remained at the sidelines of economic policy making but competition policy is an element that can mainstream development and poverty reduction and put them at the centre of economic policy regimes,” observed Rubens Ricupero, Secretary General, UNCTAD. However, for the common people, there is a difficulty in understanding how it can help development as the results of such a policy cannot be observed immediately and that is the challenge, added Ricupero. He was speaking at the closing ceremony of an international symposium on “Competition Policy and Pro-Poor Development” at Geneva on February 19.

The symposium was organized by Consumer Unity & Trust Society (CUTS), an India based research and advocacy group. The purpose of the symposium was to disseminate the findings of the 7-Up project, which is a path-breaking study of competition regimes in seven developing countries of Asia and Africa, conducted by CUTS Centre on Competition, Investment and Economic Regulation and supported by Department for International Development, UK.

Adrian Wood, Chief Economist, DFID released the project results: “Pulling Up Our Socks”, while Frederic Jenny, Chairman, WTO Working Group on Interaction between Trade and Competition Policy chaired the inugural session.

The event was attended by nearly 100 people coming from about 50 countries all over the world. Participants at the inaugural event included Rufus Yerxa, Deputy Director General, WTO; Phillip Lowe, Director General, Competition, European Commission; and Hardeep Puri, Ambassador of India to the United Nations.

The deliberations in the symposium revolved around three questions: How does competition policy and law help the poor; what type of competition policy and law should a country have and how do developing countries deal with competition problems with international dimensions.

Referring to the lack of competition culture in most developing countries, Adrian Wood observed that whereas in developed countries competition is taken for granted and deviations from competition are exceptions, in developing countries, competition is by and large conspicuous by its absence. This makes designing and implementing an appropriate competition law even more difficult in a developing country.

Rufus Yerxa observed that there are wide ranging views and positions on the issue of competition at the WTO. However, a consensus may be reached. A lot will of course depend on what happens in the preparatory process in the run-up to Cancun Ministerial. Hardeep Puri however expressed doubt whether the WTO and its core principles were structurally suitable to deal with competition issues.

Phillip Lowe observed that competition has been an important element in bilateral and regional cooperation in the EU context. He however emphasized the need for application of best practices throughout the world in a soft way. He mentioned the role of International Competition Network (ICN) in this regard, which also intends to facilitate technical assistance and capacity building in developing countries.

One aspect that came out very clearly during the discussions is that the level of awareness on competition problems, whether purely domestic or those with international dimensions, is extremely low in developing countries. People in developing countries do not know the extent to which they are suffering due to absence of an effective competition regime.

The role of the civil society was felt to be of paramount importance in this regard. “A beginning has already been made towards this direction and a network called International Network of Civil Society Organisations on Competition (INCSOC) has been launched which is going to have its first general body meeting tomorrow (February 20),” announced Pradeep S Mehta, Secretary General of CUTS.

In an impassioned plea, Mehta asked the international community to realize the huge value of strengthening civil society as an important actor in pursuing economic reforms and implementation of regulatory policies.

With regard to competition and investment at the WTO, developing countries are in a Catch 22 situation: They feel that a multilateral agreement on these issues may tie their hands in terms of freedom in national policy making. But, at the same time the status quo is not in their favour, especially in the context of investment as many of them have signed bilateral investment treaties that have created high levels of obligation. This was the feeling that dominated the discussions at the meeting of International Working Group on Doha Agenda (IWOGDA) held on February 17 & 18 at Geneva.

IWOGDA was established to promote understanding on competition and investment issues emanating from the WTO Doha agenda embracing the views of experts from different countries of the world. The group has been created by Consumer Unity & Trust Society (CUTS), an India-based research and advocacy group, which works actively on trade, investment and competition issues at the international level. The IWOGDA project is being supported by the Ministries of Foreign Affairs of The Netherlands and Sweden and the Department for International Development, UK.

The group, through written contributions, and discussions via a virtual network and two brainstorming meetings has come out with two policy briefs, one on competition and investment each. The written contributions were mainly from developing country experts, but experts from developed countries were also involved in the consultative process. The Geneva meeting of the group was designed to have a final discussion on the policy briefs. Apart from the members of the group, the meeting was attended by civil society representatives of different countries, negotiators and policy makers.

The two policy briefs, which contain analyses of the various elements of the two potential agreements in a matrix, have been designed for easy reading for the busy policy makers. The design was highly appreciated by the discussants.

Regarding competition, the group agreed, there is a prima facie case for a multilateral approach or initiative. However, the group was not sure as to whether the core principles of the WTO will be suitable for a competition agreement or the WTO is the right place for hosting such an agreement. Thus extreme caution should be exercised before making any decisive move, including but not limited to an independent international forum outside the WTO, or one which is bereft of the single undertaking nature of the WTO.

On investment, however, there was no consensus that a liberalized foreign investment regime will usher in expanded FDI flows to developing countries. There is no conclusive evidence in this regard. In some cases, the impact of FDI in host countries has even been negative. Indeed a multilateral agreement is seen as one which will further liberalise FDI movement and bind governments from regulating them. It was of course pointed out that developing countries may have a more advantageous position in a multilateral setup due to collective bargaining power as against in a bilateral situation.

It was also felt that any investment agreement, if at all, should have provisions to check the incentive race that most developing countries are engaging in to get more FDI.

Echoing a recent paper by India, China et al, it was also suggested that there should be adequate provisions to make investors responsible and to put obligations on home countries as well.

Another suggestion was that any such agreement should be accompanied by a complementary agreement on movement of labour. Movement of labour and movement of capital are two sides of the same coin. Thus, there is no economic justification of making one of them mobile while keeping another restricted.

The general message that the group wanted to convey to the negotiators and the policy makers is that they need to tread with extreme caution. They also need to put development at the centre of discussions on these two extremely important and controversial issues.

The policy briefs prepared by IWOGDA will be further revised on the basis of discussions in the meeting. They will then be circulated among the negotiators, policy makers and other stakeholders throughout the world by end of April, 2003.

Competition Paradigm And Dilemmas Of FDI In Zambia

Zambia, 2003.02.14: Zambia requires effective national laws such as competition policy in order to ensure a level playing field for domestic and international business competitors, said Hon. Eugene Appel, the Deputy Minister for Trade and Commerce. Since Zambia was not at the same level of development as its trading partners, there is greater need for effective national regulations in order to protect domestic industry from unfair competition. He was speaking at the official launch of a study report on “enforcing competition law in Zambia” emanating from a Consumer Unity and Trust Society (CUTS) research on competition regimes in seven selected developing countries- the seven up project. The studies were carried out in India, Kenya, Pakistan, South Africa, Sri Lanka, Tanzania and Zambia.

The case study report on enforcement of competition law in Zambia focused on the assessment of the effectiveness of the law in Zambia and how this would help in engendering a competition culture in Zambia.

The meeting was attended by stakeholders ranging from civil society, government and private sector.

The meeting discussed Zambia’s Competition Commission (ZCC) with regard to its effectiveness and operations. A number of issues emanated from the discourse. The issues that arose in particular regarded decisions made by the Commission vis-à-vis the takeovers and mergers of three cases: the Coca Cola merger, Tamba Chicks Takeover and the sale of Chilanga Cement Plc to Lafarge of South Africa.

- It was suggested that ZCC be affiliated to international competition bodies, including at regional and international levels in order for it to operate more effectively in order to arrest takeovers or mergers that would be anti-competitive in the country and having a cross-border nature.

- The need for greater transparency of ZCC operations for the benefit of civil society in particular and other stakeholders in general who are/were affected by decisions of mergers, takeovers and other competition-related issues in the economy.

- ZCC was mandated to curtail Restrictive Business Practices (RBPs) such as market dominance by any business entity. However, in exceptional circumstances merger and acquisitions in which the economic and public benefits far out-weighted the anti-competitive effect, the merger or acquisition would be allowed. Such as in cases where there was a sole buyer of a business entity that required immediate disposal in order to sustain operations.

- ZCC was faced with the challenge of inculcating a competition culture in Zambia’s business sector which was largely void. This was seen as being very critical to the Zambian industry particularly in the face of the impending COMESA Customs Union in 2004.

As regards the Investment for Development Project Report for the Second National Reference Group meeting the following were the findings and recommendations that emanated from the discourse based on FDI performance in the sectors of mining, tourism and agro-processing.

It was generally agreed that in the case of Zambia the only sector that had managed to attract significant foreign direct investment (FDI) was the mining sector following the liberalisation process taking into account the fact that even before this process mining historically managed to attract substantial FDI inflows. However, the cost of production in the country was inhibiting the expansion of the sector through attraction of further investment. With regard to the tourism sector, it was believed that the development strategies seemed to lack the recognition that the sector’s ability to expand and sustainably contribute to the country’s economic growth hinged upon the proper development of linkages. That is, the development of forward and backward linked industries. And in the case of agro-processing sector, the issue of improvement on the aspect of standards was seen as vital in the further development of the sector which had great potential for growth.

Furthermore, the participants were in consensus over the fact that in the attraction of FDI, fiscal regimes were not top in priority for prospective investors. Rather, the criteria for prospective investors to choose to establish in any country depended on an entirely different criteria, with fiscal incentives coming into play after the decision had been made to do so. Rather, other factors, such as a strong local business community, good international perception of a country’s socio-economic and political environment tended to bear more weight.

Mumbai, 2003.01.27: In totality, the reforms have resulted in the economic growth though it may not be in all the sectors of the economy, said Dr Kirit Parikh, Member Prime Minister’s Economic Advisory Council, while inaugurating a workshop “Reaching out in India on Economic Issues” organized by Consumer Unity & Trust Society (CUTS) and Consumer Guidance Society of India (CGSI). He analysed categorically the importance of reform in sectors like railways, power, labour, taxation etc. He welcomed the recommendations of the Kelkar Committee and felt that tax reform will enable the government to earn more revenue.

Speaking on the International Trading System, an international trade expert, Mr Pradeep S Mehta, Secretary General, CUTS, mentioned that though WTO is an unequal Treaty it is not advisable for India to get out of it. The proper strategy would be to design the proper negotiation strategies to tackle complex issues. India has in any case, won several disputes which would not have been possible in a bilateral negotiating system. With reference to China, he opined that China can be a good ally of India at the time of negotiations on various trade issues.

Dr A K Sengupta, Director SIES Institute of Management, discussed the WTO and its impact on Financial Services. He mentioned about the commitments that India made on financial services sector. He said that the stand of India with regard to financial sectors, India’s track record is quiet impressive. He explained as to why India is negotiating for supply of services through natural persons as a preferred mode of Trade in Services against the developed countries preference for cross-border supply of a service.

“We can achieve not just 8%, but 12.3% growth, if the government can act on expanding the cake, and simultaneously cut wastage and losses”, said Pradeep S. Mehta, Secretary General, Consumer Unity & Trust Society (CUTS).

Speaking at a press conference today to discuss the Pre-budget Memo, which CUTS has submitted to the Finance Minister, Mehta said that the Government should look at curtailing wasteful expenditure as also losses incurred. The CUTS’ memo, presented in their quarterly PolicyWatch, highlights various cost cutting measures, which are not receiving a cogent response.

The wastage and losses on account of several issues are approximately 13.6% of our GDP or Rs 281,000 crores. Our GDP in absolute terms was Rs 2060 thousand crores in 2001-2002. If the economy grows at 5.5% this year, and we add the above cost saving figure, the economy will grow at 19.1% over the last year. Assuming that to be a difficult target, even if we are able to cut wastage and losses by half, it would mean a growth of 12.3%.

Mehta reiterated the need to curtail non-merit subsidies, reduce the bloated bureaucracy, increase accountability, weed out corruption and infuse civic discipline in order push the economy forward.

The Government needs to do away with a long list of subsidies in goods/services where continued support is not warranted. However, the per capita subsidies in education and health may be increased while the degree of subsidization may be lowered except for carefully identified poor segments of the population.

Talking of non-merit subsidies, Mehta stressed the need for subsidies to poor and small farmers be given in the form of direct income support so as to benefit them. Size of land holdings, he mentioned, could be used as a baseline.

Since expenditure on staff has increased to an unsustainable level, the Government should seriously consider changing the service conditions at least for new government recruitments and link job security and reward systems to performance.

Further, the CUTS memo attacks sinecures and highlights that in spite of the 10^th Plan Approach paper’s recommendation, retired civil servants and judges continue to be appointed to plum post, which breeds corruption.

Introduction of modern systems of incentives and accountability to increase efficiency and stimulate investment is required. Accountability at all stages and at all levels will ensure better project management. A recent approximation made on the loss incurred due to delays in project implementation for example, amounted to a whopping Rs 41,000 crores.

Among several other suggestions, the CUTS memo highlights the lack of discipline, civic sense and road safety as important issues, which need attention at the highest level.

India tops the developing world in both absolute number of accidents and deaths due to them, but also on a per capita basis. An estimated 1,275,000 persons are grievously injured on the road every year. The social cost of annual accidents in the country has been estimated at Rs 540,000 per person. The total social cost therefore comes to about Rs 68,850 crores.

The value of discipline cannot be overstated. However, civic discipline cannot be counted as one of our nations’ virtues. Speculating the direct and indirect loss to due to lack of civic discipline to run in several crores, Mehta wondered if an good economist had ever undertaken a proper study of this far from pleasant phenomenon.

A strong competition policy is imperative to foster growth. The new Competition Act passed during this winter session is laudable. But, the law will be a non-starter unless the new agency is provided with adequate resources and is manned by young and proficient professionals, according to Mehta.

Jaipur, 21 December 2002: “Anti-dumping is a toxic instrument of trade policy; get rid of it for once and all,” said T. N. Srinivasan of Yale University, USA. He was speaking on one of the issues discussed at the mid-term review meeting of the EU-India Network on Trade and Development (EINTAD) held at Jaipur, India on 20-21 December. He stated that although there are differences of opinion between India and EU on several WTO issues, both should work more closely for the benefit of the multilateral trading system in general and developing countries in particular.

More than 20 experts, having diverse expertise, from India and EU countries participated in this meeting organised by the CUTS Centre for International Trade, Economics & Environment, in association with the European Institute for Asian Studies, Brussels and University of Sussex at Brighton, UK. The participants also included representatives from the Trade Policy Division of the Ministry of Commerce, Government of India and the Confederation of Indian Industries.

The project has taken up five issues for research: anti-dumping, mobility of labour, textiles and clothing, investment, and competition policy. Research team on each of the issues consists of at least one researcher from an institution based in EU and an institution in India. Draft research papers were discussed.

On the issue of mobility of labour, the focus of discussion was on the export of health services from India to the UK. Rajesh Chadha of the National Council of Applied Economic Research, India presented the paper. Speaking as a discussant, Simon Evenett of the World Trade Institute, Switzerland said that return migration has immense benefits. In other words, going abroad and coming back benefits the exporting countries to a large extent. While participating in the discussion, Prof. Srinivasan highlighted the need for liberalising movement of unskilled labour, and not only that in high-skilled jobs, like information technology and medical profession.

Krista Lucenti of the World Trade Institute, A. Jayagovind of the National Law School University of India and Sharad Bhansali of the Strategic Law Group, India presented the paper on anti-dumping. The US, the EC, Australia, India and Canada were reported to be the largest users of anti-dumping measures. An interesting discussion on the solution to the anti-dumping problem brought forth mixed views. Some participants argued for the wiping out of the anti-dumping measure and suggested its replacement by an effective competition policy. Others advocated for a more rationale use of anti-dumping measures, which would call for amendments in the current WTO Agreement on Anti-dumping.

Dean Spinanger of the Institute for World Economics, Kiel, Germany presented the paper on textiles and clothing, which assessed the potential impact of the phasing out of MFA (multi-fibre arrangement) quotas as per the WTO (World Trade Organisation) Agreement on Textiles and Clothing and China’s accession to the WTO. It was agreed that the phasing out of MFA quotas would boost opportunities for greater market access for India, but China’s accession to the WTO and subsequent improvement in its comparative advantage may have an adverse impact on Indian exports. The crucial need for steps to improve the competitiveness of Indian textiles and clothing was emphasized. Many participants were of the view that phasing out of MFA quotas by 2005 could turn out to be mere rhetoric and even if they were phased out, they could be ‘reborn’ in other forms of trade barriers

According to the paper on foreign investment, presented by Manoj Pant of Jawaharlal Nehru University, India, a multilateral agreement on investment at the WTO would be of little benefit to developing countries. Discussions were focused on the pros and cons of such an agreement. It was argued that such an agreement would make no difference to the amount of foreign direct investment that would flow into developing countries. Many were of the opinion that the present situation, with a multitude of agreements at the bilateral, regional and multilateral levels, is unsatisfactory and confusing for the investors and policy-makers, resulting in high transaction costs. It was expressed that an international agreement may be useful to discipline the use of incentives, i.e. to avoid bidding wars.

T. C. A. Anant of the Delhi School of Economics presented the paper on competition policy. It tried to find common grounds between EU and India on the basis of their submissions to the WTO Working Group on Trade and Competition Policy. It was argued that there is a need to distinguish between global rules on competition and global standards on national competition law. The paper also looked into the issues of hardcore cartels and argued that these can be handled only through global initiatives, like binding instruments for cooperation between competition authorities.

This Network was launched at Brussels in May 2002. CUTS, the University of Sussex and the European Institute for Asian Studies are lead partners. Other partners include Institute of World Economy, Kiel, Germany; World Trade Institute, Switzerland; University of Zurich, Switzerland; Delhi School of Economics; Jawaharlal Nehru University, National Council of Applied Economic Research, National Law School University of India. The objectives are to:

Following this meeting, members of the Project Steering Committee endorsed the future action plan, which was discussed at the closing session. The final meeting would be held at Brussels in the first week of May 2003. Before that, road shows will be organised at New Delhi and Washington DC to reach out to policy-makers and civil society organisations with the research outputs. Research papers will be published in a volume and will be presented to trade negotiators in Geneva, trade policy-makers in national capitals and other stakeholders in the trade community before the fifth Ministerial Conference of the WTO is held in Cancun, Mexico in the second week of September 2003.

Government has made a commitment to support consumer and civil society organizations programs as they compliment its programs, said Hon. Jovino Ayumu Akaki, Minister of State for Tourism, Wildlife while opening a two day Regional Workshop on Influencing Economic Policymaking held at City Regency, Kampala. The two day workshop running from Friday 20-21 2002 was organized by Consumer Education Trust (CONSENT) and Consumer Unity and Trust Society Africa Resource Centre based in Lusaka, Zambia.

The Minister commended the organizers for the timely workshop saying it was the first of its kind in Uganda to bring together regional consumer and civil society organizations with government and business associations as stakeholders to deliberate on issues that impact on businesses and socio-economic issues that affect society.

The Honorable Minister assured participants from Kenya, Tanzania, Malawi, Seychelles, Zambia and Zimbabwe that all resolutions reached at the workshop would be incorporated in policy formulation at national, regional and international levels.

Noting that the workshop initiative and objectives would consolidate the partnership between Government, consumer and civil society advocates, Hon. Akaki pledged the Ministry of Tourism, Trade and Industry would continue involving stakeholder in national, regional and international Trade programs.

The Minister appreciated CONSENT’s efforts in consumer protection to safeguard consumers in Uganda in addressing problems of dumping, use of substandard products, addressing unfair trade practices and the promotion of consumer protection, fair trade and environment protection among other issues.

Hon. Akaki assured participants that the proposed Consumer Protection Bill would be enacted into Law and a development that would enhance consumer protection and fair trade in the country.

SINCE Africa cannot delink from the World Trade Organisation (WTO), there is need to understand WTO structures and processes, some trade experts have said.

A Lusaka-based Consumer Unity & Trust Society, Africa Resource Centre (CUTS - ARC) has called for a strict analysis and a closer look at what can be done to improve Africa's position in the global economic system.

Sajeev Nair of CUTS-Africa, says his organisation has been analysing the negotiation processes of the global Trade Agreements in the context of Africa's prospects for development.

Recently, CUTS - ARC, organised a regional workshop on "The Interface Between Trade and Regional Partnership Agreements.

These regional partnerships are based on Cotonou, Africa Growth and Opportunity Act (AGOA), the New Partnership for Africa's Development (NEPAD) and WTO. More than thirty civil society representatives, researchers, consumer activists, business community, inter governmental organisations and academics from southern and eastern Africa met in Harare-Zimbabwe for the workshop.

The workshop was organised in collaboration with MWENGO (Harare) and the Institute for Global Dialogue (South Africa).

Honouring the workshop, Ms. Bella Matambanadzo, the Executive Director of Zimbabwe Women's Resource Centre, called on delegates to review how women have been negatively affected by some of the trade agreements.

She noted that the issue of HIV/AIDS must be brought on the agenda whenever trade is the theme.

The workshop aimed at demystifying the WTO and Economic Partnership Agreements (EPAs) for the benefit of the region's citizens.

Nair says, after extensive debate and group work, it was observed that in the Cotonou agreement, for example, the European Union (EU) was the driving force and it had a clearer picture of its relationship with the ACP countries.

This was not the same for the ACP countries vis-à-vis the EU. CUTS-Africa says because of this lack of clarify among the African countries on the purpose and nature of trade and economic partnerships arrangements with EU, the former may not benefit much out of this agreement.

The Cotonou agreement proposes economic partnership arrangements between private sector firms in the EU and ACP countries. This will be achieved through implementing trade and investment policy reform in African and Caribbean and Pacific Countries.

Therefore, the Brussels negotiations contains several proposals for further opening up of African economies.

Analysts say it is ironical that some of the proposals in the EPA agenda such as trade and labour standards, policies governing investment, competition and intellectual property rights are contradictory to the positions of African countries at the WTO.

The ACP countries have taken contradictory stand on some of the trade related issues, which would influence trade negotiations in future.

At the WTO, they have refused to discuss new issues such as labour standards, trade and environment, multilateral rules on investment.

But, they have agreed to do so in the Cotonou Agreement. This is of concern that both these negotiations are going on simultaneously and that EU has much influence at the WTO", reads a resolution of the workshop : "The Interface Between Trade and Regional Partnership Agreements", spearheaded by CUTS-Africa Resource Centre.

According to the resolution, this would weaken the bargaining potential of African countries in the new round of WTO negotiations. Another major problem with the EU's EPA proposals are that they aimed at dividing the African and Least Developed Countries (LDC) groupings by region and levels of development instead of common economic interests.

As a result African countries will be forced to take divergent positions on the same issues which will give advantage to EU in negotiating with its weak economic partners.

Professor Jasper Okelo of the University of Nairobi observed that the geographical configurations required in by the Cotonou Agreement in forming EPAs are a difficult and complex issue that needs time and mobilization of political will to sort out.

There are also overlaps in terms of trade and economic groupings. For instance, Some of the ACP countries belong to Common Market for Eastern and Southern Africa (COMESA) and others to SADC while still others to both.

Within these regional arrangements apart from having within them other sets such as East African Community (EAC) and SACU have countries falling in different levels of development.

Regarding the interface between NEPAD and the WTO, the participants observed that the two were different in face value. But the reality is that there are areas of overlapping between them as both have neo-liberal visions of economic development.

The neo liberal economic ideology underlines that trade is the main engine of growth and trade and investment liberalisation will lead to development of poor countries.

The need for African countries to understand the issues and targets being highlighted by NEPAD cannot be overemphasized since there are contradictions exist within itself especially regarding resource mobilization for development.

As regards AGOA bilateral arrangement, there was a consensus among the experts that it will undermine Africa's regional economic integration efforts such as the SADC protocol. Further in terms of WTO rules, AGOA's rules of origin for instance lies in contradiction to the WTO terms.

While there are a lot of preferences under AGOA its time frame is seen to be too short for countries to develop needed infrastructure so as to maximise their benefit from the trade arrangement.

Further, AGOA did not qualify to be a partnership arrangement as there was hardly any African involvement in its preparation.

Therefore, the meeting concluded that countries in the region need to focus on developing a comprehensive national development strategy and appropriate trade policy package instead of focusing the energies on sectoral and divisive programmes such as Cotonou, AGOA and NEPAD and the like.

In this regard, advocacy and public education on what lies in these trade negotiations and agreements are crucial elements.

Unfortunately, there is hardly any discussion at the national legislature and other representative bodies on the impact these agreements to the citizens of the country.

Further, there is need to have meaningful partnership developed among the various stakeholder, the civil society, private business sector and government sector within the economy.

A one-and-half-day regional seminar on the theme “investment for development” was held on 4-5 December 2002 at Sao Paulo, Brazil. Speaking at the inaugural session Mariano Laplane of NEIT, UNCAMP said that though Brazil has a long history with foreign direct investment (FDI), the country did not view FDI as a tool of development but only as a source of finance in the last decade.

Graciela Moguillansky of ECLAC (who also represented UNCTAD at the seminar) said that FDI to Latin American countries has increased exponentially but economic growth rates have been below historical levels. This could be partially explained by the fact most FDI was in form of M&As. She said that opening up an economy to FDI is not enough, it should be seen that there are linkages of foreign companies with the domestic economy.

A multilateral investment framework (MIF) might be launched at the WTO in Cancun next year and it would not be as extensive as FTAA or NAFTA, predicted Jose Gilberto Scandiucci Filho, Third Secretary, Trade in Services and Financial Matters Office, Ministry of Foreign Affairs, Brazil. It was pointed out that investment is already being dealt with at the WTO in different forms (TRIMS, agreement on subsidies, services agreement) and it is important to learn from the experiences. It was felt that there should be a balance between duties and rights of developing and developed countries in an MIF.

The treatment of investment in FTAA was treated with greater suspicion by participants than the possibility of having a MIF at the WTO. It was felt that FTAA is a copy of NAFTA and thus will face the same problems as the latter. It was recommended that a) investment should essentially promote sustainable development b) TNCs have same duties in host and home countries c) an open and transparent system of dispute settlement should be created and, d) environmental and social standards should not be reduced in FTAA.

The aim of the seminar was to disseminate findings of the project among the civil society of Latin America. The project studies investment regimes in seven developing countries: Bangladesh, Brazil, Hungary, India, South Africa, Tanzania and Zambia. It is being implemented by Consumer Unity & Trust Society (CUTS), Jaipur, India with support from Department of International Development (DFID), UK and collaboration with UNCTAD for regional seminars. The seminar was the last of the three regional seminars. The other two were held in Africa in October and Asia in November 2002. The Latin America Regional Seminar was organized by CUTS in collaboration with NEIT-UNICAMP, UNCTAD and UNICAMP. The participants of the seminar represented Brazil, Argentina, Ecuador, Chile, Costa Rica and Canada. Gustavo Rocha of NEIT-UNICAMP presented the findings of the project in Brazil.

The participants remarked that the seminar gave them an opportunity to devise strategies and policies, especially political tools, for attracting maximum benefits out of FDI. The fiscal war between the southern states of Brazil to attract higher FDI was discussed at length. It was felt by some that FDI would have come to Brazil even without the fiscal incentives and they implied heavy cost on public finances. Some other participants however felt that the fiscal incentives helped to create a favourable environment to stimulate FDI. It was also opined that Mercosur countries should coordinate to avoid incentives bidding.

Gesner Oliviera, professor of FGV-EAESP said that there are costs involved with both over and under-regulation of FDI. It was pointed out by Fernando Porta of Centro de Estudios Sobre Ciencia Desarollo y Educcacion Superior, Argentina that the aim of regulation should not be to encourage FDI but to maximize social return.

Concerns were raised on human rights and environmental records of private investors including multinational corporations (MNCs). Roxana Salazar of Ambio Foundation, Costa Rica said that civil society organizations especially the consumer groups have a special role in enforcing corporate social responsibility.

Wherever governments have given greater role to private operators in the public services sector, it has not worked well. These failures should provoke a serious reconsideration of the efforts to privatize public services said Scott Sinclair, Canadian Centre for Policy and Strategies. He added that though it is said that North America Free Trade Agreement (NAFTA) or General Agreement on Trade in Services (GATS) do not explicitly ask governments to privatize, they are powerful tools and might lead to privatization and deregulation.

Strengthen national institutions for approaching WTO issues
Agenda Proceedings

Jaipur, 13 November, “Market failure is quite common in every country but what is worrying in developing countries is political market failure that leads to under investment in institutions responsible for regulating market failures,” said Gesner Oliveira, former president of the Brazilian competition authority. He was speaking at a brainstorming meeting under the International Working Group on Doha Agenda (IWOGDA) project held at Jaipur on November 8 and 9.

CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), Jaipur is implementing the project to discuss new issues at the WTO, especially competition policy and investment. More than 20 participants from research institutes, government agencies, civil society organizations and donors from various countries including Brazil, India, Kenya, Malaysia, Sri Lanka, South Africa, Switzerland, Tanzania, the UK and the USA were present.

The discussions revolved around the potential elements, as mentioned in the Doha ministerial declaration of the World Trade Organisation, in possible multilateral agreements on competition policy and investment. Some new elements, which are not in the declaration but may be helpful to promote development, were also discussed.

Competition policy and law are necessary to face the challenges of globalisation and open markets agreed the participants in the meeting. It was also agreed that building capacity of institutions as well as the civil society was essential to make markets work for development.

On investment, many participants were skeptical on the necessity of a multilateral agreement as there is no evidence to believe that it will bring more investment to developing countries. It was also pointed out that the existing situation is not satisfactory as most developing countries are signing bilateral investment treaties (BITs) that favour developed countries.

“The US has signed BITs with several developing countries but they were not negotiated and the other parties had to sign on a format drafted by the US,” observed Simon Evenett, Director of the World Trade Institute, Berne, Switzerland. In such a scenario, there is a possibility that developing countries may get better deal through collective bargaining if they engage in multilateral negotiations, he added.

It was also noted that the existing agreements on investment, both at bilateral and regional levels, deal only with the rights of the investors. Thus, it was suggested that any possible agreement on investment should also deal with responsibilities of the investors, as irresponsible behaviour on the part of the transnational corporations are not uncommon, especially in developing countries.

“There are costs and benefits of any international agreement, but developing countries must ensure that what they get at the end does not hamper their development efforts, and promoting understanding and building capacity on the relevant issues are the key,” observed Pradeep Mehta, Secretary General of CUTS-CITEE.

One day workshop was held on economic reforms & WTO at Hotal Maharana Mahal. The organiser of this workshop were consumer Unity & Trust society calcutta, Indian National consumers Federation, Lucknow & Oxfam India Trust.

The workshop was Inaugurated by chairman of state commission Justice Palok Basu. In the starting of workshop Ms. Mita Dutta of CUTS has said that these type of workshop should held regularly because of unawareness of consumers on such a issues On the subject of present scenario of economic reforms Dr. T.N. Dhar, (secretary Indian Institute of Public Administration) has said that economic reform would not be fruitfull unless political & social reforms get stronger.

On the issue of competition policy Dr. Sukumar Nandi of IIM, Lucknow favored it he said that it will benefit the consumers. On the subject of disinvestment Prof. J.V. Vaishampayan of Lko. University said that this issue is so critical, but it is realty that without investment progress con’t be done.

Ms. Leena of oxfam has said that export policy sould design such a way so it Could benefit the people of below poverty line. Prof .Manoj pant of JNU, new delhi Described so many aspect of economic reform. He has showed so many statical report of related issues.

Dr. B.K. Nigam of Lko. University has described so many advantages, opportunities & Challenges of W.T.O. In the last session of workshop Ex. Lt. Governor of Pondicherry T.P. Tiwari, Justice V.K. Mehrotra(Gujrat) & D. D. Bahuguna member of state commission they all favored the Gandhian economy in the present age.

At the closing ceremony of workshop Arun kumar Mishra President Indian National consumers Federation
appreciated the gesture of participants & Speakers. In this workshop three states participants (U.P., Uttaranchal & Chhattisgarh) were present. NGO’S, Media representatives and research institutions also were among of them.

“Developed countries and multilateral agencies, including the UNCTAD, the World Bank, WTO, and regional development banks like the ADB should provide technical assistance to developing countries so that the latter may enact and enforce competition laws” said Zulfi Sadeque of the Canadian High Commission, New Delhi at a seminar on ‘Competition Challenges in a Globalising Economy: Issues before India’ organized by CUTS- Centre for International Trade, Economics & Environment, Jaipur in collaboration with National Council of Applied Economic Research, New Delhi on 4^th October in New Delhi.

The seminar was organized under a project entitled the 7-Up Project, which is a comparative study of the competition regimes in seven developing countries of the Commonwealth and is being implemented by CUTS Jaipur.

The discussions revolved around the present status of the competition regime in the country and the state of play at the WTO. It was felt that the MRTP Commission is an agency with powers but without teeth. The members are typically retirees from the judiciary or government while the investigating staff is also not well versed in competition issues, thus diluting the effective implementation of the law. There is an urgent need for building capacity of the officials and other stakeholders and to spread awareness about competition law and policy.

The meeting also saw the launch of the report “Reorienting Competition law and Policy in India”. This report, prepared under the Project, examines the substantive provisions of the Indian competition law and throws light on the effectiveness or rather the ineffectiveness of its implementation.

While discussing the international perspective, Sadeque said that the WTO principles of non- discrimination, transparency and procedural fairness, complement the broad objective of competition policy. He said that the main message coming out of the meetings of the Working Group on Trade and Competition Policy so far is that despite opposition to launch negotiations from some developing countries, there is broad participation from developing countries in the debate, reflecting a growing appreciation on the development dimensions of competition policy.

In his comments, T.C.A. Anant, Member of Commerce Ministry’s Working Group on Trade and Competition Policy, said that a GATS type approach should be taken in multilateral competition policy also and developing countries should be allowed to choose their own pace towards a full- fledged competition regime.

New Delhi, 23rd September 2002: “Short articles of the book makes it easy-reading and specially the articles written from the venue of the fourth Ministerial Meeting gives it a very good flavour,” remarked Muchkund Dubey, former foreign secretary of India, while releasing a book titled “WTO and India: An Agenda for Action in the Post-Doha Scenario” written by Pradeep S. Mehta, with a foreword by Prof. Jagdish Bhagwati of Columbia University, USA.

Followed by the book release function, CUTS Centre for International Trade, Economics and Environment (CUTS-CITEE) organised a panel discussion titled “Post-Doha Scenario: The State of Play” at the conference hall of the Federation of Indian Chambers of Commerce & Industry (FICCI), New Delhi. More than 50 participants representing various stakeholder groups and ministries participated in this discussion.

“The manner in which India prepared for Doha was qualitatively different and for the first time the country did not stumble on issues,” said Muchkund Dubey, former foreign secretary of India. The agenda emerged from Doha is much larger than the Uruguay Round agenda and the extent of work we need to do, especially in areas which are important to us, is huge, he added.

Anwarul Hoda, former deputy director of the World Trade Organisation expressed that India is not approaching the new round positively. The country requires to change its attitude/outlook, should proceed rationally and participate fully in the new round. Jagdish Shettigar, a member of prime minister’s Economic Advisory Council said that India should be a part of the multilateral trading system and be effective as well. Sanjaya Baru, editor of Financial Express argued that at Doha, India delayed the process of negotiations on new issues, but it is in motion.

Pradeep Mehta, secretary general of CUTS informed the gathering of the outreach efforts of CUTS-CITEE in educating the common man on WTO issues through organising training, etc. The Centre has also started a series of monographs on WTO, written in a simple question-answer format for better communication value and wider public education on complex issues.

Civil society representatives from North and South and intergovernmental organisations at the World Summit on Sustainable Development, today launched the Jubilee 2010/2020 Campaign to dismantle trade barriers.

The Campaign draws on the success of the Jubilee 2000 campaign for debt relief to address an issue of even greater importance to developing countries: reaping the benefits of international trade. It is being orchestrated by an alliance of civil society groups from all over the world under the leadership of CUTS Centre for International Trade, Economics & Environment, based at Jaipur, India; Lusaka, Zambia, Nairobi; Kenya and London, UK.

“There is growing disillusionment with trade liberalisation in the South,” according to Dr Hafiz Pasha, Assistant Secretary General, United Nations. “These countries may retreat from liberalisation if the North maintains protection in all the areas where Southern producers are competitive,” he said. Jubilee 2010/2020 calls for dirty tariffs on labour intensive goods, especially textiles, clothing and leather goods to be dismantled by the year 2010, and dirty tariffs and subsidies on agricultural products by the year 2020.

The Uruguay Round of world trade negotiations promised benefits to developing countries which have not materialised and while many countries in the South have lowered their trade barriers, the North has not reciprocated in the important areas. Even the European Union’s Everything But Arms initiative to offer zero tariffs to Least Developed Countries excludes key agricultural products.

Malcolm Damon, Director, Economic Justice Network, Christian Councils in Southern Africa, emphasised the moral imperative to bring down protection in these markets. “The Jubilee 2000 Campaign was based on the conviction that people should have the freedom to start anew in shaping their own lives and development. Jubilee 2010/2020 carries forward these same aims,” he said. Global welfare and global equality must be defended by global civil society as governments only pursue national and sectional interests.

“Protectionism is one of the global problems that has actually grown worse in the last decade”, said Ricardo Melendez, Executive Director of the International Centre for Trade and Sustainable Development in Geneva. “Subsidies on agriculture in the OECD countries are now six times as much as overseas development aid flows, which means a huge flow of resources from South to North, further exacerbating inequalities between countries”.

CUTS Secretary General, Pradeep S Mehta, said that there are problems of high tariffs and supply side capacity in developing countries, but the rich country protectionism only exacerbates the problem of market access for the poor countries.

“We also need to empower people to participate in trade policy making in both the rich and the poor countries, so that people can bring pressure on their governments to be fair in the conduct of their trade policies”, said Mehta.

Civil society in the North also needs to be mobilised against the damaging policies maintained by their governments. Paul Barbour, from the UK’s Department for International Development, Southern Africa office in Pretoria, speaking in a personal capacity, said it is an excellent campaign.

Barbour emphasised that Northern consumers would benefit hugely from the reform of agricultural policies and should counter the special interest groups that are holding back change. The impact of this is a whopping US$102.6bn per annum.

WTO external relations department’s counsellor, Bernie Kuiten, also in personal capacity, felt that it is an important campaign, but the time line is too long, i.e. 2010 and 2020. It was suggested that one can break it down so that people can relate to the idea of a long drawn campaign. “It maybe possible to organise a dialogue on this issue at Geneva with trade delegates, which will be extremely useful”, suggested Kuiten.

Several Southern and Northern NGOs participated actively in the launch event, with indications to support the Campaign: Consumer Rights Commission of Pakistan; Integrated Strategies Forum, USA; SAWTEE, Nepal; ANPED and SOMO, The Netherlands; MWENGO, Zimbabwe; and FIELD, UK.

International trade issues are complex, and developing countries face non-tariff barriers such as sanitary and technical standards as well as severe supply side constraints. However, participants agreed that the focused approach of the campaign on the single issue of tariffs would make it more effective. Reducing tariffs is an important first step on the road to justice in the international trading system.

A statement for the Jubilee 2010/2020 Campaign is being circulated and organisations from all over the world are invited to participate in the Campaign. Already over 50 groups and networks have supported the Campaign, which is expected to increase over time. It is available at www.petitiononline.com and at www.cuts-international.org.

“Because of the faulty approach to regulation, the regulatory authorities of the country have become ineffective. The regulatory bodies are dominated by the former bureaucrats who suffer from the legacy of erstwhile command and control regime and hinder promotion of competition and consumer welfare," observed T H Chowdary, the founder Chairman & Managing Director of VSNL and presently IT Advisor to the Government of Andhra Pradesh.

Chowdary was speaking at a national level seminar on ‘Competition, Regulation & Investment: Role in Economic Growth’ at Chennai on 8-9 June, 2002. He also pointed out that the predominant source of information for the regulators, paradoxically, are those who are regulated and the consumers are given the least importance.

The seminar, second in a series, was organised by Consumer Unity & Trust Society - Centre for International Trade, Economics & Environment (CUTS-CITEE), Jaipur, in collaboration with the National Council of Applied Economic Research (NCAER), New Delhi. The first seminar in the series was organised on 11-12^th January, 2002, at Jaipur. The seminar series is a part of the two major multi-country studies on competition and investment taken up by CUTS-CITEE with support from DFID, UK. Similar activities are going on in select developing and transition countries from different parts of the world.

The seminar series is aimed at generating and enhancing understanding on competition and regulatory issues and their interface with investment. The Chennai event, like the earlier one, is being attended not only by the experts in the field but also by representatives of different stakeholder groups, including government departments, regulatory authorities, academia, media, and consumer and other civil society organizations from all over India.

The predominant view at the seminar was that a proper regulatory framework needs to be established to make the ongoing process of economic reforms, especially the privatisation drive, successful in the country. It was also pointed out that an uncertain and poorly managed regulatory environment is likely to thwart our efforts to attract foreign capital, if it is not already doing so.

On its first day, the seminar focused on competition concerns in general and the new Competition Bill of India, consumer concerns in the de-regulated sector etc. It came out very clearly that although the proposed Competition Bill is a lot of improvement over the existing Monopolies and Restrictive Trade Practices Act, there is some scope for further improvement.

“The proper implementation of the forthcoming new law will be a big challenge and the government needs to take it seriously,” commented Prof. T C A Anant of Delhi School of Economics.

It was emphasized that, the Monopolies and Restrictive Trade Practices Commission has been always saddled with mediocre (and sometimes crazy) judges and bureaucrats, thereby it has not been able to establish a good competition culture in the country. It is therefore on strong reason that business is opposing the law, for they are worried that it will throw up another super-cop.

Setting up of the new Competition Commission under the new law would therefore give us a golden opportunity to change the approach and bring a good competition culture and we must not miss this chance, felt the participants.

“People are however, keeping their fingers crossed that the competition authority visualised under the new bill will also be another haven for more of the same, especially because the retirement age of the Chairman has been kept at 70 years,” observed Pradeep S Mehta, Secretary General of CUTS.

On the second day the seminar looked at the interface between investment and regulatory reforms, policy performance and perceptions on FDI (Foreign Direct Investment) in India, determinants of FDI as well as the gap between approved and actual flows. It came out that the general perception about the desirability of FDI is quite positive. It was also pointed out that making the so-called distinction between ‘silicon chips’ and ‘potato chips’ while talking about FDI is rather naïve.

If we need technology only, then it may be fine. But if we need more exports and employment, the export potential is likely to be higher in the ‘potato chips’ industries and similarly they are likely to be more employment-oriented. “Thus we need to define our objectives clearly and set priorities and strategies to see that we get it in our own terms and it actually benefits the country,” observed Manoj Pant, Professor at Jawaharlal Nehru University.

Towards the end, Prof. P V Indiresan, former Director of the IIT Madras, in a refreshing talk, brought to notice some of the deadly diseases afflicting our system. Lack of long-term planning is one of them.

“We fail to understand that building an airport bigger than what is required now may seem to silly but it saves money in the long-run apart from preventing major dislocations in the future. We must learn from China in this regard where all infrastructural facilities are in surplus, whereas in India, there is shortage everywhere” said Indiresan.

He also emphasised that it is absolutely essential to reform our judicial system, which is the culprit behind promoting and maintaining a corrupt system. Even if we accept that judiciary itself is not corrupt, it has spoiled the system by delaying everything.

In his concluding observation during the seminar, S Sundar, an eminent expert and Distinguished Fellow at the Tata Energy Research Institute said, “Issues like WTO has come to reinforce our concerns on regulations. But unless public opinion is generated on regulatory reforms, change is difficult to achieve. Civil society has a major role to play in this regard”

Brussels, 22 May 2002: EU Trade Commissioner, Pascal Lamy, emphasised the increasingly important role of non-governmental organisations in global governance at a meeting in Brussels on 21 May organised by the India-based organisation Consumer Unity & Trust Society (CUTS) in association with the European Institute of Asian Studies, Brussels. The meeting launched the new EU-India Network on Trade and Development, which brings together leading institutions from the two regions.

He praised the effort to initiate an independent network that would provide extremely useful inputs to the policy debate. Initially this network would address five topics of particular relevance for India and the European Union: mobility of labour, anti-dumping, textiles and clothing, investment, and competition. Tackling such issues, especially contentious issues like investment and competition takes “real political courage,” Lamy said.

Politics inevitably has an important influence on trade policy, and the two cannot be disconnected, he said, replying to one of the queries by a representative of the Indian government on EU’s preferential treatment to Pakistan for textiles and clothing in the wake of September 11. India has expressed concern about the impact of this on its garment export industry.

Opening the session, Pradeep S Mehta, Secretary General of CUTS, who is leading the network in India, stressed the need for coherent and cogent research on topics which are the cause of heated debates both inside and outside the World Trade Organisation. The network will encourage continued collaboration between the Indian and European research communities, which have sometimes found themselves at odds in the past.

Professor Alan Winters, noted trade economist from the University of Sussex, UK, the lead European institution for the network, pointed out the growing importance of academics and civil society in shaping trade policy. Winters explained that the research areas covered long-running challenges as well as newer issues brought to the fore by the WTO Doha Ministerial Declaration through which developed and developing countries both have potential to benefit.

The workshop, which took place over two days, attracted leading academics, journalists, civil society representatives and government officials. Among the notable participants were T. N. Srinivasan of Yale University, Suman Bery of National Council of Applied Economic Research, New Delhi, and Pierre Defraigne, Trade Directorate, European Commission.

Researchers will now develop detailed proposals on each of the five issues. They will submit their findings to policy makers in the run up to the next WTO Ministerial meeting due to be held in September 2003 in Mexico where it should make a valuable original contribution to the negotiations.For event report please click here.

Trade measures to raise labour standards may end up hurting people

Brussels, 21 May 2002: “Labour standards in trade agreements could be fine for the people covered by them, but disastrous for those who are not,” cautioned Alan Winters, the noted trade economist from Sussex University at a meeting held in Brussels on 21 May. Participants at the meeting, “Linkages: How do we bridge the gap?” discussed the issues surrounding trade and labour standards as they affect developed and developing countries.

Some believe that the issue has dropped out of the trade debate because no mention was made of labour standards in the Doha Declaration of the members of the World Trade Organisation. However, although it is not part of the negotiating agenda at the WTO, it is still being pursued by the EU and the US in their preferential trading arrangements and bilateral treaties with developing countries, Winters pointed out, and developing countries need to beware of this.

P. Kamalam, representing the International Confederation of Free Trade Unions, noted the negative impact that globalisation has had on some vulnerable communities in the world and argued that including labour in the WTO would help to balance the power of business lobbies.

However, T. N. Srinivasan, the eminent trade economist from Yale University, said that using trade measures to force countries to raise labour standards may end up hurting the people that they are designed to help. The problem is further complicated by the fact that labour standards are lower in sectors that are not traded. Srinivasan said that policy-makers and activists should constantly keep in mind the goal of reducing poverty when they are making recommendations so that policies do not backfire.

Pradeep S. Mehta, Secretary General of CUTS, which organised the event, drew attention to the inequities in the global trading system and in the functioning of the WTO, but emphasised that broadening the scope of the WTO even further risked exacerbating the problems rather than alleviating them.

Participants at the seminar included non-governmental organisations, academics, media and other representatives of civil society as well as government officials from Europe, India and other countries.

The seminar was organised by the Consumer Unity & Trust Society, an advocacy and research organisation based in Jaipur, India with the support of the European Institute of Asian Studies, Brussels. The meeting was one event in the CUTS Linkages Project aiming to stimulate an objective and informed debate on the links between trade and labour.

Lusaka, 28^th March 2002. The poor countries need to critically look at the decisions emerged out of the Doha Ministerial Conference of the World Trade Organisation (WTO) and compare them against the human, institutional and resource capacities of their economies. “We must assess whether we have the capacity to benefit from and not simply to implement new obligation which we may commit ourselves at the imminent new round of trade negotiations,” said Sindiso Ngwenya, Assistant Secretary General of Common Market for Southern and Eastern Africa (COMESA). He was speaking at a regional seminar organised by Lusaka-based Consumer Unity & Trust Society-Africa Resource Centre (CUTS-ARC) at Mulungushi Village Complex, in the Zambian capital.

Mr. Ngwenya urged the stake holders of the new trade talks to devote sufficient time to analyse the critical issues involved in the WTO processes and cautioned against agreeing to advance the 5^th WTO Ministerial from its schedule time in end 2003 to any early date as it gives only very little time for the poor countries to prepare for the negotiations. He was commenting on the sluggish preparation for the new round by the poor countries, as some countries in Africa have not even made an assessment of the decisions taken at Doha. The next Ministerial Conference of the WTO is expected to take place in Mexico.

During the run up to the Doha Ministerial Zambia worked with other least developed countries (LDCs) in their effort to get meaningful market access of their products in the rich country markets. In its effort to involve stakeholders at the national level, Ministry of Commerce and Industy took deliberate attempts to involve civil society groups in the Doha delegation, said Dr. M. Lewanika, Permanent Secretary at the Ministry. In this context, he suggested that the outcome of the seminar should be fruitful and beneficial not only to enrich the national agenda but also the regional and African agenda.

Participants drawn from civil society, government and intergovernmental organisations of South Africa, Zimbabwe, Mozambique, Kenya, Uganda, India, Zambia and the Netherlands attended this two-day seminar held during 25^th and 26^th March 2002. It looked at ways and means that could help poor developing countries to emerge with meaningful result on market access during the forthcoming trade negotiations.

According to CUTS–ARC, the seminar is part of its effort to enable the stakeholders to review the outcomes of the Doha Ministerial Meeting of the WTO and promoting south-south co-operation in global trade negotiations. Many poor countries and civil society organisations emerged out of the Doha meeting lamented that the rich countries not only sidelined issues that affect their economic development but also brought in New Issues such as environment that might adversely affect their trade prospects in the rich country markets.

The seminar concluded with the adoption of a set of recommendations for further research and advocacy work in certain critical areas. One notable recommendation was that “country representatives should be held accountable for decisions they take during international negotiations that affect the people”. Further, the negotiators of poor countries should be equipped to participate meaningfully in the various parleys taking place at the WTO, especially on issues crucial for economic development.

In a move aimed at bringing WTO issues while mainstreaming national plans for economic development and poverty reduction, the seminar recommended that policy makers, particularly members of parliaments in the poor countries should be targeted for awareness campaigns and capacity building on the WTO processes. Regarding the WTO processes, the general assessment of the meeting was that the positions of poor countries have been weak in the past, because they were divided and ill-prepared for the talks.

If developing countries make a concerted effort, then they can achieve their objectives at the World Trade Organisation (WTO), Muchkund Dubey former Foreign Secretary, said at the seminar “WTO and South Asia: Lessons and Strategies” held in New Delhi on 9^th & 10^th March.

S N Menon, Additional Secretary, Ministry of Commerce, said that Doha Ministerial Meeting of the WTO, held in November 2001, proved that developing countries now have to be listened to if they take a common stand and much had been achieved in comparison with previous meetings on important issues like TRIPS (Trade Related Intellectual Property Rights) and agriculture.

South Asian countries have many common interests in the international trade regime and can make progress if they work together, delegates at the seminar agreed. Mr Dubey suggested that regional cooperation could be enhanced by forming working groups on issues at the regional level.

Saman Kelegama, Head of the Institute of Policy Studies, Sri Lanka, said that the approach of South Asia had been reactive in the Uruguay Round of negotiations but in Seattle and Doha, South Asian countries had developed a common statement. However, this had not been reflected in the course of the meetings.

Speaking in the Inaugural Session, Pradeep S Mehta, Secretary General, CUTS, said that the Doha Declaration had generated a huge work programme. Most developing countries do not yet have the capacity to develop their negotiation positions and require technical assistance and capacity-building to do so.

On the Singapore issues, which include competition and investment, developing countries have to prepare themselves for negotiations. “The clock is ticking,” Mr Menon said, and research and analysis was required urgently for the governments to prepare their positions. According to Mr Dubey, the key issues in the agreements have already been outlined in the Declaration and discussions on the details have begun in the working groups of the WTO.

HAC Prasad, Economic Adviser, Ministry of Commerce, pointed to the missing link between international and domestic policies. Governments have to make domestic legislation consistent with globalisation. In the Closing Session, delegates noted that the development agenda has to be pursued at the national level as well as at the international level. Sharad Joshi, Chief of the Shetkari Sangathan and Chairman of the Taskforce on Agriculture, Government of India pointed out that a single market in agriculture needs to be created at the national level in India before cross-border liberalisation can take place.

Delegates at the seminar agreed that coalition-building between South Asian nations are the need of the hour. The seminar brought together experts working in the South Asian region and included representatives from international organisations, governments, business representatives and civil society groups.

The seminar was organised by the Centre for International Trade, Economics and Environment of CUTS (Consumer, Unity & Trust Society), a Jaipur-based research and advocacy organisation. The event was supported by the International Development Research Centre, Canada.

Consumer groups have welcomed the new Competition Bill but have suggested further fine-tuning, in submissions made before the Parliamentary Committee to which the Bill has been referred.

The existing MRTP Act cannot deliver justice to the country's consumers, is the message conveyed to the Committee, which is headed by Pranab Mukherjee.

A coalition of consumer groups in association with Consumer Unity & Trust Society (CUTS) maintain that inadequate coverage has been given in the Bill to Intellectual Property Rights (IPRs). A good competition law today cannot afford to be silent on IPRs, which are used as market strategy in modern knowledge-based economies. Licensing arrangements that restrict 'parallel imports' for instance, can be extremely injurious to competition. Similarly, the provision in TRIPS (Trade Related Intellectual Property Rights of the World Trade Organisation) for 'compulsory licensing', can be quite useful in correcting anti-competitive practices. CUTS has proposed a whole separate chapter on Intellectual Property Rights in the new Competition Bill.

The consumer groups' coalition comprises Consumers' Forum (CF) New Delhi, Federation of Consumer Organisations (FEDCOT) Tamil Nadu, Consumer Education & research Centre (CERC) Ahmedabad, Consumer Unity & Trust Society (CUTS) Jaipur among others.

Glaring escape hatches have been left open for the perpetuators of hard-core cartels, in that the prosecution must prove that the offending trade practice (such as price-fixing) has actually injured market competition. In such serious misdemeanor, proving purpose and intent ought to be enough to take cognizance.

Moreover, some cartels may in fact be in the better interest of the consumer, while hard-core cartels are really damaging to consumer interest. In other countries there is clear recognition of the various kinds of cartels that may exist in the market place, and the differential treatment meted out to the perpetuators. The Indian Bill under consideration, however, largely paints all conducts with the same brush. Hence, the prescribed fines may be too harsh a punishment for certain cases of abuse of dominance and vertical agreements, while may be less than required deterrent for hard-core cartels.

Another surprising omission in the Bill pointed out by consumer groups is the lack of protection for the whistleblower, or a leniency programme for the colluding firm turned approver. A stick and carrot policy of heavy fines and punishments coupled with the promise of amnesty for the whistleblower has proven effective in uncovering and prosecuting cartels in many countries including the US and in the European Union.

In a rare matching of views between consumer groups and business lobbies, both feel that the given criteria of eligibility and age-limit for membership of the Competition Commission could easily make it into another sinecure for retiring and retired judges and bureaucrats. This must not be allowed.

The proposed multilateral competition policy is about enabling cooperation at the international level, and not imposing an international competition law.

Frederic Jenny, chairman of the WTO working group on trade and competition law, made this point at a panel discussion on “Trade and Competition Policy” organised by Consumers International and CUTS Centre for International Trade, Economics & Environment here on the sidelines of the 4th WTO Ministerial Conference.

“The purpose of this meeting is to explore how we can move forward in ensuring that consumers are adequately protected from anti-competitive practices by business in a globalising economy,” said Pradeep S. Mehta, Secretary General of CUTS. “In 1995 only about 50 countries had a competition law, and due to the discussions at the WTO, which resulted in an increased profile, today over 100 countries have a competition law.”

Julian Edwards, Director General of Consumers International, in his welcome address noted that an effective competition policy and law enhances consumer welfare, and that CI members are actively engaged in pursuing the same. CI is currently involved in a multi-country research project which is examining issues under the agreements on agriculture and services, and on competition policy in 16 countries through member organisations. He said that the preliminary results of the research are very enlightening.

Jenny went on to say that no one is suggesting that there should be one uniform style of competition law. One size doesn’t fit all and countries need to design their own law according to their needs, culture and size of the economy. As regards the issue of a multilateral competition policy, he felt that due to its rules-based approach the WTO is the best place to situate it. UNCTAD cannot be a host because it doesn’t have any negotiating mandate or teeth to enforce any future agreement.

George Kiriazis of the European Commission was the third speaker, who kicked off discussions with the classic statement: “With increasing trade liberalization, competition abuses are also growing. The negative effects need to be checked through a good competition law.”

As regards the issue of a multilateral competition policy (MCP), the WTO already has references to competition policy in several agreements such as TRIMs, services and TRIPs so it cannot be considered to be a new issue. All these need to be given strength and we seek their convergence for the purpose of coherence, Kiriazis added.

“Under the proposed MCP, countries will be able to deal with cross border issues through cooperation mechanisms. If the Doha meeting doesn’t agree to having negotiations on an MCP, the EU will go ahead with bilateral and pluritaleral agreements. For example, the Cotonou Agreement with 73 ACP countries already has a provision on competition policy, and we will launch negotiations there”, asserted Kiriazis. “Technical assistance and capacity building will be an integral part of any MCP.”

“At any level, a country requires a competition law, as I have seen in my own country: Slovenia,” said Breda Kutin, head of the Slovene Consumers Association. “We are a transition economy with only 2mn population and also a candidate for membership of the EU. For that reason, Slovenian economy is already open and liberal, and we are already witnessing many restrictive business practices which cost consumers. Therefore, we need effective implementation of our competition law and closer cooperation with other countries.”

In a lively interactive session which followed the preliminary remarks, some participants questioned the necessity of having an international competition policy. Jenny and Mehta drew attention to the international cartels which have a deleterious effect on developing countries and their consumers, and can only be properly tackled through an MCP.

Quoting from the latest World Development Report, Jenny pointed out that developing countries have experienced the effects of cartels in vitamins, electrical equipment, graphite electrodes etc. However, no action has been taken.

Mehta added that in the case of the recent vitamins cartel, action was taken in the USA, Canada and Australia, as result of which over a billion dollar fine was levied on three European manufacturers and six Japanese manufacturers. Even a developing country like Brazil has taken action by getting cooperation from the US Justice Department, but India, where all three companies are operating, has not taken any action.

James Musonda of the COMESA (Common Market for Eastern and Southern Africa) Secretariat noted that cross border mergers and acquisitions are taking place across the region, potentially threatening competition. “The issue of cooperation between different competition authorities is becoming more necessary than ever before, and therefore too an MCP is desirable.”

In response to a question on the link between competition policy and corruption, Jenny pointed out the benefits of a transparent and predictable system on checking abuses. For example, in collusive tendering, where corruption is inherent, an action under competition law has often deterred corruption.

Participants as a whole recognised the potential benefits, but wondered whether WTO is the best place to locate it. It was pointed out that developing countries are not favour of an MCP at the WTO because of several problems there that are not directly related to the outline of the agreement: the inherent inequities in the system; an overloaded agenda and lack of capacity; and how can cooperation be ensured, when it will be voluntary.

The attempt to re-introduce core labour standards in the WTO negotiations was widely condemned by a number of NGOs--from Africa and Asia--who are in Doha for the 4^th ministerial conference of WTO.

In a statement released here today a coalition of NGOs from Africa and Asia stated: “Introduction of core labour standards in WTO agenda would once again sabotage the success of the ministerial, as it happened at Seattle. We are not surprised at all. The European Union and other supporting countries are foisting an agenda with the clear intention of annoying the poor countries.” It was issued by Sustainable Development Policy Institute, the Network for Consumer Protection and Noor of Pakistan, CUTS Centre for International Trade, Economics & Environment of India and Zambia, South Asia Watch on Trade, Economics & Environment of Nepal, Bangladesh Environmental Lawyers Association, Zambia Association for Research and Development, Uganda Consumer Protection Association, and Consumer Information Network, Kenya.

Poverty is the major problem in our countries. There are millions of families in Africa and Asia who are depending on the income that their children generate. In Bangladesh they tried to stop child labour and the result was that the working children turned into street beggars and prostitutes.

“Why do they think that one size can fit all? Their issues are entirely different from our issues. I appreciate that they take care of their citizens and try to improve the working conditions in their countries. In most of the cases their social security system is strong enough to protect the livelihood of a family if a person leave the job. However, in our case it is entirely opposite. It is not the matter of choosing the best work conditions. It is the matter of subsistence and livelihood,” said the representative of the Bangladesh Environmental Lawyers Association.

In a country like Nepal, India, or Pakistan where 40 to 50 percent people live below poverty line the main problem is finding a job. If the rich countries are really that sincere in improving the work conditions then their first priority should be to eradicate the poverty not by loans but by better terms of trade etc.

The proponents of the revised effort: EU, New Zealand, Canada etc are not sincere in improving the condition of labour. They just need another excuse to block the entry of developing countries into their markets. The idea of labour standards is too premature to be considered in the new round of issues. The WTO should give top priority to other main issues, such as implementation of the Uruguay Round commitments, better terms of trade, TRIPs and concerns of the poor.

The statement asserted that: “Core labour standards are very important. However, the WTO is not the right forum to deal with the issue. The Dispute Settlement Undertaking of the WTO would penalise countries deemed to operate below the agreed standards. This approach would make the situation worse, especially the least developed countries would suffer the more because the penalty from the WTO will be punitive whereas the International Labour Organisation will try to assist the country reach to an acceptable labour standards.”

Responding to the statement of ICFTU (International Confederation of Free Trade Unions) that introduction of core labour standards would put an end to the WTO’s isolationism from the other bodies of the United Nations, and most notably the ILO, the statement noted: “EU and Canada are hypocrites and have double standards. We are advocating that patenting of life forms under TRIPs should be made compatible with Convention of Biological Diversity. On the issue of patents of medicine we are demanding that the World Health Organisation should decide when the situation arises in a country to give her exemption from TRIPs. Similarly we are trying hard that FAO should decide when a country’s food security is under threat to give her exemptions from tariff reduction, but the developed countries do not pay any heed and now when their own interest is involved they are supporting the proposal of core labour standards. It is simply unethical and we reject it categorically.”

Capacity building of consumers in the rich countries is essential to enable development of pragmatic standards, which will enable improved market access for producers in the poor countries.

This was one of the key recommendations, which emerged at a panel discussion on “Standards and Market Access” organized by the CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE), India and Zambia; the Sustainable Development Policy Institute (SDPI), Pakistan and the South Asia Watch on Trade, Economics & Environment (SAWTEE) on the sidelines of the 4^th Ministerial Conference of the WTO.

It is often consumers in the rich world who demand quality, which is more stringent than what is normally available, without any substantial safety gains. They need to be educated about the problems which producers in the developing world face, so that the demands are practical and not utopian.

Standards are a tool to gain or block market access in the present international trading system but unfortunately their sole use seems to be to block exports from developing and the least developed countries to the rich world, was the common refrain from the delegates at the meeting.

The meeting was attended by trade officials and representatives of civil society from Uganda, Zambia, Kenya, Zimbabwe, Nigeria, Egypt, India, Pakistan, Nepal, Sri Lanka, Belgium, Austria, Switzerland, The Netherlands, USA, and United Kingdom. Representatives of Consumers International, Oxfam International and IFOAM were also participating.

“Market access is a vast issue and in fact the whole of the WTO is about better market access, but rules, such as Sanitary and Phyto-sanitary Measures (SPS) and Technical Barriers to Trade (TBT) prevent easy entry and are creating problems for the poor countries,” said Mr. Pradeep S. Mehta of CUTS in his opening remarks. “These rules need to be interpreted in a fair and equitable manner otherwise the benefits of trade liberalization will not accrue to the poor countries, thus creating a further backlash against the multilateral trading system.”

Furthermore, certification, testing, and accreditation are major trade barriers for Southern exports and the developed world imposes its standards on developing nations, which are often inappropriate to conditions in the developing world and pose a threat to traditional knowledge, indigenous practices and local customs.

“We ought to leave it up to the discretion of the consumers in the developed world what they want to consume and should not frighten them with false alarms or create a false sense of insecurity,” said Alexander Daniel of IFOAM.

The meeting also noted that the whole issue of standards is in fact being misused to play the dirty game of power politics and the powerful ones are exploiting the powerless nations of the South. Konrad von Moltke, Adviser to the WTO Director General, said that he was surprised to see how negotiators are arguing at the meeting without having any clear goals. “Coming from an environment background, I find a huge difference between trade negotiations and environmental negotiations, which have a clear purpose. Here, people are speaking with each other, without one understanding the other,” said Moltke. “This reflects even in the issue of standards and trade.”

It is simply not possible to have a universally accepted standard or set of standards as ONE SIZE CAN’T FIT ALL. “The developing world should have autonomy to decide whether their products are safe for consumption and the whole business of certification should be made much simpler and easier,” said Henry Kimera, an Ugandan delegate.

“It was wrong to state that the dispute around standards is only between the rich and poor. For example one of the biggest disputes—on the beef hormone case—is between the US and EU,” said Julian Edwards, Director General of Consumers International. “The dispute has its origin in the EU invoking the precautionary principle provision in the SPS Agreement, an issue which needs further study and development. This should not become another trade barrier for the South.”

“Developed nations should look at the ‘end product’ and not on the processing method if they are really sincere in implementing some standards. They ought to understand the culture of the developing world”, said Dr. Abid Suleri of SDPI in summarising the lively discussions. “Standards should not become an end but a means to achieve sustainable development.”

Instead of doing capacity building in the South, they should educate and do the capacity building of their own consumers (who are more sensible than the trade giants) that everything in South is not ‘unhygienic’ and ‘harmful’. This would lead to equitable development as well as to the broader goal of integrating developing countries under the globalisation era.

In proposing the vote of thanks, Dr. Ramesh Arya of SAWTEE stated that their network is engaged in a two-pronged programme: building capacity of testing and other institutions in South Asia, so that producers can cope with standards set in the north, and engaging in political discussions of this nature so that process of standards-setting is more fair, transparent and equitable.

Consumer Unity & Trust Society (CUTS), a leading international NGO working on trade policy issues, will be represented by its Secretary General: Pradeep S Mehta at the WTO Ministerial Conference at Doha from 9-13 November.

In a press release issued today, CUTS said that Mehta will also be participating in the several NGO events to be organised on the sidelines of the main event, and will be writing for the Financial Express on a daily basis.

Commenting on the constitution of the official delegation, CUTS has severely criticized the Government of India for having ignored their repeated request of being nominated on the official delegation to Doha, and taken other non-officials such as business representatives from chambers of commerce.

"The government thinks that wisdom only resides in the bureaucracy, and that a little more can be found in business representatives, who are willing to kow tow with the government is strident position so that they can continue with their protectionist agendae", said the CUTS press release.

"As consumer representatives, CUTS is a lobbyist for the whole economy". Mehta serves on the Government of India's Advisory Committee on International Trade, and has been actively participating in its deliberations over the last several years. Not only that but Mehta has participated in all the WTO ministerial meetings ever since Marrakesh, and is considered an authority on international trade policy issues.

CUTS states that serving on the Government's trade advisory committee is a sufficient proof of its claim for being nominated on the official delegation. Besides this, it is increasingly a pattern where civil society representatives are taken on government delegations in both developed and developing countries to WTO ministerials.

Mehta is also an UNCTAD expert on trade, investment and competition policy issues and has been consulted widely by several governments including India. He also writes frequently for business papers in India and abroad.

The CUTS Centre for International Trade, Economics & Environment is the specialised body of CUTS dealing in WTO matters, whose advisory committee is chaired by the renowned economist: Professor Jagdish Bhagwati.

For the Government of India to have ignored the CUTS claim the second time is a poor reflection on the part of a country, which is the largest democracy in the world. At the earlier ministerial at Seattle, the government had done a similar act.