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!