Competition Policy and Law: not a luxury but a necessity for developing countries

Dhaka, September 23, 2004, Press Release

23 September 2004, Dhaka: “Bangladesh government is committed to promoting effective and well-functioning market”, stated Altaf Hossain Chowdhury, the Minister of Commerce of Bangladesh. He was speaking at the regional launch meeting of a project on “Advocacy and Capacity Building on Competition Policy and Law in Asia”, codenamed as 7Up2, held at Dhaka on 22-23 September, 2004. The meeting was organised by Bangladesh Enterprise Institute (BEI) in partnership with CUTS International, India, which is also the lead partner of the project that covers five other countries: Cambodia, India, Lao PDR, Nepal, and Vietnam. The minister expressed his hope that the project will bring out significant learnings, which will help Bangladesh in shaping its policies on market regulation.

Earlier in the day, Mr. Farooq Shobhan of BEI highlighted the need of competition policy and law especially in the era of globalisation and liberalisation as the country is engaged in market-oriented reforms. “Markets cannot take care of everything and the government needs to ensure that appropriate regulatory frameworks are in place so that market failures do not thwarts the efforts of the government to ensure better standards of living for the people”, reasoned Sobhan.

Speaking on the occasion, Pradeep S Mehta of CUTS argued, “a competition policy and law is not the luxury of the developing world but a necessary governance instrument for all countries. It is true that as of now it is found mainly in developing countries but countries like the US, Canada and Australia adopted a competition law more than hundred years back when they were at a stage of development where developing countries find themselves today”. He also provided a brief account of the developments that have taken place on the competition policy and law front around the world.

Frank Matseart of the Department for International Development (DFID) Bangladesh expressed the commitment of DFID in promoting competition policy and law as a component of their private sector development strategy, which has important bearing on growth and poverty reduction in developing countries. He also noted that the achievements of the 7-Up1 project also implemented by CUTS in seven developing countries with support from DFID. He expressed the hope that the present project will be equally successful if not more.

Atiur Rahman, a reputed economist of Bangladesh noted that there is feeling in several countries including Bangladesh that in the aftermath of competition policy being dropped from the WTO Doha Round Agenda, the issue has become dead. However, he cautioned, “developing countries need a competition law for their own benefits irrespective of whatever happens at the WTO”.

The meeting also noted that several anticompetitive practices are taking place everyday that originate from outside a country or affect a number of countries or even the entire world. It was felt that there is an urgent need to adopt some multilateral framework to take care of these practices. However, it was also felt the proposals made at the WTO may not be appropriate. Not only because the WTO is not the most appropriate forum but also because under the proposals most cross-border anti-competitive practices that affect developing countries more will remain unaddressed. It was suggested that a new forum entirely dedicated to competition issues under the auspices of the UN could be considered.

It was also mentioned that there are regional dimensions of the issue as well. In South Asia, India being a very large country and countries like Nepal, Bhutan and Bangladesh having significant trade linkages, anti-competitive practices organised in India also affect the other countries. It happens in the reverse direction as well but at a lower scale. It was suggested that as the SAARC countries integrate more and more, a regional competition framework can be evolved. Some participants also opined that India which has relatively better regulatory arrangements should address the concerns of neighbouring countries and give access to them in its relevant forums.

Experiences from countries like India, Pakistan, Sri Lanka, Nepal, Cambodia, Lao PDR and Vietnam were shared in the meeting. It came out that the three countries: India, Pakistan and Sri Lanka have reasonably long experience with competition law, however, not very encouraging. Problems have been there with the design of the law and more so with its implementation which was not taken seriously by the policy makers. Countries like Bangladesh and Nepal have a different story as anti-competitive practices thrive without any threat of law. The three countries of Mekong region are no better where the markets are still dominated by state-owned enterprises.

The participants in the meeting also discussed about promoting a healthy competition regime in the project countries and the strategies and actions required to achieve this objective. It was highlighted that an appropriate competition policy and law would help everybody in the economy including the business. It needs to be emphasised that a competition regime is to create an enabling environment in which business thrives and grows though there are often apprehensions to the contrary. It is absolutely essential to involve all stakeholders in designing as well as implementing a competition regime was the consensus that prevailed among the participants.

Need to Regulate Cable TV Charges: CUTS Survey

New Delhi, September 29, 2004

“Most subscribers do not have option to change their cable operator and face frequent hike in subscription charges,” showed a survey done by a group of consumer organisations in the country, led by CUTS.

The survey findings reveal that 7 out of 10 households interviewed do not have option to change their cable operator, and 80% of these households faced a hike in subscription charges at least once in the last one-year. The survey is based on responses of more than 1500 representative respondents from the four metropolitan cities of Delhi, Mumbai, Kolkata and Chennai. It was done by CUTS in Delhi and Kolkata, CAG in Chennai and CGSI in Mumbai. The project was supported by the Ministry of Consumer Affairs, Government of India, under their consumer welfare fund.

“In an industry where there is a virtual monopoly at the consumers’ end, the survey identifies a crying need to regulate prices and ensure proper service standards at local level”, said Pradeep S Mehta, Secretary General of CUTS and Bharath Jairaj, Legal Coordinator of CAG, Chennai.

The Cable TV sector is a seller’s market and the consumer is merely a puppet in the hands of operators, having no say in the types of channels s/he wants to watch. Though 70% cable TV subscribers received more than 50 channels, most of these (83%) usually watch less than 15 channels. Thus consumers are made to pay for more than 35 channels, which they do not watch. “This is a clear example of restrictive trade practice being followed in the cable TV industry. The Conditional Access System (CAS) was supposed to address this anomaly, however, it has remained a non-starter except for Chennai and South Delhi, with its fate uncertain,” commented Manish Agarwal, Policy Analyst at CUTS.

Eighty percent households covered by the survey, pay between Rs.150-300 as monthly cable subscription charges: maximum respondents (38%) pay between Rs.150-200, followed by 24% paying between Rs.200-250 and 20% paying between Rs.250-300 per month. Importantly, there is not much difference in the subscription charges paid by consumers in lieu of the number of TV sets owned by them.

Kolkata with average monthly subscription charge of Rs.175 is the least expensive metro, followed by Chennai (Rs.187), Mumbai (Rs.247), and Delhi (Rs.253), as the most expensive.

Among key improvements, consumers would like in the cable TV system: better picture and audio quality, an effective complaint redressal system, and stopping of change in order of channels.

Since CAS was to be implemented in the four metros, the survey was initially aimed at assessing consumers’ perception on the operational efficiency of CAS and to assess whether CAS has addressed these inefficiencies and inequity. However, notification on CAS was withdrawn on recommendations of the Telecom Regulatory Authority of India (TRAI), designated regulatory agency for broadcasting and cable services. Given the status quo, survey was done in the four metros to:

• assess the structure of cable TV market and level of influence cable operators have on consumers; and

• identify the level of consumer awareness about CAS

The survey reveals that most respondents (96%) have heard of CAS. However, in terms of acceptance of the system, there is variation across metros. Majority of respondents in Delhi, Kolkata and Chennai are not in favour of accepting CAS and advance fear of increase in monthly rentals as the main reason for their response. On the other hand, majority of respondents in Mumbai, in particular those paying monthly subscription charge of Rs.200 and above favour CAS and expect that CAS would reduce the monthly rentals.

Post-CAS monthly rental is thus a chief reason for accepting/rejecting CAS. Keeping aside the variation in their perceptions, what emerges is that most respondents do not want an increase in their monthly cable bills, if CAS is implemented.

Moreover, variation in perception of respondents across metros regarding post-CAS monthly subscription charges highlights the poor awareness with respect to CAS. In fact, lack of information about different aspects of transition to the CAS regime has been one of the main reasons for failure of CAS in its first attempt.

“TRAI is soon going to come out with its recommendations on Cable TV services. Given the experience with implementation of CAS, it is imperative that whatever system is proposed by TRAI, there is full clarity and mass awareness of consumers, in order for any proposed system to succeed”, suggested the consumer activists.

On mode of procuring set-top box, while majority of respondents in Delhi, Mumbai and Kolkata expressed their preference to buy, majority of respondents in Chennai prefer to rent a set-top box. Sixty-seven percent respondents do not mind advertisements during TV programmes. In contrast, only 3 out 10 respondents are willing to pay more if advertisements are removed from TV programmes.

While TRAI is working on its recommendations on CAS, several alternative technologies, such as DTH, broadband and Trap, have emerged. This requires the regulator to look at the full spectrum of issues involved in broadcast and cable regulation.

The Ministry of Information & Broadcasting in its bid to encourage alternative delivery platforms to provide choice to consumers and hence competition at consumers’ end has asked TRAI to make recommendations such as all TV channels are available on all delivery platforms on a non-discriminatory basis. “However, given that Indian law is not applicable to broadcasters who have uplinking facility outside the country, it is to be seen what mechanism TRAI recommends to make available all TV channels on all delivery platforms”, said the activists.

“The best way to regulate the sector is by segmenting the market at consumers’ level and ensuring price caps and service standards. On the contrary, if we allow for more than one operator, then it would lead to dirty competition, as the operators would try to damage the infrastructure of other operators”.

“CUTS has prepared a Draft Cable TV Bill in this regard and is organising a one day Seminar in New Delhi on 18^th October 2004 to deliberate on these issues. The seminar seeks to develop a consumer friendly cable TV system”, said Manish Agarwal, who prepared the report.

For further information, please contact:

Pradeep S Mehta, 98290 13131/98102 06633
Manish Agarwal, 98292 85925
Anand Patwardhan 022 - 2262 1612
Bharath Jairaj 044 - 2446 0387

Implementation of the Common Minimum Programme is a huge concern          

September 17, 2004, Press Release

17 Sept. 2004, New Delhi: The Common Minimum Programme (CMP) of the United Progressive Alliance government has covered all relevant issues for India’s development with employment generation and poverty reduction. However, unless attention is paid on issues of economic governance at the grassroots, its outcome may be far from what is promised. This was expressed by the representatives of civil society organisations from different parts of the country while participating in a two-day national seminar titled “The Common Minimum Programme and Its Prospects for Economic Reforms”. The event was jointly organised by Firedrich Ebert Stiftung (a German political foundation) and CUTS International (a think-tank working on economic issues). It ended yesterday at the India International Centre, New Delhi.   

Kicking-off the event, Pradeep S. Mehta, Secretary General of CUTS International said that economic reforms are not new in independent India. He explained the point by taking the example of reforms in the telecommunications sector, which started in mid-1980s. In today’s context, the major concern is whether the nation is witnessing “jobless growth or not”. “We need to understand the complexities of the system and see how to grow and balances the concerns of different communities,” he said. The CMP is designed to address these complexities and concerns and it is a challenge for all citizens of the country to see to it that it is implemented in its letter and spirit.

According to Paranjoy Guha Thakurta, Director of School of Convergence and economic commentator, the central question is whether there is any consensus on economic reforms. But before finding an answer to this question, it is necessary to debate on why and how to emerge consensus. “The apparent consensus on economic reforms is a fallacy, as otherwise why there is no consensus on privatisation,” he argued.

Presenting the current employment scenario of the country, N. P. Samy, Coordinator of the National Council of Labour (an apex trade union of unorganised sector workers) said that 93 percent of the current employment is in the unorganised sector, but only about 65 percent of our economy is considered as ‘unorganised’ according to various other (than employment) economic indicators. The government should address this imbalance through appropriate policy measures. He also argued that despite many claims otherwise, employment in the unorganised sector is declining over the last decade or so and this is mainly due to decline in agricultural production. Another major concern is quality of employment. 

Pronab Sen, Advisor to the Planning Commission of India called for recreation of the planning system. The system is following a tiered approach – national, state, district and village-level planning. However, it is largely dysfunctional at the state, district and village-level, barring a few states. In this context, he argued that “the civil society organisations have a major role in making this system functional at the grassroots and only then the delivery mechanism (of public goods and services) will be improved.”

Amirullah Khan of the India Development Foundation argued that, contrary to some opinions, the proposed national employment guarantee act (providing legal guarantee of at least 100 days of employment every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle class household) would not result in a heavy financial burden on the state. The issue is that of implementation and creation of tangible assets for better delivery of public goods and services to the poor.

On day two, there were presentations and discussions on economic policy positions of different groups. According to Dinesh Trivedi, Member of Parliament (Rajya Sabha – Upper House), the nation is confused, as the people as well as policy-makers are not sure of the development model to be followed. However, the basic issue confronting the common people is access to basic needs like food, shelter, clothing, water, energy, communications. He urged the civil society organisations to work on fiscal reforms, as that will be major factor to determine the nation’s future course of development.

Amarjit Kaur of the All India Trade Union Congress said that trade unions are not opposed to reforms. “We are opposed to some contents of reforms, which suit the needs of vested interests and goes against the interests of the poor.” “What does economic reforms mean? Is it reduction of subsidies to the poor and subsidisation of the rich?” she argued. “The CMP will be considered successful if it can generate enough employment essential for the livelihood security of the poor.” 

According to Tapan Sen of the Centre for Indian Trade Unions, in 1990s there was significant decline in public investment and this has resulted in the decline of purchasing power of poor consumers. At the same time, there are enough resources in the country and these are to be tapped through innovative means. He argued that the CMP should be implemented in a manner that the real economy grows, as only then the consumer base of the country will be expanded. “The Indian electorate has started responding to economic issues and this will increase the political accountability of the system,” he added.

All the participants took active part in this interactive event, including group discussions. They pointed out that the CMP does not talk about land reforms (including tenancy reforms) and environmental protection. These two issues are to be included, as they are fundamental to the availability of, access to, and ability to pay for basic needs.

Summarising the general debate during the closing session, Chetan Sharma, Deputy Editor of TV Today Group said that there are two major issues:

• employment generation in a sustained manner and the quality of employment for better livelihood security

• accountability of the system, so that the poor can have better access to basic needs (public goods and services)

In this context, participants were unanimous in their recommendation that the debate on economic reforms and its implications on the livelihoods should be held regularly and at different levels: national to grassroots. Such debates will deliberate on required public actions for better economic governance in the country. There should be an arrangement for holding objective and well-informed debates among civil society representatives (from various movements such as development, environment, consumer, human rights, women, youth, student) and other stakeholders (policy-makers, politicians, industry, etc). They also called for periodic social audit of the implementation of the CMP and its implications for the people of India.

CUTS calls for aid to road accident victims first, formalities later

Kolkata, September 6, 2004, Press Release

Kolkata, Sep 6: “Prompt” medical attention to accident victims! “Only a “lucky” few get it”, says Soumi Home Roy, a researcher with CUTS Safety Watch, a premier consumer organisation working on consumer safety issues.

Road accidents have become a regular phenomenon. Every 12 minutes an Indian dies on the road and 10 times that number get injured. In such circumstances, Roy pointed out that the role of medical institutions becomes important, as the first few minutes after the accident, termed the “Golden Hour,” are very precious and crucial. Many lives can be saved and disabilities prevented by providing immediate treatment to accident victims.

“But in India, medical handling of crash victims is far from satisfactory”, expressed Roy. The time taken between the accident and reaching the hospital is critical, but the procedural wrangles and public fear of getting involved in a police case delay crucial help. Additionally, the police and the medical institutions often prioritise completion of medico-legal formalities over treatment that results in the death or permanent disability of many victims. Moreover, many medical institutions deny emergency cases by giving lame excuses, such as non-availability of beds, etc.

“In 1989, the Supreme Court passed an order that a road accident victim needs immediate medical attention so that his life is saved,” informed Roy. The Court stated that any Doctor (or medical institution) can be approached for immediate treatment and that it is his duty to do so. Alternatively, failure on the part of the doctor (medical institution) to provide timely medical care to a person results in violation of his “Right to Life,” guaranteed under Article 21. The judgement added that in any such case, the police should not harass the doctor by dragging him to the police station in the name of investigation.

Subsequently, in 1994, Section 134 was added to the Motor Vehicle’s Act, 1988 to cover this exigency of providing immediate medical treatment and succour to accident victims. Under this section, a driver involved in any accident is required to secure medical aid for the injured person, by taking him to the nearest hospital/doctor and it shall be the duty of the hospital/doctor to render medical aid to the victim without waiting for completion of legal formalities. Failure in this regard is punishable under Section 187 of MV Act, 1988.

“What is unfortunate is the fact that even after so many years, most of the people are unaware of the Supreme Court judgement and Section 134 of the Motor Vehicles Act. Inspite of the provision under law, accident victims and their relatives suffer because of the ignorance”, lamented Roy.

Roy also pointed out that the entertainment industry, which plays an important role in spreading messages and moulding public perceptions, continue to portray this undesirable state of affairs.

Thus, there is an urgent need to sensitise common people, the police, the medical fraternity, as well as the entertainment industry on the same, opined Roy.

CUTS is involved with road safety issues since the last 20 years and twice it has served on the National Road Safety Council. It has also contributed to the framing of the first National Road Safety Policy draft in 1992. To make people aware about Section 134, CUTS has launched a nation wide campaign.

CUTS has written to the Ministry of Road Transport and Highways (MORTH), DG police of all the states and films/serials directors/actors. Upon hearing positively from eminent personalities like Alok Rawat, Joint Secretary, MORTH and Raj Kumar Hirani (film director), Roy feels encouraged to take this campaign further down to the masses and empower them.

Urge for more proactive South-South cooperation on trade negotiations

Islamabad, August 19, 2004: Cooperation among Southern countries through consensus building on trade and trade policy issues is essential to ensure a concerted approach to counter-balance the hegemony of developed countries in designing and implementing trade policies. These were the general observations voiced by the experts and participants during the second day of a regional conference on WTO issues being held at Islamabad. 

At the session on the future of Singapore issues, the keynote speaker, Mr. Pradeep Mehta from CUTS International stated that developing countries had balked in including these issues in trade talks, specifically investment rules, because many wanted to retain control over their own key industrial sectors. The complexity of negotiating completely new areas would have left them at a disadvantage, compared to the rich countries.  

Participants demanded an accelerated pace of clarification for these issues, as enhanced awareness in the South might lead greater participation in negotiations. It was argued that although there has been some technical assistance provided since Doha, it was mainly in the form of donor-driven workshops. It was felt that the capacity of Southern countries to negotiate and implement new obligations had not increased considerably. 

On competition policy, Prof. Manoj Pant of Jawaharlal Nehru University stated that developing countries were not in a position to undertake many obligations and a harmonisation of competition laws across the board may not be in the interest of trade as each country's policy was determined by its domestic needs and culture. As a result, the one-size-fits-all approach would not work. 

Former Indian Ambassador to the WTO, Mr. S. Narayanan, while sharing his experiences of the Doha meeting said that India had all along questioned the legitimacy of including the Singapore issues in the WTO programme. It had maintained that the issues are not for multilateral negotiations as they impinge on the sovereignty of individual countries. 

On investment, many participants said that a multilateral agreement might erode governments' ability to regulate and formulate investment policies. An investment framework advocated by the proponents would prevent or limit the host government's ability to regulate the entry and operations of foreign firms and funds, and its ability to assist or give preference to local firms. Local firms may lose protection and assistance provided by the state. The prohibition on government to regulate the flow of funds could lead to financial instability, balance of payments problems and increased external debt. 

On trade and competition policy, an extremely complex issue subject to different interpretations, there is a need for governments to assist and promote local firms so that they may be viable and develop despite their present relative weakness, to enable them to successfully compete with foreign firms and their products. However, there were apprehensions that the market access approach of developed countries may eventually win out, due to their higher negotiating capacity and influence. 

On trade facilitation, the participants expressed serious concerns that it may lead to imposition of new obligations on developing countries that would be costly and difficult to implement.  

Dr. Saman Kelegama, Executive Director of Institute of Policy Studies, Sri Lanka, while speaking at a session on trade in textiles & clothing, stated that two stages of the phase-out of the present quota regime have passed, but little meaningful integration had taken place. Exports will improve with relocation of industry from developed to developing countries, but the maximum relocation will be in South Asia. The region will gain from the new (post-2004) trade regime on textiles & clothing, with India & Pakistan benefiting from low wages and domestic capacity.  

However, China is expected to dominate global trade in textiles & clothing, increasing its share to 50 percent after 2005. Sri Lanka, Thailand and the Philippines are expected to lose out due to dependence on imported fabrics. However, environmental, labour, health and other safety standards may be used to circumvent the quota-free trade regime. He further argued that one of the most important aspects of garment exports is to highlight the importance of this sector with people's livelihoods.  

According to Dr. Aradhana Agarwal of Indian Council for Research on International Economic Relations, even in a quota-free regime the question as to which country would gain out of the new regime will depend on the sectoral competitiveness of that country. In India, there is little investment in technology and machinery. Apart from this, transaction cost is very high. India is already loosing out to China and although it is predicted that the country will gain from the quota-free trade regime this might not actually happen, she argued.  

Dr. Atiur Rahman of Bangladesh Institute of Development Studies said that textiles and clothing is an extremely important sector for Bangladesh. If this sector collapses, there will be very serious repercussions on the Bangladeshi economy.

WTO agreements need to be negotiated in the interests of the people of South Asia

Islamabad August 18, 2004: Though cautious about certain agreements under the World Trade Organisation (WTO), speakers at a South Asian regional meeting started in Islamabad on Tuesday, the 17^th August, were of the view that globalisation is going to be unstoppable and the WTO agreements need to be negotiated in the interests of the people of South Asia. Developing countries must have their own agenda items for the negotiations.  

Speaking at the inaugural session, Dr. Abdul Hafeez Shaikh, the Pakistani Minister for Privatisation said no country has progressed without being part of global stream and globalisation is unstoppable as the basic desire of people is to prosper through trade. “The South Asian region has lost much time. Therefore, we need to do a lot of catching to match with the level of economic development of other regions,” he said while delivering the keynote address. “WTO needs to be better understood that some of the decisions are going to have far reaching impact on the lives of people of this region”, the Minister further emphasised. 

The Indian High Commissioner to Pakistan, Mr. Shiv Shankar Menon in his introductory remarks underlined the importance of regional cooperation in South Asia. He further opined that efforts towards regional cooperation are now getting necessary governmental support as well. In his speech, Pradeep S. Mehta, Secretary General of CUTS International highlighted the specific objectives of the meeting being held as part of the SACSNITI (South Asian Civil Society Network on International Trade Issues) project with the support of the International Development Research Centre of Canada. The meeting titled “WTO Post-Cancun Developments: Options for South Asia” is jointly organised by CUTS International, Sustainable Development Policy Institute, Islamabad, Oxfam GB in Pakistan and South Asia Watch on Trade, Economics and Environment. The SACSNITI, which was launched three years back, is a unique partnership between research organisations and advocacy groups in South Asian region.  

The technical session on “Multilateral Trading System: Post-Cancún Scenario and the Future” was chaired by Mr. Qasim Niaz, Joint secretary, Ministry of Commerce, Government of Pakistan. Talking in this session Mr. Rashid Kaukab of South Centre, Geneva identified the main features and trends related to the WTO. He compared the establishment of WTO to the present scenario. Listing various comparative advantages of the WTO, he said that it provides legitimacy and credibility as three-fourth of its members are from developing countries. Concluding his presentation he argued that it is safe to predict that the WTO will continue to remain an important and relevant body but not the only form to conduct trade among countries. However, our goal should remain the development of developing countries, which could be achieved by strengthening South-South relationship and shaping, mobilising and channelising public opinion. Civil society and media had an important role to play, he added.  

Mr. H. A. C. Prasad, Economic Advisor of Ministry of Commerce, Government of India presented his analysis of WTO’s July Decision. According to him, these negotiations were a step forward after the Cancún ministerial. He said that developing countries must find ways for better utilisation of the G-20 alliance.  

Mr. Poshraj Pandey from Nepal was of the view that if developing countries can act jointly, the outcome could be in their interest. The chances of better negotiations will only be possible if developing countries continue to be part of larger negotiations. Solution lies in joint efforts on behalf of research and advocacy groups to assist governments in preparing negotiating agenda.  

Dr. Nagesh Kumar, Director General of Research and Information System for Non-aligned and other Developing Countries (RIS), India, said 1990s was a decade of regionalism rather than a trend of globalisation. As a result of the formation of regional trading arrangements (RTAs), 60 percent of the world trade is done on preferential basis. Keeping this in view if a country is not part of any RTA, then its exports are prone to be disadvantageous. Now there is a movement in developed world to stop developing countries from forming such blocs. Developing countries should not be defensive about RTAs. They are building blocs to get into the multilateral system. The other aspect, which Kumar highlighted, was that RTA not only helps create trade but also expand the scope of investment. 

Ms. Huma Fakhar of Pakistan raised certain important questions as how to negotiate the South Asia Free Trade Area (SAFTA). She was of the view that rest of the world is far ahead than South Asia in terms of building regional blocs. She called for more research to deal with regional trade issues and how to get benefit from regional trade. 

Mr. Ratnakar Adhikari, Executive Director of South Asia Watch on Trade, Economics and Environment said that nothing is happening in terms of transfer of technical assistance to least developed countries (LDCs) within SAFTA in order to catch up with other countries in the region. He said the South Asian countries need to show seriousness towards regional cooperation, particularly in trade. 

Dr. Abid Suleri of Oxfam GB in Pakistan called for a mechanism among the South Asian countries to achieve a win-win situation and argued that RTAs is one of the ways to achieve this goal. He urged the need to take media along to create enabling environment to influence policy and decision-making in South Asian countries. 

Mr. S. Narayanan, Former Ambassador of India to the WTO said that the South needed to put its own house in order. We should not think about giving into multilateral trade agreements and any pressure in this regard. He said when a country is representing a group of countries at a global forum it should do it in the best interests of countries involved and in a transparent manner.

WTO July Package: Too early to uncork the champagne bottle

Jaipur, 05 August 2004: “As far as the July Package of the WTO’s Doha Round negotiated in Geneva is concerned, it is too early to uncork the champagne bottle. It has too many gaps and it is unlikely that the Doha Round will be concluded even before the extended December 2005 deadline,” said Pradeep S. Mehta, Secretary General of CUTS International.  

Except in “modalities for negotiations on trade facilitation” the negotiated text is full of optional words: ‘may’ and ‘will’. The only places where the mandatory word: ‘shall’ has been used are for those for which no explicit commitments (obligations) are required.  

In the text on agriculture, some of these gaps are glaring. It is true that the members have agreed to a major demand of the European Commission and G-10 group of agricultural importing countries on ‘sensitive’ products. But an appropriate number of tariff lines to be treated as sensitive is left open for negotiations.  

On the other hand, the G-33 group of developing countries (mostly net food importers, such as Egypt, Mauritius) demands to designate an appropriate number of ‘special’ products has been placed under the “special and differential treatment” category. The text also speaks about “operationally effective” S&DT. “These products will be eligible for more flexible treatment. A Special Safeguard Mechanism will be established for use by developing country members.”  

It appears that a small number of rich countries, such as Japan, Norway and Switzerland will succeed in receiving ‘special and differential’ treatment of a different nature as far as their ‘sensitive’ products are concerned, while a significant concern of developing countries on ‘special’ products will be considered as “best endeavour”.  

A quick analysis of the July 31 Decision and India’s existing tariff structure on agricultural products reveals that the country could list rice, dairy products (fresh milk and cream), tea, coffee, oilseeds and horticultural products (mushroom, peas, etc) as special and sensitive products. However, the listing of such products has to be based on in-depth study, and that will be the Commerce Ministry’s agenda in the future. Of these, dairy products and oilseeds are of greater concern to the large number of small farmers in India, in whose name the Government was so assertive. 

The framework agreement on non-agricultural market access (NAMA) is more vague than that of agriculture. It has only outlined the initial elements for future work on modalities. However, many industry bodies have welcomed the NAMA text. Both the Federation of Indian Chambers of Commerce & Industry and the Confederation of Indian Industry have commented that their concerns have been “addressed and reflected in the text”. The US Council for International Business welcomed the deal as a “good road map”, while UNICE (the main European business lobby) urged all WTO members to “contribute in the coming months leading to the 2005 WTO Ministerial, in the negotiating process underway in all areas of negotiations”.     

Cotton, a livelihood issue for small West African farmers, was another roadblock. In spite of strident demands for stand-alone negotiations, it will be an integral part of agriculture negotiations. However, the US cotton lobby criticised the deal and described it as “unfair and will threaten the round”. There were criticisms from other quarters as well. According to Oxfam International, the deal was a “serious betrayal of developing countries”. While the WTO General Council’s Decision of 31 July emphasised that the ‘trade-related’ aspects of this issue will be pursued in the agriculture negotiations, it is not clear how the ‘wishful’ thinking to “stress the complementarity between the trade and development aspects” will be put into practice.    

On Singapore issues, there was quite a surprise. Of the four contentious issues, “Trade Facilitation”, was accepted with some difficulty, while Investment, Competition and Transparency in Government Procurement were dropped from the Doha agenda. On trade facilitation the WTO has decided to agree to negotiate by “explicit consensus” to commence negotiations. Thus, in future, any ‘new’ issues, which may come before the WTO members for negotiations will have to be decided by explicit consensus. Secondly, investment, competition policy and transparency in government procurement have been dropped out of the Doha Work Programme, but not immersed into the Lake Genevè. In all likelihood the study process will continue, thus the three will remain hovering in the corridors. 

There is a possibility that protagonists will demand for negotiations on these issues after the Doha round is over and, in another scenario, these issues may be brought back to the WTO more formally through the Hong Kong Ministerial Declaration (to be held in December 2005). Thus, the issues remain as a challenge to the antagonists for future. 

According to Mehta, “The situation (on Singapore Issues) can best be described as though they were seemingly unbundled, there will be a ‘standalone’ negotiations on trade facilitation and the other three issues will remain in the WTO in a ‘standstill’ mode. EU has been advocating for plurilateral agreements on these issues. These are also being wrought into several other side-deals, and thus the demandeurs will use those agreements as ‘template’ for multilateral negotiations.”      

On trade facilitation, the scope of negotiations will be of “limited nature”. As per the July 31 Decision, negotiations shall confine to “clarify and improve” relevant aspects of Articles V, VIII and X of the GATT 1994 with a view to further expediting the movement, release and clearance of goods, including goods in transit. The negotiated text made several reference to customs and this can be interpreted as that negotiations will be confined to ‘border’ measures only.  

The text on services should be a major disappointment for developing countries. It called for further liberalisation of the services sector with a possible change in the basic structure of GATS, i.e. the positive list approach (“with no a priori exclusion of any service sector or mode of supply”). Therefore, developing countries should be extra cautious while negotiating services. The only manner in which they can counter this offensive is by demanding a standalone agreement on movement of natural persons. However, the July 31 text only notes the ‘interest’ of developing countries on this mode of service supply. Is it due to over-emphasis on agriculture by the G-20 and the group of “five interested parties” (Australia, Brazil, EU, India and US)? 

In the midst of all these, “development concerns” (particularly of poor countries) did not receive much attention. Though the text has several paragraphs on ‘development’ but the word ‘poverty’ does not appear for once and the language is too vague. Furthermore, there was an attempt to introduce a de facto new class of developing country WTO members with advanced Latin American and East Asian nations on one side and ACP (Africa, Caribbean and the Pacific) nations on the other. This move could have institutionalised preferential market access as a norm in the multilateral trading system.  

On balance, the July 31 Text is a mixed bag for developing countries. A good feature on trade facilitation is the recognition of “cost implications” of proposed measures. During the Uruguay Round there was no such recognition and many poor countries are still to find out the cost implications of the WTO obligations, such as the TRIPs agreement.  

Another serious issue is the deadline by which the Doha round is to be concluded, i.e. December 2005. Not only that the time period is short (especially given the capacity of many countries to understand and negotiate many new aspects and issues), it is not clear how the US will approach these negotiations given its presidential election and the fact that the US president’s trade negotiating mandate will come up for renewal sometime in the middle of next year. It is likely that the negotiations will continue for a few more years taking into consideration the phrase “deadlines are not to be met, but to remind us of the importance of issues”.

CUTS Safety Watch urges National Building Code to be made mandatory

Kolkata, 29 July 2004: Uphaar, Dabwali, Tiruchi and now Kumbakonam! Fire safety does not seem to be high on the priority list of many buildings in the country, with schools being no exception.  

The scant regard for the safety norms to be followed has turned the majority of the schools of the country into a firebomb, says Soumi Home Roy, a researcher with CUTS-Safety Watch, a premier consumer organisation working on consumer safety issues. CUTS calls for a nation-wide alert for tightening rules and stricter enforcement of safety regulations in every school all over India. 

Though the Bureau of Indian Standards (BIS) has formulated the National Building Code (NBC), which governs the design, safety and health aspects of buildings, but those are hardly followed.   

NBC specifies rules and regulations regarding fire safety measures to be adopted in educational institutions, eg., the students should be able to evacuate the building at the rate of one minute or less per floor. Exit (stairways) of at least half-metre width should be provided for every 25 students. All institutions should have basic fire-fighting equipments like carbon dioxide cylinders, water and sand buckets and should know their right application. Schools should carry out fire drills in accordance with the fire safety plan at least once every three months. But educational institutions rarely conform to these standards and norms as evident from the gruesome tragedy at Kumbakonam.   

The reason behind this laxity is that the norms set up by the BIS under NBC are mere guidelines and can only become mandatory provisions if state governments adopt them through legislation. 

The fire at Kumbakonam in which more than 90 children perished was undoubtedly due to "criminal negligence" of the school management compounded by "slack supervision" of education department officials. The State Government has ordered a judicial probe. All schools having thatched structures will have to be replaced with non-flammable material by this month-end. One crore special package for the victims has been announced. But Roy noted that there is much more to do. Because nothing less than a miracle can save school children in case of a fire in most of the educational institutions in the country as most of them are veritable firetraps.  

Apart from running schools in dense localities, which pose difficulties for the fire services to reach, in the case of an emergency, the floor space, seating arrangements, ventilation, lighting facilities, aeration, the width of staircase and emergency escape routes, if any, leave a lot to be desired. Many schools are located in dilapidated wooden buildings with fire extinguishers out of order and with old electric wirings. In hundreds of schools in South India, mid-day meals are cooked with little concern for fire safety. Safety norms are almost unheard of in most of the districts. In hill towns, many schools are housed in highly inflammable stone-cum-wooden buildings of the British vintage without conforming to any fire safety norms. Fire protection regulations are not given any consideration by authorities while issuing licences to schools. 

Thus, Roy on behalf of CUTS Safety Watch urged all the state governments to take a close look at every school to ensure that they are equipped to fight fire. 

Roy opined that unless the implementation of the National Building Code is made mandatory, the situation will not improve. Her recently published book “Is It Really Safe?” on different consumer safety articles, contains one article titled “Does your building follow fire safety norms?,” which highlights that most builders flout this code with impunity without bothering to take a no-objection certificate from the fire brigade. Infernos are dangerous in all overcrowded locations where people assemble like cinema halls, auditoria, educational institutions, marriage halls, and even hotels or restaurants. Even after the Uphaar cinema tragedy, most of the buildings in the country do not comply with the NBC. 

Thus Roy noted that it is high time that implementation of NBC is made mandatory to prevent any fire mishap in future.  CUTS hopes that the Kumbakonam tragedy will serve as an eye opener for the authority and the implementation of the NBC will be made mandatory.

‘Interests of rural consumers need better protection’

Jaipur, 03 July 2004: “Proposed draft Rajasthan Electricity Bill 2004 aims at promoting competition and efficiency in electricity generation, transmission and distribution which is a welcome move; however it does not adequately address genuine concerns of rural consumers at large. Though the necessary legal framework to ensure commercial viability of distribution utilities has been provided, which is desirable, yet the issues pertaining to quality of services to rural and agriculture consumers is overlooks. Time-bound provisions have been made for ‘open access’ to protect the interests of industrial consumers however in case of rural consumer there is insufficient mention, without necessary elaborations”

These are the excerpts from collective views of more than 25 Consumer groups from across the State, emerged out in response to a survey conducted by CUTS to know their opinion about various provisions made under the draft Rajasthan Electricity Bill 2004. While doing this survey, CUTS critically analysed the draft Bill and prepared a questionnaire to get views of these more that 25 Consumer groups spread over the State.

All consumer groups were unanimously opined that the draft bill must provide for linking the tariff to the quality of supply offered to a category of consumers. “A rural consumer getting erratic supply with poor voltage should not be charged equal to his counterpart in city like Jaipur where far better services and supplies are maintained.” Expressed many rural consumer groups.

The Bill carries the provision for consumer to pay the Capital and Maintenance costs of Distribution Company’s infrastructure in case of getting a new connection, which is entirely injustice. In the wake of the fact that agriculture consumers mostly get supply during night hours, which help Distribution Companies maintaining their load-curve flat, the Bill could have provided for taking into account the parameters such as, time of the supply, quality of supply and so on, as decisive parameters for tariff determination. Not only that, the Bill keeps silence about imposing penalties in case of Distribution Companies not delivering the services with agreed standards, which is entirely unacceptable.   

While the Consumer groups welcome the proposed move for making the Regulatory Commission accountable to elected legislatives however remain critical of not providing the required financial autonomy to the Commissions to actually become independent to the State government.

Inclusion of the provision for Regulatory Commission releasing a ‘draft tariff order’, prior to finalising the tariffs, is also demanded.

Based upon the outcome of this survey, CUTS has submitted a detailed memorandum to the State government demanding for incorporating the suggested improvements into the Bill.

UNCTAD XI ends with renewed commitment to ‘development’

São Paulo, 18 June 2004: The 11^th Session of the United Nations Conference on Trade and Development (UNCTAD XI) ended with a renewed commitment on the part of large developing countries to accommodate the interests of the least developed countries by providing preferential market access, among other initiatives.  

On the closing day, a meeting was held on the “Joint Integrated Trade Assistance Programme” (JITAP) for least developed countries (LDCs). It called for the reinforcement of synergies between the private sector, civil society organisations and national/regional institutions in order to achieve better human and institutional capacity building in LDCs. JITAP was launched in 1996 during the 9^th Session of UNCTAD (UNCTAD IX) in Midrand, South Africa. One of the major purposes was to help poor countries assess the impact of the WTO (World Trade Organisation) agreements on their economies and to build the necessary capacity to formulate policies and programmes for tapping the opportunities of a rules-based multilateral trading system. At present, JITAP is jointly implemented by UNCTAD, WTO and the International Trade Centre and financed by several donors.    

The Conference adopted three declarations: the Spirit of São Paulo, the São Paulo Consensus, and a Declaration launching the third round of GSTP (Generalised System of Trade Preferences) negotiations focusing more on enhancement of South-South trade.  

The Declaration titled “The Spirit of São Paulo” recognised that “improved coherence between the international monetary, financial and trading system is fundamental for sound global economic governance.” The Member States of UNCTAD expressed their commitment to “improving the coherence between those systems in order enhance their capacities to better respond to the needs of development.” They agreed to “continue working on the creation of a positive synergies between trade and finance and on how to link these efforts to development.” It reiterated the Members’ commitment to support UNCTAD in fulfilling its mandate as the focal point within the United Nations for the integrated treatment of trade and development. 

On the other hand, the “São Paulo Consensus” (a 24-page document) contains issues relating to policy analysis and necessary responses with respect to the four sub-themes of the Conference: development strategies in a globalising world; building productive capacities and international competitiveness; assuring development gains from the international trading system; and partnership for development. 

In the process of adopting this ‘Consensus’ the contentious “policy space” issue emerged. Many developing countries argued for such space and flexibility to carry out national development policies. They cited examples to buttress their point that such policy space had recently been constrained by international rules and in future may become further narrowed. However, Paragraph 8 of the final text stated: “It is particularly important for developing countries, bearing in mind their development goals and objectives, that all countries take into account the need for appropriate balance between national policy space and international disciplines and commitments.”       

Another significant development was a call made by Luiz Inácio Lula da Silva, the President of Brazil, to establish a global fund to eliminate hunger through taxing arms trade and financial transactions.  

At the closing session, UNCTAD’s Secretary-General, Rubens Ricupero said: “Human development is an invisible part of economic development. Although UNCTAD doesn’t have powers like many other inter-governmental and multilateral organisations, it has the power of ideas, commitment and faith.”  

The issue of UNCTAD’s new leadership also came up during the Conference, as Secretary-General Ricupero will complete his second term later this year. The Civil Society Forum (CSF), held parallel to the Conference, stated in a statement: “Safeguarding and strengthening UNCTAD’s mandate to deal with the interdependent issues of trade, money, finance, technology transfer and development, in an integrated manner, is critically dependent on the quality and management of its leadership. In light of the impending changes in the leadership of UNCTAD, the CSF urges the UN Secretary-General and Member States to exercise the greatest care and transparency in the selection of UNCTAD’s new management.” As a key stakeholder concerned with UNCTAD’s future, civil society expects to be closely involved and consulted in decisions concerning the organisation’s future management.  

The Conference also adopted a Note on “Multi-Stakeholder Partnerships” recognising the role of NGOs. Among others, it contains a reference to capacity building on trade issues. It also mentions the work done by CUTS in the investment field. 

Prior to UNCTAD XI, CUTS had organised an Afro-Asian Civil Society Seminar in New Delhi titled “From Cancún to São Paulo: The Role of Civil Society in the International Trading System”. A document containing the proceedings and papers of this Seminar was released at São Paulo. An Afro-Asian Civil Society Statement on Trade, endorsed by several civil society organisations, was presented at São Paulo. The Statement calls on the international community to take forward the recommendations on trade and development issues, including South-South trade.  

Regarding the “partnership for development” (one of the sub-themes of UNCTAD XI), the Statement urged that such ‘partnership’ should be based on facilitating:  

a) the relationship between the civil society and the governments, so that they can engage constructively;

b) the process of dialogues and consultations between and among the civil society and other stakeholders; and

c) the co-management of joint programmes.

Call for global initiatives to fight against hunger and poverty 

São Paulo, 17 June 2004: Funds for the elimination of hunger, trade preferences among developing countries, reestablishment of the link between trade and employment – these are some of the ideas, which are conceived by the delegates from over 180 nations taking part in the 11thSession of UNCTAD. Intense debates and discussions are taking place to find how best the international community can fight against poverty and to enable poor countries to reap the benefits of international trading system. 

Luiz Inàcio Lula da Silva, the President of Brazil called world leaders to support taxes on arms sales and international financial transactions to establish a global fund to eliminate hunger. He argued that easing hunger would allow poor countries to become more productive and democratic. “Hunger not only kills, it withdraws the capability to learn, to work, and most serious, throws away the hope of millions and millions of human beings,”' he said. 

On the 5^th day of the meeting, a high-level panel discussion was held to discuss trade and development strategies of least developed countries. Participants called for providing sufficient “policy space” for poor counties in order for them to develop appropriate strategies for poverty reduction. The panel included trade ministers of Bangladesh, Madagascar, Rwanda, former trade minister of Ireland and noted economist Prof. Ignacio Sachs from the School of Advanced studies, Paris, France. The panel recommended that there is a need for paradigm shift in the approach for economic development and poverty reduction and policy autonomy is a crucial aspect. Trade ministers of Rwanda and Madagascar shared their views and importance of “policy coherence” at the global and domestic level.  

Another high-level forum focused on “assessment of trade in services and development gains”. According to UNCTAD’s Secretary-General Rubens Ricupero the main concern of developing countries is how to strengthen domestic supply capacity in services and reconcile trade, development and equity considerations. Pursuing domestic policy reforms becomes a major challenge for them, as many times it was difficult to assess impact of different policies on different stakeholders. The ongoing services negotiations at the WTO is posing various challenges. Undertaking specific commitments on trade in services would mean new obligations, binding certain policy options, and developing countries are to be careful in negotiating services liberalisation.  

“Assessment of services reform in developing countries” – a joint initiative of UNCTAD, World Bank and UK’s Department for International Development (DFID) was launched on this occasion. Lakshmi Puri, Director of UNCTAD, outlined the purpose of this initiative, which is to fill the knowledge gap to enable developing countries to look at their national interests and assess the possible impact of alternative policies on growth and development and in particular their effect on poverty reduction. 

In another interesting development, trade union bodies like the International Confederation of Free Trade Unions and the Trade Union Advisory Committee of the OECD called upon UNCTAD not to become an FDI (foreign direct investment) promotion body. They emphasised that job creation and poverty reduction should be at the heart of the organisation’s mission. They, however, supported various initiatives being taken by UNCTAD to re-establish the linkage between trade and job creation at the centre of development strategy.

Third round of GSTP launched with renewed vigour and commitment   

São Paulo, 16 June 2004: The third round of negotiations on the Global System of Trade Preferences (GSTP) was launched at the 11^th Session of UNCTAD. A Special Session of the GSTP Committee of Participants adopted the São Paulo Declaration announcing the launch of this round of GSTP negotiations and 43 developing countries from Africa, Asia and Latin America will take part in it.  

Presiding over this Special Session, Argentina’s Minister for Economy Roberto Lavagna said that another 40 developing countries are expected to take part in the negotiations. UNCTAD’s Secretary-General Rubens Ricupero and Brazil’s Foreign Minister Celso Amorim were present at this Session.   

In the Declaration, the participating countries committed themselves to work towards developing concrete measures to be accorded in favour of the least developed countries. They also extended an invitation to all the members of the Group of 77 developing countries and China to join the GSTP. “We give great importance to South-South trade,” expressed Li Enheng, China’s Deputy Permanent Representative to the World Trade Organisation in Geneva.  

According to Celso Amorim, this round of GSTP negotiations is expected to construct a new commercial geography worldwide. He also underscored the need for greater participation by poor countries. At present, out of 49 least developed countries (as per the UN categorisation), only seven are part of the GSTP.

One of the goals of the GSTP is to stimulate South-South trade by lowering tariffs between developing nations. However, not much progress has been made in that direction. By relaunching the negotiations at São Paulo, UNCTAD hopes to take advantage of new alliances between developing nations, especially the Group of 20 (G-20) and its increasing prominence at the international stage.

Earlier in the day, speaking as one of the keynote speakers in the Plenary, Ugandan President Yoweri Kaguta Museveni said that poor countries must be assured of better market access to developed economies and financing from their rich counterparts for education and infrastructure development.  

“We cannot sanction a trading system that produces advantages for some and adversities for others,” he emphasised. He argued that if 800 million Africans, 1 billion Indians, 1.3 billion Chinese, 200 million Indonesians and millions in Latin Americans assert their participation in the world economy, that would be a win-win situation for all.       

Another keynote speaker in the same Plenary, Leonel Fernandez Reyna, President-elect of the Dominican Republic agreed that underdeveloped countries can achieve their potentiality through the use of technology and development of infrastructure. He emphasised on the imperative of poverty reduction in order to achieve further expansion of the world economy. 

Another high-level round table titled “Bilateralism and Regionalism in the Aftermath of Cancùn: Re-establishing the Primacy of Multilateralism” was held today in which Executive Secretaries of the United Nations Regional Commissions participated. Carlos Fortin, Deputy Secretary-General of UNCTAD chaired this session.  

Participating in the discussion, UNCTAD’s Secretary-General Rubens Ricupero questioned Article XXIV of the General Agreement on Tariffs and Trade, which makes provisions for regional and bilateral trade agreements. He argued that the so-called free trade agreements are undermining the key element of multilateralism, i.e. non-discrimination between nations, if not in letters but in spirit.

Foreign direct investment: Focus on gains rather than quantity
 

São Paulo 15 June 2004: Concerted efforts should be made to extract more benefits from foreign direct investment (FDI) and not simply endeavour to attract more and more of it. This was the broad consensus that emerged out of the high-level interactive thematic session “Leveraging Foreign Direct Investment for Export Competitiveness” at UNCTAD XI. The session included eminent panellists representing international and national business chambers, inter-governmental organisations, and academia.  

In his brief appearance during the session, UNCTAD Secretary-General Rubens Ricupero emphasised that FDI can be a powerful contributor to the economic development of any economy subject to making its best use in employment generation and export promotion. “The quality of domestic policies does play an important role in attracting FDI,” he said.  

FDI provides the missing elements of export competitiveness. Export-oriented FDI brings benefits but cannot substitute domestic capital formation. FDI, however, has remained a scarce resource for the majority of countries. So far, besides developed nations, only large developing countries with big domestic markets and countries having rich reservoir of natural resources have been able to attract a major share of global investment.   

Issues relating to business process outsourcing (BPO) were also discussed. Amit Mitra, one of the panellists and Secretary-General of Federation of Indian Chambers of Commerce and Industry (FICCI) said that BPO is not a new phenomenon. In the past, developed countries had practiced it extensively among themselves. He quoted from a study done by McKinsey, a US-based consultancy firm, saying that outsourcing of jobs brings gains for both parties, resulting in a win-win situation.  

The renowned development economist Prof. Sanjay Lall from Oxford University emphasised that one does not need to be defensive on outsourcing. The next wave of FDI will create massive employment opportunities and nothing in the world can stop outsourcing except the misguided policy on the part of developed countries. 

He strongly underlined the need of building domestic capacity, as without a strong domestic industrial base and institutions, it is often very difficult to attract quality FDI and to reap benefits out of it. FDI should be looked at in the broader context of industrial policy of an economy. Reacting to a submission by a Ugandan delegate, who said that his country did everything what the ‘doctors’ advised to attract FDI but without much success, Prof. Lall suggested that the AGOA (African Growth and Opportunity Act of the US) like initiatives should be further extended. Equally important is to relax the rules of the game such as WTO agreements, which are hampering the domestic industrialisation process of several African countries.  

In his intervention, the Secretary-General of CUTS International, Pradeep Mehta, shared the findings of the multi-country “Investment for Development” project carried out by CUTS in seven developing countries. The study came out with three critical factors, which stand in the way of harnessing fruits from FDI. They are: lack of market openness, poor marketing network, and inequality in the international trading system.    

On the third day of UNCTAD XI, another panel discussion titled “Commodities, Poverty Alleviation and Sustainable Development” reviewed the trends, prospects and actionable measures regarding the commodities markets. It attracted representatives and experts of governments, inter-governmental organisations, the private sector, producer groups and NGOs. UNCTAD Secretary-General Rubens Ricupero and one of the Deputy Director-Generals of the WTO Francisco Thompson-Flores attended this meeting. 

In his speech, Ricupero said that there is nothing wrong in being a commodity producer and exporter. The problem is not of being a producer but over-dependent on one commodity or two without diversification, especially when prices are extremely volatile. He suggested that the road ahead is diversification. He said that there is no ready recipe to address the problem of commodity-price volatility. He called for a partnership approach to address this issue. 

Earlier in the day, Brazilian President Luiz Inàcio Lula da Silva took part in a debate organised by the Civil Society Forum, an event being organised simultaneously with the UNCTAD Conference. The debate revolved around how to guarantee fairer and more humanitarian international policies. 

According to him, Brazil is making important progress in the search of a more balanced international policy. He emphasised alliance building and said: “In order to have better trading conditions with rich countries, we have to create a united block. This is the way we will be heard and will be able to change political foundations”.  

UNCTAD also released a report titled “Competition, Competitiveness and Development: Lessons from Developing Countries” in another event. It carried papers, with many quotes from CUTS’ work on competition policy, in particular the 7-Up, which was a comparative analyses of competition regimes of seven developing countries of the Commonwealth.

CUTS lauds Rajasthan government’s recognition of the consumer movement

Jaipur 15 June 2004: The consumer movement of India has achieved a significant recognition in Rajasthan. For the first time, the Chief Minister of Rajasthan (also holding the finance portfolio) called consumer groups to take part in a pre-budget consultation, held in Jaipur on Monday, the 14^th June. Many consumer groups from all over Rajasthan told the forum to take proactive steps for promoting the consumer movement in the state, which will act as a catalyst for the overall development of its economy.  

“Consumer interest is synonymous with national interest. In Rajasthan, a vibrant consumer movement has been developed with active participation of consumer and other social action groups. It is time for the government to facilitate this movement in order to achieve the larger goals of social and economic development of the state and its contribution to national development. This requires a better and an enabling environment for furtherance of the consumer movement. Thus, the government was urged to set-up a ‘Consumer Directorate’ and ‘State Consumer Welfare Fund’ so that common consumers benefit from their association with the movement. The consumer movement needs to expand its space and sphere of activities to intervene positively in developmental policy-making.” This was highlighted in a memorandum submitted by Consumer Unity & Trust Society (CUTS), Jaipur.  

“Increased public investment in agriculture would directly benefit more than 70 percent population of Rajasthan and accelerate overall economic growth. Promoting dry-land farming and micro irrigation techniques would yield greater productivity, as water and electricity are both scarce in Rajasthan. The state can be benefited from the experiences of countries facing similar challenges,” said Rajeev Mathur, Director of CUTS, while presenting the memorandum to the forum.  

“On power sector reforms, it was expressed that a mere five percent conservation at the consumer end would save huge amount of electricity – equivalent to Rs. 400 crores. This can be achieved by strengthening the relationship between electricity distribution corporations and consumer groups,” he added. CUTS has been taking active part in power sector reforms in Rajasthan and regularly providing consumer perception in this regard. Other issues, on which CUTS has been active at the state level, include road safety, water conservation, population policy. 

Among others, the memorandum provided a roadmap to the people of Rajasthan (including policy-makers and different stakeholders) on public utilities such as road, water, electricity. It also covers areas on which the state has advantage and suggested paths to take initiatives for cultivating those advantages for the benefit of the people. These include tourism and industrial activities.  

For better fiscal management, the memorandum suggests drastic reduction in administrative expenditure and timely completion of government projects. Currently, Rs. 1,760 crores is stuck in about 300 incomplete (delayed) projects in the state. It also suggested for the introduction of performance-based management system for all functionaries and departments by setting appropriate performance benchmarks to make the government machinery more productive and accountable. 

Taking this opportunity, a document titled “Vision Rajasthan 2020” was also presented to the Chief Minister and other participants. It outlines strengths, limitations and opportunities and analysed them in the light of various challenges that the state is facing. CUTS will seek wider consultation on this document, so as to have cross-fertilisation of ideas and experience of different stakeholders and as a contribution of the consumer movement to the development of the state.

UNCTAD XI begins with a renewed call for South-South cooperation

São Paulo 14 June 2004: “Developing countries may decide to focus on trade among themselves rather than with their richer counterparts, if developed countries don’t break down trade barriers,” said Prime Minister Thaksin Shinawatra of Thailand while speaking at the inaugural session of the 11^th Session of the United Nations Conference on Trade and Development (UNCTAD XI). The Conference, held every four years, is intended to reorient the debate on linkages between trade and development and reposition UNCTAD in the present context.  

While inaugurating the Conference, the President of Brazil, Luiz Inàcio Lula da Silva, said that developing countries must also eliminate trade barriers among themselves to increase their share of world trade. He said that 44 developing countries, the signatories of the Global System of Trade Preferences (GSTP) would hold a new round of talks on reducing tariffs. He hoped that the meeting would enlist 40 new member countries from the developing world to the GSTP scheme. 

During his speech, President Lula highlighted the “IBSA Facility for Hunger and Poverty Alleviation”. India, Brazil and South Africa (IBSA) created this initiative in partnership with the United Nations Development Programme (UNDP). It is devised as a means of replicating successful social projects in the areas of health, education, sanitation, and food security, among others.  

So far developing countries have been successful in putting farm trade barriers right at the top of the Conference agenda. A day before the formal opening of the Conference, US Trade Representative Robert Zoellick provided indication of moving forward on agriculture but the EU’s Trade Commissioner Pascal Lamy insisted on parallelism, asking developing countries to open their markets further. It appears that the two may be in a hurry as Lamy’s tenure is ending in September and Zoellick’s continuation as the USTR will be decided after the US presidential election. Since the Cancún debacle, there have been many instances of using forums like this to break the logjam on farm trade agenda. Next month in Geneva, trade negotiators will sit together to push the Doha Development Agenda forward and UNCTAD XI is perhaps the last big forum of trade ministers before the crucial July negotiations.  

The Indian Commerce Minister, Kamal Nath, also hold bilateral meetings with Robert Zoellick and Brazilian Foreign Minister Celso Amorim and underlined India’s sensitivities on agriculture, particularly the protection of small and marginal farmers.

UNCTAD XI: Agriculture likely to occupy the Centre stage

São Paulo 13 June 2004: The 11^th Session of the UN Conference on Trade and Development (UNCTAD XI) formally begins tomorrow but it appears that agriculture has already occupied the centre stage. Agriculture was one of the major causes of the debacle of the Fifth WTO Ministerial at Cancún last September and since then efforts have been made to bring convergence over this contentious issue. Several rounds of discussions have been held between the two major groups – the EU and US on one side and the G-20 on the other, but with little success. US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy arrived in São Paulo to hold consultations on agriculture with other big players, particularly India, Brazil and South Africa.   

Speaking at the Civil Society Forum, UN Secretary-General Kofi Annan echoed the voice of the civil society on the issue of agricultural trade liberalisation. “I share your concern about agricultural and other subsidies in the developed world that create unfair competition, and about how hard it is for developing-country goods to gain access to rich-country markets,” he said.  

The Civil Society Forum expressed deep concern over the collapse of the commodity economy in their declaration: “As the largest single source of employment, incomes, public revenue and foreign exchange in many low-income countries, particularly the least developed countries, the commodity sector is a major determinant of current growth and of prospective development. Its near disappearance from the global development agenda owes much to the ‘laissez faire’ view that the sector’s performance reflects the functioning of the markets and that, over time, the affected farmers, producers and economies should adjust and become more efficient,” the declaration stated. It called for global policy responses including the active involvement of UNCTAD to address problems caused by market failures. It recommended the creation and management of multilateral mechanisms to regulate and support international markets for agricultural products. 

To its disappointment, Kofi Annan did not specify any special role that UNCTAD could play in checking the falling commodity prices at the global level. He simply stated that the UN system alone cannot regulate agriculture trade. However, he suggested having a larger civil society and business sector involvement in the functioning of the United Nations.   

In addition to this, Rubens Ricupero, Secretary-General of UNCTAD pointed out the need for re-establishing the link between trade and employment. This process began in the United States during President Kennedy’s administration under the Trade Adjustment Act. Ricupero also called for linking employment creation as a key component of global trade negotiations.

Curb Wastage to Contribute 8.9% to National Income: 'CUTS'

New Delhi 5 June 2004: At a pre-budget meeting today with the Finance Minister, Mr P. Chidambaram, CUTS Secretary General, Pradeep S. Mehta submitted that if the government adopts a policy of ‘conservation and productivity for growth’ and takes measures to curb wastages in the economy, about Rs.200,000 crores can be saved and contribute to the national income by 8.9%. 

Mehta was invited to the pre-budget meeting with economists, as CUTS International, a leading NGO works actively on economic policy issues in India and abroad. Earlier, when the Finance Minister used to invite interest groups, Mehta presented his views in the pre-budget consultations with consumer groups. But, in view of paucity of time, the Ministry has restricted the consultations to agriculturalists, industrialists, trade union leaders and economists in this year. 

In the matter of not inviting consumer groups, Mehta told the Finance Minister, that this will give a wrong signal to the country as he had invited trade and industry, while the countervailing power was not given their rightful space. Mehta suggested that the Minister could, at the least, write to select consumer groups and get their views for formulating a pro-consumer and green budget.  

Mehta pointed out that while the new government speaks about achieving 7-8% growth over the next few years, hardly anyone speaks about how national income can be increased and accelerated by efficiency, conservation and savings.  

He highlighted wastages in the economy, such as transmission & distribution losses in the power sector, which account for about 1.5% of GDP, while the economic cost on account of road accidents a whopping 3% of the GDP. Further non-merit subsidies amount to over Rs.20,600 crores, where the delivery mechanism is poor and most often undeserving get a significant share.

The government loses about Rs.41,000 crores due to delays in implementing projects. He cited the case of the Ganga Action Plan, which was started in 1985 and scheduled to be completed by March 1990. However it has now been extended to December 2008, clearly indicating the extremely slow pace of development work being done for the past 18 years.

Mehta suggested the government must ensure a proper project management system to ensure timely implementation of works, which would also deliver the crucial multiplier effect on the economy.

On core governance, issues relating to accountability and transparency were highlighted. Mehta argued for setting performance benchmarks and instituting a performance-based management system in government that rewards the good and punishes the bad. For this purpose, the Minister can create an incentive cum disincentive scheme in the budget and thus send a strong message. “For good performers who complete projects in time and within the estimated cost a bonus should be awarded. For this purpose, the annual budget should provide a fund”.

Mehta also suggested that Competition Act, 2002 should be implemented effectively to ensure significant gains to the national income. He added that a study in Australia has shown an annual addition of 5.5% to the GDP when competition policy measures were adopted effectively over a period of time.

Is WTO Public Symposium Closure the Beginning of the Another Working Phase for NGOs in the Run-Up to July?

Geneva 27 May 2004:The final day of the WTO Public Symposium 2004 was characterised by emergence of a number of non-trade issues, such as technology, environment, animal welfare and gender. Even in the agricultural workshops, GMOs, Geographical Indications and subsidies occupied the centre stage. Others are on IMF’s role in supporting the Doha Development Agenda and the challenges of market access and ineffective S&D. 

At the session on Agricultural Subsidies organised by the Institute for Agriculture and Trade Policy among others, a common thread that emerged was about the effects of subsidy cuts on small farmers. 

The serious problem facing farmers worldwide is the very low commodity prices, which many say will only continue to fall.  The low prices cause over-production, which in turn causes prices to fall further. Comments from speakers from the EU, US and South America all reiterated this phenomenon as the justification for continued subsidies, and calls were made for the root causes to be addressed and solutions found. 

One interesting issue, which should have required more deliberations, was the effects of operational agri-intermediary cartels who have actually been the main beneficiaries of the lower prices for agricultural commodities, instead of consumers. 

These intermediaries abuse their monopolistic dominance in the market for final products while in the markets for primary products they abuse their monopsonistic dominance. A World Bank report estimated that the divergence between producer and consumer prices may have cost commodity-exporting countries – which mostly are developing and LDCs - more than US$100bn a year, and suggests that imperfect competition at the intermediary level is the key factor.  

A session organised by the Commonwealth Business Council and the Geneva Women in International Trade brought to the forefront the interlinkages between trade and gender as well as the impact of women in small, medium and micro enterprises.  Although the issues of inequality covered is much more of a development issue, perhaps more pertinent to national government policy, the discussion on entrepreneurial development and the practicalities of how to engage in the international market were interesting. 

The evergreen debate of whether environmental standards under the SPS and TBT agreement under the WTO should be enhanced beyond the least common denominator was the focus of a workshop organised by the European Commission on “Environment and Governance: What role for the WTO”. Rupert Schlegelmilch of EC DG Trade tried hard to sell the EC’s view of introducing process standards in the WTO, but was met with substantial civil society opposition.  

Another issue that emerged was regards the compatibility of multilateral environmental agreements such as the Montreal and the Kyoto Protocols with the international trading system especially in terms of their trade related impact.  

“The trade equation of MEAs will not be solved unless these issues enter the WTO”, said EC’s Representative. In counter, Tom Crompton from WWF, UK vocalised the views of most NGOs as well as developing countries “WTO is ill equipped to handle additional environmental issues. It will be more relevant to strengthen UNEP”    

The International Policy Network’s session on “Trade, Technology and Development” was another discussion which witnessed a great deal of debate as to whether there is a simple causal relationship between trade liberalisation, local FDI presence of TNCs in developing countries together with the technology they bring in and economic development. Implicit consensus was that appropriate regulatory mechanisms are needed badly, and an imperative if the developing countries are to reap the benefits of opening their economies.  

Countering an example quoted by Johan Norberg of Timbro, Stockholm, author of “In Defence of Global Capitalism", Alice Pham of CUTS revealed to the participants a sad fact that the monthly salary of a normal Nike worker in Vietnam is not sufficient to afford even one high-quality pair of Nike shoes; as against the huge profits the same TNCs have been making in the developing world. 

“Asymmetry or exploitation, is just a tricky game of words”, said Dr. Margaret Karembu of the University of Nairobi and ISAAA Africentre, one of the panellists. “That people are competitively thriving for a US$100-monthly-salary-for-hard-labour doesn’t mean TNCs are doing a favour to developing countries, if one looks at these companies’ super-profits there, and at the number of weaker local enterprises driven out of business”.  

LDCs like Bangladesh, for example, remain an LDC despite having an extremely open investment regime. Technology transfer doesn’t happen if the host countries, which are weak, don’t have the absorptive capacity. More so, the transfer is blocked by the legal but anti-competitive licensing practices which the current trading system is granting the ‘big guys’. 

The role of the International Monetary Fund in supporting the WTO negotiations also came under scrutiny. According to Hans-Peter Lakes of IMF, although the Fund streamlined its policy imposing trade liberalisation-related conditionalities since 2001, a small number of assistance programmes are still linked to conditionalities. 

Ambassador Toufiq Ali of Bangladesh questioned the rationale behind IMF proposing the Trade Integration Mechanism, whereby the Fund pushes the developing countries to further integrate into the world economy through new commitments in the WTO. He suggested that that the Fund should rather start programmes to enhance the export base of developing countries, whereby the poor countries benefit, rather than offering onerous loans to undertake new commitments. 

At another session focusing on market access, Ambassador Nathan Irumba of Uganda pointed out that if the large developing countries represented at G-20 are ready to accommodate concerns of the lease developed countries (LDCs) in the G-90 group, both could join together in the current round. He disclosed that there are dialogues going on between G-20 and G-90 to reach an understanding on taking common positions in many areas including agriculture.  

Prof Ajit Singh of Cambridge University argued that the success of India and China in liberalisation was due to the controlled liberalisation and integration with the global economy which they followed in the 1990s. He suggested that poor countries should learn from the liberalisation experience of Japan, South Korea as they all followed “strategic integration” with the world economy.  

The experience of the above countries showed that free trade is not the only way of economic growth but controlled liberalisation whereby countries should go for liberalisation of sectors where it is competitive or complimentary to foster welfare of the people. 

The Symposium ended with a hope that the three days of extensive exchange of ideas and intensive discussion among the civil society and the trade community will act as a catalyst in the run-up to the July deadline of the Doha Round. Whether the concerns raised would be addressed or not is still a question, but the meet clearly sent a signal that the civil society has a higher responsibility and will need to come up to the expectations of the role they are constructively playing to achieve a better, rights-based world trading system for all.

Role Of Civil Society In WTO Recognised

Geneva 26 May 2004:The second day at the WTO Public Symposium “Multilateralism at a crossroads” clearly displayed the growing importance and clout of the civil society in international trade issues so much so that high profile diplomats from developing and developed countries were more than happy to participate in NGO deliberations.    

A workshop organised by the Third World Network “Development perspectives on the current WTO negotiations” included panelists like K.M.Chandrashekhar, Ambassador of India to the WTO and Luis Felipe Seixas Correa, Ambassador of Brazil to WTO as well as Martin Khor of the TWN.  

Ambassador Chandrashekhar asserted in his presentation that there is no causal link between trade, growth and poverty and countries should be cautious of such claims made by liberalists in all fora. S&DT treatment for LDCs by developing countries took the centre stage at the TWN session.  

Responding to the latest debate on differentiation, Chandrashekhar clarified that it is improper to create a distinction between developing countries and LDCs within the WTO framework because the developed countries themselves have introduced programmes such as AGOA and EBA outside the WTO framework.  

Further, he said that developing countries were planning to accommodate the interests of LDCs via special treatment under other plurilateral arrangements.  Ambassador Correa added that the forthcoming G20 draft on agriculture for the July Framework agreement will accommodate the interests of LDCs.  

An interesting session “Environmental Requirements and Market Access” saw Laurence Graft, of the European Commission spoke about how EC is trying to assist developing countries to promote better environmental standards by providing financial and technical assistance. She also said that the EC is trying to promote cooperation and partnership and increase transparency within EC environmental legislation.  

Countering the EC representative, Ms Shashi Sareen, Director of the Indian Export Council said that overall measures adopted by developed countries for promoting transparency in the environment legislation seemed fine on the surface, but under that,  things were very different and difficult. Developing countries are not even consulted as regards new environmental schemes. Certification costs are prohibitive, while certification by domestic certifying agencies are not accepted. Standards are also set at high levels than that acceptable under international standards.  

In another event on “Corporate Social Responsibility issues and WTO” organised by the Geneva Social Observatory, the issue of an international voluntary code for social, environmental and ethical standards emerged. Further, Hugh Pullen from DG Trade, European Commission noted that CSR codes are finding a place in regional agreements for voluntary adoption, but there is no serious attempt to promote CSR.   

A panel discussion organised by CUTS Centre for International Trade, Economics and Environment (CUTS-CITEE) on “South-South Cooperation” introduced South- South cooperation as a new silent revolution.  “At present 43 percent of South trade is with developing countries, which accounts for about 11 percent of global trade. And this number is growing at a rate of around 10 percent per year, which is double the growth rate of global trade” said Lakhmi Puri, Director of UNCTAD.  

Ms Puri emphasised that South-South trade, in particular, and technological and economic cooperation, in general, gets a role to play in the development path of Southern countries in a more globalised world. The points were reiterated by all other panellists as well as participants, pointing to the need for more South-South technical assistance and capacity building for really meaningful cooperation between developing countries which will benefit them all.  

“Trilateral cooperation can be an efficient and great way forward, with financial support from the North, to deliver technical assistance from the South to the South”, said CUTS Secretary General, Pradeep Mehta, underscoring the point made by Nagesh Kumar from the Research and Information System for Non-aligned and Other Developing Countries, India. “We already have experience of getting financial support from the British, Swiss, Swedish and other northern donors, who are supporting CUTS projects for delivering technical assistance to other developing countries. In these projects, CUTS gathers a group of southern experts to do the job”.    

“There is a case, and a need, for a multilateral competition framework (MCF) to be hosted by a joint forum of WTO and UNCTAD ”, was the opinion, which came out at a meeting organised by the CUTS Centre for Competition, Investment & Economic Regulation (C-CIER). The Panel Discussion which aimed at examining the desirability and possible structure of an MCF, held on 26^th May, the second day of the open debate hosted by the WTO at Geneva, Switzerland.  

All the speakers as well as participants showed support to the necessity of having such a framework if developing countries’ interests are to be protected against cross-border anti-competitive practices increasingly prevalent in this globalisation era. “Traditional approach has to be given up, while  a more constructive collective bargaining power is indispensable. Together, we will make a better deal”, observed many participants.

Need For A Multilateral Competition Framework Recognised -
Joint Body of WTO-UNCTAD as the Best Host

Geneva 26 May 2004:There is a case, and a need, for multilateral competition framework (MCF) to enable developing countries to deal with the increasing prevalence of cross-border anti-competitive practices. However in view of the difficulty of negotiating such a deal at the WTO, a joint UNCTAD-WTO body will perhaps be the best host. This opinion emerged at a Panel Discussion organised by the CUTS Centre for Competition, Investment & Economic Regulation (C-CIER) on the second day of the Public Symposium hosted by the WTO at Geneva, Switzerland. 

Robert Anderson, WTO Counsellor, took a neutral position to start the “most enlightening discussion” so far of the Symposium by giving an overall introduction to the issues. All the speakers as well as participants expressed positively about the necessity of having such a framework if developing countries’ interests are to be protected against cross-border anti-competitive practices increasingly prevalent in this globalisation era. The question is no longer about whether there should be an MCF, but rather on where and how.  

The EU’s insistence on bundling the four Singapore issues and then wavering on them at Cancun, has caused much harm to competition policy, which is one of the benevolent and good governance instruments to be negotiated internationally. It became a case of throwing out the baby with the bathwater.  

Now, the EU’s approach to negotiate competition at the WTO as a plurilateral agreement will also not enable any sensible thinking as many developing countries will not agree to any plurilateral deals. “If there is a plurilateral deal on competition, then there could be one on labour standards or any other non-trade issue, and therefore it is not at all acceptable to the South”, said Pradeep Mehta of CUTS, who was moderating the panel. 

Interestingly, as pointed out by Josef Drexl of Max Planck Institute, the EU proposal is not only too obviously market access-oriented, it is also rather “consistent” with EU’s own legislations. A harmonization in this direction would only effectively lead to having an EU competition code at the multilateral level.  

Drexl’s academic perspectives were reiterated by NGOs’ activists as well as practitioners in the field. Patrick Krauskopf of COMCO, Switzerland quoted an example of an EU-Switzerland Air Transport agreement, which left the Swiss having a European Commission office in Switzerland take charge of the competition provisions. 

Mehta in an answer to a contribution from the floor by a Japanese expert on the problems of having one-size-fit-all competition legislation as per the current proposal at WTO, quoted CUTS’s experience in the 7-UP project, a comparative study of competition regimes of several developing countries, to point to the equally problematic but largely forgotten issue of “one-type-fit-all”. Developing countries do need competition law/policy, however, it needs to be an appropriate one suited to their needs, levels of development and local peculiarities.  

“We do need concessions and special and differential treatment for the South in a multilateral competition regime to work well” noted Taimoon Stewart of University of West Indies. She was making a presentation on her recent study of CARICOM countries. S&D treatment was also the theme of presentation made by Philippe Brusick, UNCTAD, who reiterated the need for an MCF. However, to achieve these concessions as well as treatment, “traditional approach has to be given up”, a more constructive collective bargaining power is indispensable. “If developing countries continue to enter into bilateral and regional agreements […], they will have less bargaining power. Together, they can get a better deal in a multilateral context”. 

Several specific examples were quoted by Phil Evans of the UK Consumers Association, Taimoon Stewart, and Patrick Krauskopf of COMCO Switzerland, all pointing to the fact that developing countries’ economic health is suffering from serious fever, whose cause can be traced back to big business in the developed world.

In view of the reluctance of many developing countries to do a deal at the WTO, a multilateral framework in a joint “UNCTAD-WTO” body is the best approach. Concrete implementation mechanisms, nonetheless, are yet to be proposed, and still pose a daunting question for experts and concerned parties. 

However, let us not leave the collapse at Cancun a bump on the road forward, and “take advantage of this small window of the opportunity given to us” to build up a constructive dialogue on an international competition policy.

A Silent Revolution in South-South Trade

Geneva 26 May 2004:Contrary to the general perception that globalisation and rules-based multilateral trading system eroded trade amongst countries in the South, a new silent revolution is taking place in trade and economic cooperation among the developing countries. 

“At present 43 percent of South’s trade is with other developing countries, which accounts for about 11 percent of global trade. And this number is growing at a rate of around 10 percent per year, which is double the growth rate of global trade” said Lakhmi Puri, Director of United Nations Conference on Trade and Development (UNCTAD), Geneva. 

She was speaking at a Panel Discussion at the World Trade Organisation (WTO) Symposium organised by CUTS Centre for International Trade, Economics and Environment (CUTS-CITEE) on 26^th May. 

Mrs Puri emphasised  that South-South trade, in particular, and technological and economic cooperation, in general, gets a role to play in development of Southern countries in a more globalised world. However, what needs to be done, and yet to be done is a daunting question.                                                                                          

South-South cooperation has received new thrust at the recent Cancun Summit of the WTO, where  India, Brazil, South Africa along with 17 other countries formed the Group of 20 (G-20) which effectively lobbied for protecting the interests of developing countries in the global agricultural trade. 

“Cancun in that sense was a turning point in the international trading system, where the Southern solidarity expressed itself quite authoritatively. As things stand today, the solidarity will sustain in spite of any contrarian efforts by the powers”, said CUTS Secretary General, Pradeep Mehta. “There is too much at stake”. 

New initiatives to cement developing country cooperation will be launched at the 11^th conference of UNCTAD, taking place in Sao Paulo in June. Most importantly, the Third Round of Generalised System of Trade Preferences (GSTP), which provides preferential tariffs for trade among the South will be launched in Sao Paulo. 

Technical cooperation, technology transfer and capacity building are other growing areas, which complement the economic cooperation among the South. Dr Nagesh Kumar, Director General of Research and Information Systems (RIS), New Delhi highlighted the logic and feasibility of South-South technical assistance and capacity building for more meaningful cooperation between developing countries, which will benefit them all.  Explaining his case, Dr. Kumar cited the experience of a diary firm in Africa which sought technical assistance from Europe for processing milk products. The answer that they got explains it all.  “Sorry, but we cannot help you to deal with the situation where temperatures go up to 45^oC, as we have experience of working only in temperatures below 20^oC”. This was a striking example of how technical assistance needs to be obtained from others with similar situation. 

“Cooperation in South Asia can be enhanced if Least Developed Countries such as Bangladesh, Nepal and Bhutan are given better market access opportunities by large developing countries such as India and Pakistan” said Ambassador Toufiq Ali of Bangladesh.

Though all the developing countries require special and differential treatment the poor amongst them should be granted special conditions, said Werner Corrales, former Ambassador of Venezuela to the WTO. This sentiment was echoed by Mr. Paulo Mesquita, Counsellor in the Brazilian Mission. The panel discussion was moderated by Razeen Sally of the London School of Economics.

Is the EU Serious?

Geneva 25 May 2004:An unprecedented audience heard Pascal Lamy reiterating his well-known views on how to take the Doha Agenda forward, though most did not feel convinced that the EU is really serious. 

Speaking at the opening session of the WTO Public Symposium being organised here on 25-27 May, Lamy, the EU’s Trade Commissioner, fired a salvo. “We failed to bring in social issues at Doha and will launch a campaign soon after the end of the year when the quotas under the agreement on textiles and clothing come to an end”. 

The WTO Director General Dr. Supachai Panitchpakdi, in welcoming the participants noted that over 1200 people have registered for the event and this is indicative of the increasing transparency that the WTO would like to pursue. “This is an opportunity to have reality checks by bringing together the various stakeholders and actors of the multilateral trading system, stimulating an open debate”.  

In the context of the Doha round, Panitchpakdi hoped that the July target of arriving at a framework will only be the beginning. Commenting on the structure of the symposium, he noted that of the 29 events, 25 are being organised by NGOs and there are issues being discussed many members may not like, but it is important to have discussions and debates on the contentious issues. 

One such contentious issue is the matter of labour standards, which was raised by the Global Unions at a workshop organised in the afternoon. In discussing the ILO’s report of the Commission on the Social Dimensions of Globalisation, participants noted that it has called for better coherence among international institutions and that labour standards need to be respected in all international accords. 

“The Unions will never give up on getting labour standards into the WTO framework. Perhaps that is another issue which the EU would support, as Lamy said quite plainly, and would become another non-tariff barrier whether or not the Doha Round is successfully concluded”, noted CUTS Secretary General, Pradeep S Mehta. 

It was not Lamy alone who has inspired this debate but several campaigns which the international labour movement has been running ever since the Singapore ministerial meeting of the WTO in December, 1996. 

The workshop also expressed serious concern on the lack of movement in the area of special and differential treatment—an issue which was agreed at Doha to put weight on the ‘development’ prefix to the Round. However, Lamy did not address this issue at all.  

On the contrary, Lamy, in response to a floor intervention, gave only a vague answer on the four Singapore issues (investment, competition, trade facilitation and transparency in government procurement), which will remain on board and expectedly move at differing speeds. “We now have an understanding on trade facilitation with nearly all members, while one is still looking at transparency in government procurement. Investment and competition will continue to be discussed at the WTO and we will proceed with them as agreements outside the single undertaking”.   

The Singapore issues were also brought up in a concern raised in the area of bilateral and regional agreements, where the capacity of the developing countries to negotiate is almost non existent, and where they lack the backing of the bargaining power that they can have in the multilateral trading system.  

On agriculture, Lamy said that they are moving forward on export and production subsidies. “The picture is rather less clear on market access, where differences between us—or apparent differences—have slowed progress. We still believe that a “blended approach” can address concerns of the agricultural exporters, our own sensitivities and those of developing countries like India”.   

As the day moved on, agriculture turned out as the hottest issue, with a lot of concerns raised by developing-country and NGO observers. At a subsequent workshop on “Trade in Agriculture”—and more to come—Ignasi Carreras of OXFAM Spain made a critical statement that northern agricultural policies are harming southern farmers, citing an example that while the EU is one of the least competitive producers, it is one of the biggest exporters of sugar. Another point was made by Jack Wilkinson of International Federation of Agricultural Producers, who noted rather stoically that sometimes subsidies have historically been put in place for valid reasons, because the markets have not worked. If the subsidies are removed and if practical ways are not found to address these market failures, how will the poor benefit? 

Many speakers and discussants reiterated Dr. Panitchpakdi’s opening point for the urgent need to take advantage of the small window of opportunity that has opened up between now and July.  Repeated references arose  as to the serious need for substantial political will to move forward in the area of agricultural negotiations, particularly from developing countries. 

A workshop by ICTSD on Africa was quite despondent, raising a fundamental issue: “The continued dismal performance of Africa in the global economy has led many to question the utility of its participation in the multilateral trading system”. One message coming out of the discussion – For effective participation into the system, capacity building is required, however, most of the efforts in this line made in Africa has been negated by corruption and other governance problems. This was, by coincidence, in choir with a remark made in the “Trade in Agriculture” by Joachim Von Braun, International Food Policy Research Institute: It is incorrect to blame everything on globalisation. Looking at environmental issues, free trade is not bad for the environment, it is bad governance and bad rule of law that are bad for environment. 

The opening day of the Symposium ended but a lot of questions remained unanswered, not to count those exchanged but not yet having a chance to be voiced in common, stimulating an atmosphere of great excitement and anticipation. Let’s keep our fingers crossed that in the next days to go, NGOs will manage to make their points, as expected by the WTO Director General ay the beginning. “Whatever [NGOs’] point of view, it has to be acknowledged that [NGOs] succeeded in making [NGOs’] voices heard and in having [NGOs] arguments- at least some – taken into account by the WTO and its Members. It is equally true that, because of this growing influence, [NGOs] too can be partially held accountable for the success AND failures this organisation has seen.”

Promoting Effective Markets in the Mekong Region 

Hanoi 24 April 2004:“We may have already drafted a competition law but implementing it will be a gigantic task and we will welcome outside assistance for it”, observed Mr. Truong Quang Hoai Nam, Director General, Legal Department of the Ministry of Trade of Vietnam. Mr. Nam was speaking at an international seminar at Hanoi. The seminar, organised by CUTS-International Centre for Competition, Investment & Economic Regulation, an India-based research and advocacy organisation, also launched a cross-country research-based advocacy and capacity building programme, codenamed “7-Up Mark II”, aimed at accelerating the process toward an appropriate competition policy & law, in three Mekong countries viz. Cambodia, Lao PDR and Vietnam.

International competition experts from Asia, Africa, Europe and America met on 23 & 24 April, 2004 in Hanoi to debate on the desirability, optimal content and structure of the competition policy & law that developing countries should implement to promote effective markets for economic development. Officials from the Department for International Development (DFID-United Kingdom), Federal Trade Commission (FTC-United States), Foundation for Effective Market and Governance (FEMAG-Australia), State Secretariat for Economic Affairs-Switzerland (SECO), Swiss Competition Commission (COMCO), World Trade Organisation (WTO) joined experts from Australia, India, Indonesia, Kenya, Nepal, Taiwan, Thailand, as well as local consultants of project countries, Cambodia, Lao PDR and Vietnam to present their viewpoints and share firsthand experiences as regards competition policy & law and its implementation performance across the world.  

The participants in the seminar were unanimous in recognising that with all these countries shifting from a planning-based to market-oriented economy, the role of competition policy becomes important to ensure protection of consumer interest as well as long-term economic interest of the countries. With the liberalised economic policies welcoming foreign goods and companies the market situation has become even more complicated.  

“The competition law has to be supported and promoted by efficient institutions, which are well equipped with sufficient capacity and skills”, observed Ross Jones, former Commissioner of the Australian Competition and Consumer Commission. Toward such policies and concomitant institutions, it is necessary, at the first instance, for developing countries to foster public acceptance as well as widespread participation and contribution of various national stakeholders into the designing and implementation of competition policy and law.

The role of civil society, especially consumer organisations, is important in such a process to sustain momentum towards appropriate policy change, and to preserve the merits of reforms. This is a point which has guided the designing of the project, said Mr. Pradeep S. Mehta, Secretary General-CUTS International. This also the reason that the participants in the seminar were drawn from all major stakeholders groups, including chambers of commerce, government, academia, media, as well as civil society. It was noted that Vietnam already has consumer organisations which need to be strengthened, while in others countries consumer movement needs to be created.  

Mr. Mehta also emphasised that the project was not intended to tell these countries what to do but to facilitate the policy-makers and other stakeholders of these countries to decide for themselves what to do and how to do.

Developing countries need to recognise their differences while forming coalitions

New Delhi 16 April 2004: “There are differences within developing countries on trade and trade policy matters and this needs to be recognised fully while forming coalitions at the international levels in order to take forward their interests in a cogent manner.”  This was one of the key recommendations that emerged out of the Afro-Asian Civil Society Seminar on Trade, which was held in New Delhi.  The three-day seminar concluded yesterday.  Other than the plenary sessions, a number of case studies highlighting the impact of international trade on domestic economies and sectors were presented. 

More than 100 participants from different countries discussed and debated key issues emerging in the international trading system.  They debated the draft Afro-Asian Civil Society Statement on Trade, which will be adopted.  The recommendations will be taken forward to advocate at different fora, especially to the 11^th Session of the United Nations Conference on Trade and Development, which will be held in Sao Paulo, Brazil, in June this year. 

Two major strands emerged from the seminar.  While many participants challenged the existing development model and called to put primacy to social and human considerations over economic considerations.  Another set of participants argued that it is the system, which needs to be reformed and profound structural changes are required to operate the system in a more acceptable way. 

The forum recommended a research agenda for the civil society organisations to take forward.  The domestic dimensions of the issues and their linkages with the international trading system should be recognised and researched properly.  Another issue is whether the civil society organizations are in a position to facilitate the building of international coalitions.  If yes, the question is how they would reconcile the international civil society perspectives with the national perspectives.  There should also be joint advocacy strategies around common issues. 

The role of civil society organisations in helping developing countries in trade negotiations was another issue, which was debated.  The challenge is to recognise the complex relationship between the governments and the civil society organisations, particularly when the non-state actors challenge the existing paradigm of governance and related issues.  The civil society also needs to understand its relationship with other stakeholders, like business and media. 

Another outcome of the meeting was the formation of an Afro-Asian Civil Society Network on Trade, which will work together to implement the research agenda and do advocacy at different levels.

Trade Policy Capacity Building should be Demand Driven

New Delhi 15 April 2004: “International trading system is still evolving and trade policy-making is a specialised subject.  Therefore, trade policy capacity building should be demand driven,” was the view expressed by experts while speaking at the Afro-Asian Civil Society Seminar being organised by Consumer Unity & Trust Society (CUTS) in New Delhi.  More than 100 participants from 40 different countries are participating in the event.   They represent governments, inter-governmental organisations, NGOs, business organisations, research institutions, academia, media persons, etc. 

Pradeep Mehta, Secretary General of CUTS International, argued that capacity building is defined in different ways, both by the donors and the recipients.  However, the word ‘building’ in “capacity building” has acquired a distorted meaning, implying that something from scratch has to be initiated.  On the other hand, the capacity that has already been created has not been used effectively.  This should depend on local context, for critical reflection, learning, documentation and dissemination and should be a continuous process. 

According to David Luke, Trade, Debt and Globalisation Advisor to the United Nation Development Programme, there is the need for coherence between rich countries trade and development assistance policies.  Aid for trade capacity support is concentrated on a very few developing countries.  Secondly, leadership in exercising ownership and direction over the policy process is required from national policy-makers.  In many Sub-Saharan African countries, the experience shows that there has been too little trade capacity development content in Poverty Reduction Strategy Papers, thus mainstreaming trade in these plans is proving to be an elusive objective to realise. 

Veena Jha, UNCTAD’s Coordinator in India, outlined the imperative of developing local institutions in building trade policy capacity, which can also act as regulatory and enforcing bodies.  At present, there is no built-in mechanism to estimate the costs of adjustments to new trade policies and their implementation, she said.  Referring to the WTO’s dispute settlement process, she argued that the cost of defending is very high, which calls for the creation of indigenous capacity.  She also shared the experience of the implementation of UNCTAD’s India’s Trade and Globalisation programme, which is aimed for building the capacity of different stakeholders. 

Rosalca Hamilton, the Chief Executive Officer of the Institute of Law and Economics, Jamaica, shared the Caribbean experience of trade policy-making, especially that of Jamaica.  She argued that first there should be a need to clarify to build capacity for what, for whom and how.  Building capacity should also focus on enabling developing countries to produce high value products, which will be helpful for getting better market access. 

While chairing the session, Suman Bery, Director General of National Council of Applied Economic Research, New Delhi, said that the imperative is to have regular and better interaction between the trade policy officials and the civil society, so that both can learn from each others’ experiences and apply them in their respective fields.

NGOs’ Role in the International Trading System Should Be Emphasised More

New Delhi 14 April 2004: “Are international organisations adapting to the issues that developing countries advocate for holistic development?” This question was posed by N. K. Singh, Member of the Planning Commission of India. He also added that the definition of sovereignty will undergo a significant change in the near future and countries need to reposition themselves in this new era of globalisation.   

He was delivering the inaugural address of the Afro-Asian Civil Society Seminar, being held in New Delhi. The event is organised by Consumer Unity & Trust Society (CUTS), an international non-governmental organisation, having its headquarters in Jaipur. The Seminar will continue till 15 April. More than 150 representatives from over 40 countries are participating at the event.  

According to Magda Shahin, Egypt’s Ambassador to Greece: “Increased awareness of NGOs on issues confronting the international trading system is indeed helping developing countries in manifesting their concerns of development in a better way”. She added that Cancun was a new beginning as far as developing countries´ participation in the international trading system is concerned. In this context, she highlighted the importance of the various groups of the developing countries that have shown readiness to work together.    

K. A. Azad Rana, Deputy Director General of the World Trade Organisation stressed on the need for developing the capacity of developing and least developed countries while engaging in trade negotiations and explained the various programmes that the WTO is organising. He also emphasised on supply-side constraints that many of these countries are facing and argued that unless these problems are addressed, poor countries will not be able to enjoy market access opportunities to the fullest extent possible, even if they are available.  

Lakshmi Puri, Director of the United Nations Conference on Trade and Development outlined the role that UNCTAD is playing in highlighting the poor countries’ concerns on trade. She iterated that the UNCTAD will continue to develop the capacity of developing and least developed countries on both trade policy and trade promotion. In this context, she mentioned that at the 11^th Session of UNCTAD, which will be held in June this year, the organisation would launch a new programme of partnership between the governments, business organisations and the civil society organisations.   

While chairing the session, Arjun Sengupta, a leading economist of India, argued that the civil society has a much larger role to play today than before, especially in the light of changes which are taking place in the international trading system. He took this opportunity to laud the efforts made by CUTS and many other NGOs to do both research and advocacy to place the developing countries´ views at different forum in a better way.  

 According to S. N. Menon, Special Secretary of Department of Commerce, Government of India: “There should not be any hurry for making trade rules, as that can have adverse impact on the interests of developing countries.” Trade is welfare enhancing, but trade liberalisation may create some losers and the redeployment of those people into the economic process is very important,” he argued.  

The title of the first plenary was “Assuring Development Gains From the International Trading System and Trade Negotiations”. While delivering the keynote address, Anwar Ul Hoda, Professor of Indian Council for Research on International Economic Relations deliberated on the issue that trade is not the end all and be all of development. “The bedrock of any development process is social and political stability and sound macro economic management,” he emphasised.   

Maxine Olson, the Resident Representative of the India Office of United Nations Development Programme chaired the plenary and emphasised that trade is the means and not an end. She expressed that in future, NGOs will be playing a much bigger role in shaping the agenda for the international trading system, and both the governments and the inter-governmental agencies need to devise new mechanisms to entering into partnerships with the civil society.   

NGOs Are an Integral and Vibrant Part of the International Trading System, say experts
 

New Delhi 13 April 2004: “Are international organisations adapting themselves to the issues that developing countries advocate for development to be holistic?” N. K. Singh, Member, Planning Commission of India posed this question. He also added that the definition of sovereignty will undergo a significant change in the near future and countries need to reposition themselves in this new era of globalisation.

He was delivering the inaugural address at the Afro-Asian Civil Society Seminar being held in New Delhi. The event is organised by Consumer Unity & Trust Society, an international non-governmental organisation, having its headquarters at Jaipur, India. The Seminar will continue for the next two days. More than 150 representatives from over 40 countries are participating at the event.

According to Magda Shahin, Egypt´s Ambassador to Greece: “Increased awareness of NGOs on issues confronting the international trading system is indeed helping developing countries in manifesting their concerns on development in a better way.” She added that Cancun was a new beginning as far as developing countries´ participation in the international trading system is concerned. In this context, she highlighted the importance of the various groups in the developing countries that have shown readiness to work together. 

While chairing the session, Arjun Sengupta, a leading economist of India, argued that the civil society has a much larger role to play today than before, especially in the light of changes which are taking place in the international trading system. He took this opportunity to laud the efforts made by CUTS and other NGOs to do both research and advocacy to place the developing countries´ views at different fora in a better way. 

Afro-Asian Civil Society Seminar on WTO Begins

New Delhi 12 April 2004: CUTS International is organising a three-day Afro-Asian Civil Society Seminar titled “From Cancún to São Paulo: The Role of Civil Society in the International Trading System” beginning from today. The event will be held at Hotel Le Meridien. More than 150 participants from 30 different countries representing NGOs, inter-governmental organisations, research institutions, media, governments will take part in this Seminar.

Speaking at a press briefing today, Pradeep Mehta, Secretary General of CUTS International said that the Seminar will manifest the civil society’s concerns on the international trading system. “The Seminar will involve and engage the civil society representatives and policy-makers in order to have diverse discussions and debates for taking the Doha Development Agenda forward, which will, in turn, provide ideas for achieving better coherence between the international trading system and national development strategies”, he added. The objectives are to:

·        take stock of various aspects of the international trading system, which are of special interest to developing countries in Asia
         and Africa;   

·        discuss concerns and necessary actions of civil society organisations, governments and other stakeholders for achieving
         better coherence between the international trading system and national development strategies;

·        provide networking platform to civil society organisations and others to discuss issues of mutual interests and build
        partnership between and among different stakeholders; and

·        adopt the Afro-Asian Civil Society Statement on Trade and develop research agenda and advocacy inputs for civil society   
        organisations and others.

Among the distinguished speakers, there will be N. K. Singh, Member, Planning Commission of India; K. A. Azad Rana, Deputy Director General, WTO; Lakshmi Puri, Director, UNCTAD, Magda Shahin, Egypt’s Ambassador to Greece; S. N. Menon, Special Secretary, Department of Commerce; Veena Jha, Coordinator, UNCTTAD India; Colin Ball, Director, Commonwealth Foundation; David Luke, Advisor, UNDP; Jean-Pierre Lehmann, Chairman, Evian Group; Abid Suleri, Deputy Country Representative, Oxfam GB in Pakistan.

 The plenary sessions will focus on the following themes:

·        Assuring development gains from the international trading system and trade negotiations

·        Does the international trading system promote the interests of the poor?

·        Building and strengthening capacity in trade policy

·        The role of UNCTAD in assisting national trade and development strategies

Besides plenary sessions, four workshops will be organised to present case studies on micro aspects of linkages between the international trading system and national development strategies.

In the immediate future, the outputs of this Seminar will be used in conducting advocacy during the 11^th Session of United Nations Conference on Trade and Development (UNCTAD XI), which will be held in São Paulo, Brazil in June 2004. The theme of UNCTAD XI is “enhancing coherence between national development strategies and global economic processes towards economic growth and development, particularly of developing countries”.

Consumer Unity & Trust Society (CUTS), the organisers of this event, is an international NGO, having its headquarters in Jaipur and six resource centres in India (Chittorgarh, Calcutta and Delhi) and overseas (London, Nairobi and Lusaka).

CUTS Initiative on Road Safety Issue

Calcutta 07 April 2004: One needs to take care of his own while on the road, irrespective of whether he is a pedestrian or a driver. This was the main idea that emerged at the panel discussion titled “Road Safety is No Accident” organised by Consumer Unity & Trust Society (CUTS), a consumer interest body, on April 7, 2004 at Calcutta Management Association Auditorium.  

The theme of this year’s World Health Day is Road Traffic Injury and measures to prevent them. CUTS took this opportunity to celebrate the day to address the above issues by raising a healthy debate on the issue of road safety. A panel discussion brought together representatives of consumer organisations, experts on road safety issues, common people, schools and media to discuss in detail about the road safety scenario in the country. 

Dr. Jayanta Basu, Journalist, opined that road accident is a sheer wastage of resources He quoted a study on slums in Calcutta and expressed his surprise that even in slums, road accident is the primary cause of lost lives. He suggested that CUTS should look at the fatal accidents and find out reasons why accidents are happening, who is responsible for the accident. He stressed that CUTS could provide a platform to formulate the strategy to prevent road accidents in future by analysing the data of road accidents. 

Mr. Ashok Bhattacharya, Director, Legal Metrology, who was earlier with Regional Transport Authority for eight years, shared his experiences with the audience. He opined that Road Safety initiative is a movement, which should involve all relevant stakeholders. He pointed out the dismal condition of road and traffic management in the districts of West Bengal. Giving some examples he showed how one gets a driving license even without passing the test. He also gave a comparative picture of the road safety scenario in countries like Australia, Germany and England to show how effectively these countries manage the traffic system and have concern for pedestrians. 

Mr. Prabir Basu, Lawyer, talked about consumers’ role and responsibilities. He pointed out that road safety depends on pedestrians, drivers and the traffic department. He mentioned that the primary causes of road accidents are high speed and poor condition of roads. He stressed on the fact that one has to take care of his own while one is on the road. 

Prof. Nabinananda Sen, Dept. of Business Management, Calcutta University, who moderated the discussion, said that lack of awareness is the main problem in countries like India. Awareness generation is necessary to ensure road safety, and that should be done by the civil society. 

On the occasion, Mr. Prabhat Rohatgi, a noted Consumer Activist, released a book “Is it Really Safe?” which compiles 21 articles on different consumer safety issues. Mr. Rohatgi appreciated CUTS’ efforts to publish such a book and expressed his hope that this would be beneficial for the consumers and the consumer organisations.  

Another eminent personality, Mr. Sanjay Budhia, Chairman, Eastern Region, Confederation of Indian Industries (CII), launched a newsletter “Beware,” a CUTS initiative to disseminate information and empower people on different consumer safety issues.

Playing With Toys or Life?

Calcutta 17 March 2004: Toy is a child's best friend. Be it a Barbie doll, a stuffed animal or a WWF warrior, racing car; children and their playthings are inseparable. But unfortunately toys are not without their hazards. Each year, quite a large number of children get hurt while playing with toys. But such incidents are rarely reported in the newspapers.

CUTS while undertaking a research on the issue found that “Choking” is a common hazard for children. There are numerous incidents of babies choking on parts like small balls, marbles or lose parts getting into their noses.  

While enquired with parents, complaints about the sharp edges of toys were reported which local merchandisers often overlook. Toys that shoot objects are very dangerous and injury from such toys are very common. A host of such cases are reported regularly to child specialists. 

It has also been found that very often toys are attached with long strings or cords, which easily gets wrapped around a small child's neck and cause strangulation. 

Even, it is not safe to play with noise making toys as it can create a noise level that interferes with children's learning abilities. Because of a child's shorter arm span, toys are often potentially more dangerous. Children’s ears are more sensitive than adults and their hearing is easily damaged.  

Electric toys also pose risk. Toys with heating elements can result in burns in younger children, and these toys are not recommended for small children.  

It is often seen that low quality fibres and materials are used to make toys. Since small kids have a tendency of sucking toys, this could lead to stomach disorders and other related ailments. Allergies from toys are quite a common problem with kids now. Carcinogenic colours are used to bring the bright look of the toy. But there is a chance of the paint peeling off and your child swallowing it. Apart from some reputed manufacturers, others do not use food grade colouring material for toys meant for a small child. 

It may sound shocking but the fact is that most toys and other baby products in the Indian market are not manufactured following certain safety standards. The Bureau of Indian standards (BIS) has set standards for toy safety related to their mechanical and physical forms as well as toxicity. But the manufacturers are not obliged to adhere to the BIS guidelines unless they are exporting. The enforcement of guidelines is yet to be made mandatory for domestic toy manufacturers.  

We are into deeper research on this to come out with recommendations that could become an advocacy tool to pursue BIS in making the standards for the toys mandatory, so that your children can play safely with toys.

MOCA Would Be a "Catalyst" in Consumer Movement Says Chawla
 

New Delhi 12 March 2004: Lauding the exemplary role of non-government organisations in inculcating consumer awareness and proposing to augment the consumer grievance redressal machinery, the Secretary in the Ministry of Consumer Affairs (MOCA), Navin Chawla, today assured an active government involvement in espousing consumer causes and called for a mass movement to help remove consumer apathy.

Releasing a book titled “Is it really safe?” at a function organised by CUTS, a premier consumer rights organisation in the backdrop of World Consumers Day on March 15, Mr. Chawla told the audience comprising leading consumer activists and safety experts that the Ministry of Consumer Affairs would act as a “catalyst in hastening the process of consumer welfare and would endeavour to involve various schools, colleges and universities to meet this noble objective.”

Citing the example of Andhra Pradesh and Maharashtra, Mr. Chawla said, “The Ministry of Consumer Affairs has received a deluge of applications from hundreds of schools in these states seeking help in setting up consumer clubs. Steps are being taken to ensure that this enthusiasm is spread all over India.” He invited CUTS and other NGOs to help the Ministry in this regard and appreciated their efforts in the dissemination of consumer-friendly information.

“Is it really safe?” is a compendium of articles on the safety of commonly used products and services and is aimed at the middle and lower middle class consumers.

Hailing the efforts of CUTS in generating awareness on consumer safety issues, noted Transport safety expert and Henry Ford Professor for Transportation Safety at IIT, Dinesh Mohan, called for the need of evolving “efficient designing and engineering as a tool to guide human behaviour rather merely sermonising on safety issues”. He buttressed the point by citing the example of IIT where a speed breaker was provided at every 80 metres to control the rate of accidents when all other efforts in that direction had failed.

Ruing the poor road designs that prod people to break the law, Prof Mohan averred, "redesigning the roads, considering safety aspects, will go a long way in altering the human behaviour because any degree of education will not change the long bred habits,"

Informing that "road accidents cause more deaths than any other cause in 15-50 age group" Mohan stressed that as the year 2004 is a year of road safety, it is about time that attention was paid to this important issue.

Momentum For The Doha Round Has Not Been Lost: Sir Michael Arthur 

Jaipur 17 February 2004: “The British Government is not going to impose any protectionist measure on outsourcing,” asserted Sir Michael Arthur, British High Commissioner to India. He was delivering a public lecture on WTO (World Trade Organisation), which was held at the HCM Rajasthan Institute of Public Administration (HCM RIPA), Jaipur on Monday, the 16^th February 2004. “Britain is one of the most open economies in the world, not only in terms of trade but also for foreign direct investment. It believes that open economy and FDI bring huge benefits,” he added.    

The event was organised by “CUTS” International and HCM RIPA. More that 75 participants representing civil society organisations, business chambers, government bodies, etc attended the lecture. Initiating the discussions, Pradeep S. Mehta, Secretary General of “CUTS” International expressed that the WTO is perhaps the victim of its own success. According to him, Cancun was a stocktaking exercise and not much should be made out of its failure. More importantly, the trade community has to work hard to make the Doha round of negotiations a success with ‘development’ as its overarching objective.  

According to Sir Michael, the momentum for the Doha round has not been lost. In Europe, political consensus on WTO is very high. He welcomed the emergence of G-20 group of developing countries as a healthy development in the international trading system. Other than this, he expressed that in future South-South trade will be an important element of international trading system. In the same vein, he supported the emergence of intra-regional free trade arrangements as one way of taking forward the international trading system. However, he was not much sure about the efficacy of inter-regional free trade arrangements.  

On the so-called Singapore issues of investment, competition policy, transparency in government procurement and trade facilitation, he said that more flexibility is required and future negotiations on these issues, if at all, should be based on the principal of asymmetrical liberalisation commitments on the part of developing countries.   

While concluding his lecture, Sir Michael made the following observations: a) the dispute settlement system of the WTO should not be misused and/or overused, b) regional trade brings huge peace dividends and its political importance should not be undermined, and c) the framework of trade liberalisation is becoming complex, as non-state actors are getting powerful and involved. In such an emerging situation, concomitant domestic reforms are necessary for trade to help achieve better economic growth.  

Commenting on the lecture, V. S. Vyas, Professor Emeritus of Institute of Development Studies, Jaipur, expressed that though economic theory tells us about the virtues of free trade, we need to ponder seriously on the substantial public opinion that why free trade is not helping a country’s economic and social development. He cited two reasons for widespread scepticisms on WTO: a) lack of reciprocity on the part of many major countries, particularly on issues which are important for poor countries and b) lack of appreciation about the resilience of the system.   

According to him, the main stumbling block to the progress of the WTO is agriculture. In countries like India, agriculture is indeed existential in nature. Other than arguing for asymmetrical reciprocity on agriculture, he urged that the WTO agreement on agriculture should have a food security box, with provisions to take care of not only the existence of a huge number of poor and marginal farmers, but also of peoples’ right to food.   

B. K. Zutshi, former Indian Ambassador to the GATT/WTO was the other discussant. He expressed that the multilateral trade regime is like a bicycle and if we do not keep moving it will fall. According to him, in early 1990s, Indian policy with respect to international trade was inflexible.  

On investment, he expressed that a multilateral agreement on investment is like a solution looking for a problem. In any case, almost 95 percent of all restrictions on FDI are in services and the General Agreement on Trade in Services of the WTO is taking care of them. Thus, there is no need for investment to be added separately in the WTO agenda. On transparency in government procurement and trade facilitation, he said that multilateral agreements on these issues would help developing countries in the long run. However, before entering into any multilateral obligations, we need to judge the implementation burden and dispute settlement mechanism.   

He urged developed countries to liberalise their labour market under Mode 4 (temporary movement of workers). This issue has to be looked in the larger context of globalisation and demographic changes, in particular in industrialised countries.  

The presentations were followed by floor discussions. Concerns were raised about the impact of agricultural liberalisation in India on oilseeds and dairy sectors. According to many participants, though Indian agriculture is changing and getting integrated into the global market, there remain stumbling blocks. Reforms in domestic agriculture should be carried out in all earnest before making further liberalisation commitments in the multilateral context.  

Concerns were also raised about the erosion of trust, particularly among the poor countries, on the multilateral trade regime under the WTO. The forum called upon the trade community to devise and implement confidence-building measures for getting the Doha round of negotiations back on track.  

While delivering the concluding address, Arvind Mayaram, Director of HCM RIPA said that though the WTO is the manifestation of a multilateral trade regime, its impact is getting increasingly felt at the national and sub-national levels. In this emerging situation, all stakeholders, particularly at the sub-national level, should be better equipped to understand the meaning and implications of the regime, what are the challenges and how changes can be introduced to reap benefits out of the system.

Concentrate on the Quality of FDI: CUTS/UNCTAD Seminar in Geneva

Geneva 30 January 2004:Countries need to reorient their national economic development strategies and integrate FDI with these strategies says CUTS study “Stategising Investment for Development”. The study was released at Geneva, Switzerland by Karl Sauvant, Chief of the Division on Investment, Technology & Enterprise Development (DITE), UNCTAD. It was released on 28 January 2004 during a panel discussion on “Civil Society Perceptions of FDI” at the Palais des Nations.  

The one-hour panel discussion was held as part of the final meeting of the Consumer Unity & Trust Society (CUTS)-implemented two-year project: Investment for Development (IFD). The project was conducted in collaboration with UNCTAD and with the support of Department for International Development (DFID), UK. It was implemented in seven countries: Bangladesh, Brazil, Hungary, India, South Africa, Tanzania and Zambia.   

Speaking on the occasion, Sauvant said, “This was the first time that UNCTAD has worked with an NGO on a project ….. it was a privilege for UNCTAD to work with CUTS on the IFD project”. Jean-Pierre Lehmann, Director of the Evian Group and Professor of International Political Economy in IMD at Lausanne, Switzerland moderated the discussion, which also included Pradeep S. Mehta, Secretary General, CUTS and Freddy Bob-Jones, Economist, DFID as speakers.  

Welcoming the participants, Mehta highlighted the results of a survey on civil society perceptions of FDI carried out under the project. The survey showed that the respondents are highly aware of their own country experiences and that countries with more positive experiences with FDI are favourably inclined towards FDI. Further, the survey respondents considered the benefits of FDI as access to new technologies, management techniques and competitiveness, while costs as environmentally harmful technologies and reduction of opportunities for domestic firms.        

The main project finding is that developing countries in 1990s have liberalised their investment regimes to attract foreign direct investment (FDI) with mixed degrees of success. In some cases, high FDI has not contributed to economic growth and development. The aim of the countries should be to attract “quality” FDI: foreign investment, which would contribute positively to economic development.   

The panel discussion was followed by a day long “International Seminar on FDI Policies and Regulation” on 30 January at the Palais. The two events were organised in conjunction with the UNCTAD Commission on Investment, Technology and Related Financial Issues, Eighth Session, held between 26 and 30 January. On the issue of linkages between FDI and Economic Development, it was pointed out that developing countries should have policy flexibility in the context of WTO commitments and other international agreements for furthering their own development. Peter Nunnenkamp of Kiel Institute for World Economics noted that it is important for developing countries to build local entrepreneurial capacity.  

The experiences of least developed and large emerging economies were also discussed in the seminar. Speakers pointed out that, while least developed countries (LDCs) are keen to attract FDI in manufacturing and other non-traditional areas such as services, their share in the world trade is less than one percent. Further, the IFD research shows that the LDCs, which were studied in the project, lack proper FDI data, which hampers their prospects since most data underreports their actual FDI. Large emerging economies (LEMs), in contrast, have been attracting increasingly higher quantity of FDI, as the latest UNCTAD data has also confirmed. Interestingly, in some LEMs such as Brazil, this has not produced much benefit for the economic growth process.

Miklos Szanyi of Budapest University of Economics and Public Administration talked about Hungary’s experiences with FDI: while the country managed to attract high FDI between 1990 and 1998, the flows have petered out in recent years. Now the country needs to review its policies and national development plan to take into account the changed scenario. 

The seminar had an interesting discussion on China. James Zhan, Chief of International Investment Arrangement section of the DITE, UNCTAD pointed out that the share of FDI stock in gross domestic product in China is 36 percent. He added that China has managed to attract FDI in high tech manufacturing and this has benefited its economic development. Reservations were expressed that China has depressed its exchange rate to attract FDI or that round tripping of FDI hides the actual flows into the country. Questions were also raised on whether there is any crowding out of domestic investment and what type of linkages exists between foreign and local firms in the country. The discussion ended with a note of caution that the long-term effect of FDI in China is uncertain and depends on a number of factors such as what type of FDI is it attracting.

Bleak Future for Doha Agenda

London 24 January 2004: “The future of Doha Development Agenda appears to be quite bleak.” This was the prevailing apprehension in a seminar, “From Cancun to Hong Kong: Progress Inside or Outside the WTO?” held in London on January 23, 2004. The seminar was organized by the London chapter of  the India-based research and advocacy group CUTS Centre for International Trade, Economics & Environment and the UK-based Consumers’ Association, UK. The focus of the seminar was to discuss the possibility of salvaging the Doha Agenda before the forthcoming Hong Kong Ministerial of the WTO in 2005. The participants in the seminar included experts from academia and civil society groups and other agencies both from India and the UK. 

It was pointed out that many important players at the WTO including US, Canada, France, Germany, India and South Africa are going for elections before the Hong Kong Meet. This might dampen the progress on the Doha Agenda as the countries will reluctant to take bold decisions, observed Phil Evans of the Consumers’ Association. Nevertheless getting back onto the track is extremely important for the global economy. Referring to the debate on the “peace clause” on agriculture that maybe one way to move the talks forward, observed Pradeep S Mehta of CUTS. 

The problem is likely to be compounded as the leadership for trade negotiations is going to be changed both in the US and the EU. It is also true that prior to the Uruguay Round of trade negotiations, only the US and EU, and to some extent, Japan were the major players in multilateral trade negotiations. However, over the years, countries like Brazil, China and India have become more assertive. This might be good for the international economic order, but has definitely made the trade negotiations more complicated, observed Sheila Page of the Overseas Development Institute.  

It was pointed out that one of the major players, the US is not particularly interested in the Doha Round. This might be due to the fact that the corporate lobby in the US has not shown much interest. Another major player, the EU, though may be interested, is not particularly good at negotiations. During the Uruguay Round, the big agri-business companies, the pharmaceutical companies and financial companies were deeply involved in the process. But no such group is active now in the US, observed Simon Evenett of the Oxford University and Brookings Institution. 

Concerns were expressed at the growing engagement in regional and bilateral trade agreements which might not be good for the multilateral system. However, it was also viewed that regional arrangements can work as building blocks rather than stumbling blocks, but of course if their proliferation remains within a limit and does not create a “spaghetti bowl” like situation. 

It was also viewed that the failure at Cancun should not be considered as the failure of the WTO as an institution. At Cancun, there was an overloaded agenda, especially when many of the Uruguay Round issues are yet to be settled. The best way out seems to be going slow or even dropping some of the Singapore Issues. However, it was pointed out that the EU may not be so keen on the Singapore Issues as it appears. Their insistence on these may be a tactical ploy to block any progress on agriculture, observed L Alan Winters of the University of Sussex. The future of the Doha Agenda thus depends to a large extent on the EU. The Doha Agenda can be salvaged before. However, the question remains, will it be?

Bigger Role for NGOs in Economic Regulation

Jaipur 22 December 2003:“The process of liberalisation did not diminish the role of economic governance in the country as unregulated corporations can harm people. The biggest challenge therefore is to set up independent regulatory institutions, which can withstand pressures from political and business lobbies. The NGOs can play an important role in the process. They can raise awareness and build pressure to enhance accountability of the regulators,” observed D. R. Mehta, former chairman of the Securities and Exchange Board of India, the capital market regulator of the country. He was speaking at a national seminar on “The Role of the Civil Society Organisations in Economic Governance” held at Jaipur on 19th – 21st December 2003.

The seminar was organised by the city-based research and advocacy group, Consumer Unity & Trust Society (CUTS). The seminar was attended by the representatives of several civil society groups from different parts of the country. A number of experts on regulatory issues spoke in the seminar.

Speaking at the occasion, Pradeep S Mehta, the secretary general of CUTS, emphasised that if India needs to realise the goal of a developed country living standard by the year 2020, we need to look beyond the eight percent growth target. This is difficult but not impossible and the third sector, i.e., the NGOs can significantly contribute to the achievement of the goal.

The seminar participants were unanimous in recognising the importance of efficient and independent regulators. However, concerns were expressed that the regulatory authorities have become roosting grounds for retired bureaucrats and judges which is harming the interest of the country. Referring to the controversy on the issue of the appointments at the Competition Commission of India, it was lamented that the issue has been made to appear like a turf war between the bureaucrats and the judges while the real issue that is at stake is ignored. Regulators need to be adequately trained and appropriately oriented and whether they came from bureaucracy, judiciary or some other background is totally irrelevant.

Grave concerns were expressed on the state of health and education in the country as well as the state of infrastructure, particularly electricity, roads and water. It was observed that India is one of the most vulnerable countries, as 90 percent of the people do not have any protection against health risks. Moreover, contrary to popular belief, an overwhelming majority relies on private health providers, who remain unregulated exposing the consumers to the menaces like over-medication and irrational drug use, unnecessary testing and surgical operations, prescription of more expensive drugs etc.

An urgent need for far reaching reforms in electricity with effective regulatory mechanism that puts consumer interests at par with producers’ interest was felt necessary. However, on water, the participants were not in favour of large-scale privatisation or sweeping changes, even though some reforms were felt to be necessary.

Good governance was considered to be the key. We need to redefine the role of government and the attributes of good governance. “India maintains one of the most expensive governance system for the size of its GDP. What we spend in maintaining the system is probably far too more than what we get from it”, observed Prof. Vijay Shankar Vyas, who delivered the closing address in the seminar.

CAS:  Walking Away From The Pandora’s Box

New Delhi 17 December 2003: The Government opened a Pandora’s box of problems and tip-toed away when the going got tough, feel consumer organisations.  Even as recently as the 8th December, Rajan R Gandhi, Director of the Consumer Unity & Trust Society, had in a Fax to the Information and Broadcasting Ministry pleaded with the Government to intervene and come out with a “no-nonsense” statement placing consumer welfare above the machinations of the Cable TV service providers. 

Consumer organisations are not opposed to CAS per se, says Gandhi.  However, they insist that steps be taken by the Government to actually demonstrate its concern for consumers, rather than merely paying lip service.  Such steps would include the establishment of at least a pro tem regulatory body which would address the questions of poor service, arbitrary price hikes and lawless behaviour by Cable TV service providers.  The regulatory body should also look at the bundled pricing policy of Cable TV channels which, under the guise of offering “bouquets”, forced a consumer into paying for channels he had no interest in. 

There were basic issues involved, too, he said.  In the first place, it was not clear why the consumer had to pay for a set-top box.  The row over revenue-sharing was between the Cable TV service providers and it is they who should pay for it.  Secondly, “bouquets” were surely a restrictive trade practice which should not per permitted.  The Government had initially made some noises about setting a cap on the pricing of individual channels versus “bouquets”, but had not progressed this idea any further.  Thirdly, Cable TV operators were currently transmitting 30 (out of a possible 85) Free-To-Air channels which their customers had little interest in watching, thus forcing them into buying STBs even for the purpose of watching free channels.   

The situation which has emerged over the last few days in Delhi is that the total outlay of the consumer stands every possibility of being higher than ever before.  Surely this is not what the Government, even the PMO, meant when it talked about Consumer interests coming first, said Gandhi.  The State Governments of West Bengal and Maharashtra would do well to learn from the Delhi example, he felt, since Kolkata and Mumbai are the next to fall under the CAS axe. 

For several months, it has been clear that without competition or some sort of independent regulatory body, the Cable TV industry was going to blatantly disregard the interests of its own customers by exercising the unhindered monopoly rights that it has.  CUTS and other consumer organisations had repeatedly drawn the attention of the Government to this probability, but to no avail. 

In the absence of Government action the only near-term solution, Gandhi felt, was a complete boycott of pay-to-see Cable TV channels.  When advertisers saw that consumers were not watching pay channels, they would withdraw commercials from the channels and broadcasters, their MSOs and Cable TV operators would be brought to heel. 

Civil Society Urged To Advocate For The Betterment Of The Indian Informal Sector 

New Delhi 24 September 2003: “Globalisation is a fact, not an option and a deeper integration of the production process is significantly affecting the informal, unorganised sector,” said Kirit Parikh, Professor Emeritus of Indira Gandhi Institute of Development Research, Mumbai and a member of the Prime Minister of India’s Economic Advisory Council. He was delivering the keynote address in a national dialogue on “Globalisation and the Informal Sector”. The meeting was organised by Consumer Unity & Trust Society (CUTS), Jaipur, an international non-governmental organisation working on issues of international trade and development. It was organised with the support of Oxfam GB in India, a development agency working in the country for over fifty years. 

Participants representing non-governmental organisations, fair trade movement, women’s groups, producer’s groups, labour interests from different parts of the country took part in two-days deliberations covering issues impacting the Indian informal sector. Welcoming the participants, Rajan Gandhi, Director of CUTS Delhi Resource Centre expressed hope that the advocacy points, which would come out of the meeting, will help NGOs and other bodies to take forward the concerns of the informal sector, in particular on livelihood issues in the face of changing domestic and global economic scenarios. 

Samar Verma, Policy Advisor of Oxfam GB in India argued that in this era of globalisation and economic liberalisation one of the most significant changes are taking place in commodity prices. He pointed out that in the decade of 1990s prices of many agricultural commodities, like coffee, cotton, came down significantly. Along with shift in cropping pattern from food to cash crops, these changes have impacted the livelihoods of many poor farmers. The advent of a rules-based trade regime under the World Trade Organisation has not resulted in any significant positive impact on the lives of the poor. In fact, Oxfam International’s Make Trade Fair campaign has come out with analysis showing how trade rules are being rigged to the detriment of the poor. 

In this context non-governmental organisations and other stakeholders have very important roles to play in policy advocacy through generating information from the grassroots. This was expressed by Bipul Chatterjee, Director of CUTS Centre for International Trade, Economics and Environment, Jaipur. He provided an overview of the project “Globalisation, Economic Liberalisation and the Indian Informal Sector” and urged for information-based policy advocacy at various levels, involving different stakeholders for the Indian informal sector to play a positive role in the process of globalisation. The project has taken into account the challenges and opportunities that three sectors are facing: non-timber forest products, handlooms, and handicrafts. 

Many participants were of the opinion that globalisation is not a threat, but an opportunity in terms of expanding markets. However, many have urged the government that in order to avail the opportunities, it is important that they are allowed to operate under an enabling policy environment. The government’s role should be to regulate policy implementation and provide means for social safety nets for the poor. It was pointed out that even the poorest of the poor have considerable assets, intellectual or otherwise, and all they require are right policies to better utilise their skills and knowledge. Non-governmental organisations, the fair trade movement and other stakeholders should facilitate the process of skills upliftment, generation of new markets, marketing of products, etc. 

Speaking on globalisation and labour issues, N. P. Samy of NCL, Hyderabad argued that the bottom of the economic pyramid is being crowded with more and more people getting precipitated downwards, increasing the ranks of agricultural labourers, construction workers, and other informal sector workers. On issues that women are facing in the era of globalisation, Roopa Mehta of SASHA, Calcutta said that empowerment of women entrepreneurs is the key to effectively run economic activities. It is important that efforts should be made to protect indigenous designs, motifs, knowledge and skills. 

Addressing the linkages between international trade and the informal sector, P. M. Mathew of ISED, Cochin argued for more debates on the political economic aspects of public policy designed for the sector. The debate should focus on institutional structure and policy instruments required for the Indian informal sector to be more competitive in this globalising era. 

Speaking at the closing session, Anand Das, Programme Coordinator (Market Access) of Oxfam GB in India mentioned that the aim of the project was to get multiple stakeholders into dialogues platforms to discuss and debate issues that the Indian informal sector is facing. He expressed the need to introduce some changes in the Unorganised Labour Bill, which has been introduced in the parliament. In particular, the Bill should have sections on working conditions, terms of employment, and code of conduct for the informal sector, he argued.  

Delivering the valedictory address, Veena Jha, Coordinator of the United Nations Conference on Trade and Development said: “In the decade of 1990s, informal sector has contributed significantly towards asset building, which is an important impetus for the Indian economy.” UNCTAD has done a study analysing the impact of globalisation on the informal sector in South Asia. The study shows that there is significant positive impact on employment generation in export-oriented sectors. The informal sector has also contributed towards improving the competitiveness of the economy. Therefore, it is time to look into the opportunities that globalisation can offer for strengthening the contribution that this sector can make towards more equitable development of the Indian economy. 

Real Negotiations Are About To Start At Cancun 

Cancun 13 September 2003: Less than 30 hours are left for the official closing of Cancun Ministerial and so far the Ministers have virtually made no headway. All five facilitators after conducting open-ended meetings with member countries have submitted their draft texts to the Mexican foreign minister Luis Ernesto Derbez, chairman of the Conference. Now it is the turn of the chairman to act on these texts and come out with an updated draft ministerial text. The “real negotiations” will start thereafter.  

The major problem confronted by the facilitators and the chairman is that the majority of the members are still holding on to their long held Geneva position. George Yeo, Singapore’s trade minister and the facilitator on agriculture, has pleaded with major agricultural producers to put aside domestic politics for the sake of developing countries. He urged rich nations to end export subsidies on agriculture and be more generous to poor countries.   

However and as expected, Lamy seemed quite tough on agriculture. In a briefing on 12th afternoon he commented on the G-21 proposal by saying: “My experience is that alliances, to be politically effective, have to have a solid ideology on which they base their proposals.” He expressed his disapproval in particular with India and Brazil being a part of the same alliance. India and Brazil are in totally different worlds. This is not to say, he clearly stated, that alliances such as these cannot operate efficiently or that they are not useful. However, agriculture has its specificities and India and Brazil have very conflicting interests. US trade representative Robert Zoellick, according to another news report, is known to have asked the G-21 members “if they were ready to offer any concessions in exchange for a cut in domestic support and export subsidies on farm produce”. 

On Singapore issues, Canadian trade minister Pierre Pettigrew (facilitator on these issues) had a series of meetings with other ministers. A substantial number of delegates believed that there was no ‘explicit consensus’ among members on these issues, hence it was not possible to launch negotiations at this Ministerial. One participant in the Working Group described the state of issues as ‘Geneva by the sea’. 

However, Pascal Lamy is clear on EU’s position. In a briefing with NGOs, when intervened by a NGO representative on which issue he would select, other than investment, if there were place to begin negotiations on only two of the Singapore issues. To this he responded: “We don’t have to choose. My mandate is to keep them bundled. No unbundling.” 

On investment, an NGO representative asked the reasons why he thought that investors’ responsibility should not be a part of a potential multilateral agreement on investment. He responded by saying that investors’ responsibility was meant to be dealt in other fora such as the OECD, referring to the existing OECD’s Code of Conduct. Bringing it under the WTO framework would thus not be advisable. Lamy admitted that some developing countries have problems with the Singapore issues. But “others don’t. Some have more problems than the others. Some others are in favour of some of the issues and against the others.” What he did not appreciate was the attitude “I don’t want this if you want it” that some developing countries have the tendency to adopt. “I have my answers,” he said, to the issues of policy scope, technical assistance etc which are often cited as the ‘negatives’ of the Singapore issues.

No Economic Case For An Investment Agreement: “CUTS” 

Cancun 12 September 2003: “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. 

The study was released yesterday by Dr. A. C. Muthaiah, President of the Federation of Indian Chamber of Commerce (FICCI) at a workshop on “Standards & Market Access” organised by CUTS alongwith FICCI, Consumers Association of UK etc. The CUTS-Sussex University EINTAD Study is jointly edited by Professor L. Alan Winters of Sussex and Mehta of CUTS. 

The investment paper in the study has been done Professors Peter Nunnenkamp of Kiel Institute of World Economics and Manoj Pant of Jawaharlal Nehru University, New Delhi. Other four topics are competition policy, antidumping, textiles and clothing and movement of natural persons. Each of these papers are co-authored by eminent reseachers from Europe and India. 

According to the study, regulation under GATS can address the apprehensions of both developed and developing countries. While developing countries fear “brain drain”, developed countries are worried about illegal immigration and temporary migration turning into permanent one. These are serious problems, which the negotations should address. Proposals for a GATS Visa etc should be taken up in full earnest. 

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”, Mehta added. 

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. 

G-21 Support Swelling, EU Still Clueless 

Cancun 11 September 2003: Agriculture continues to hog the headlines here and any agreement appears as elusive as it was when the ministerial began. The matter continues to agitate those outside the hallowed portals of the convention centre. Farmers groups continued their agitation few miles away charged by the sad incident of a Korean farm leader committing hara-kiri. The farmer: Lee Kyung-hae 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 building in Geneva a few months ago asking for exclusion of agriculture from the WTO. 

Lee’s death must be in vain. The two groups--with a large silent majority—continue to hold hardline positions. The G-21 alliance (comprising of countries like Brazil, India and China) is holding on, with the other party: the EU trying hard to break this alliance. That is the crux of the proceedings that dominated discussions at the WTO Ministerial Conference in Cancun on September 11. There is a feeling among the EU officials that India is a difficult nut to crack. A strategy to separate Brazil from India may be well on their cards. That is why they have primarily identified Brazil as the leader of G-21 rather than India. Further, developed countries have spotted some clear differences between the two big developing countries – Brazil and India – on contentious agriculture issues. 

Brazil, a leading farm exporter and member of the Cairns group of countries is strongly advocating for total liberalization of agriculture that includes tariff reductions and complete phasing out of subsidies by rich countries. On the other hand, India is mainly interested in the elimination of subsidies and not the reduction of tariffs, as it itself maintains relatively high tariffs rates to shield her farmers. Another soft target is Argentina, which owes billions of dollars to the International Monetary Fund. 

Delivering an update on the day’s happenings at the Ministerial, Franz Fischler, the EU Agriculture Commissioner, in a briefing with NGO representatives, said that the meeting this afternoon with the facilitator of the Agriculture group was the starting point of the real negotiations in Agriculture. 

The discussions lasted over two hours where the G-21 and the EU presented their respective positions. Fischler commented that the G-21 countries in their proposal were demanding reforms in the Blue Box (elimination of blue box subsidies), Green Box measures (capping and strict criterion) and Amber Box (setting of higher targets and ambitious timelines for trade distorting subsidies. According to him, the fact that they were discussing green box measures, besides blue box and amber box makes their proposal flawed. The EU’s position, he said is that “the Green box indicates non-trade distorting subsidies and the WTO is only concerned with trade distorting subsidies, so why should we discuss Green box measures at all”. The risk he said was that discussing this will block discussions on other sectors that need reform. 

On market access, Fischler said, the G-21 was asking for a different approach and we, the EU think “it will be risky to have 2 WTOs, one for developed countries and one for developing countries”. However, it is clear that we, the EU, should do more for developing countries and we are prepared to do more than compared to the past. In this context he also said that one should not underestimate the importance of South-South trade in agriculture. If you liberalize agricultural trade, then 80 % of the benefits of this liberalization will come from greater trade between developing countries. 

Importantly, Fischler clearly stated that the EU is offering to discuss a list of products of interest to developing countries and in relation to that the complete phasing out of the subsidies associated with these products. 

Said Fischler, “It is a matter of fact that since the 1993 agricultural reforms in the EU until today, there has been a reduction of more than 70 per cent in the trade distorting subsidies of the EU”.  He emphasised that in principle, the EU is moving forward but we don’t see moves in other parts of the developed world.  This, of course, was a clear indication towards the stubbornness of the US. 

Fischler added that the EU feels committed to help poor countries get the chance to increase their agricultural exports. However large agricultural exporters such as Brazil should not ‘cash in’ on benefits to the poor and disadvantaged developing countries. 

With regard to the cotton subsidy issue, when interrogated by somebody from the audience has to why the EU has not made a commitment now, but is waiting for autumn to announce a reform, Fischler said that the EU has planned to decide on a reform proposal by next week. So, he said, we are not delaying things. 

The five facilitators who were entrusted with the job of informal consultations started work today. However, there is no significant breakthrough on any of the issues so far. Most of the Members have still not gone beyond their Geneva position. Members have stated their initial position on non-agricultural market access and special & differential treatment (S&DT). On non agricultural market access, members want to start work on two issues: formula for tariff reduction and sectoral tariff component (Para 3 and 6 of Annex B, Cancun Draft Ministerial Declaration). On S & DT, Pakistan has proposed a framework agreement. India has argued for the immediate adoption of 24 issues mentioned in Annex C of Cancun Draft Ministerial Declaration, related to S &DT. 

Surprisingly, on new issues, not much discussion took place. In the meanwhile, India is trying to form yet another formidable alliance comprising of countries like China, to oppose all the Singapore issues. How far she will succeed, will depend on the movement on agriculture.           

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