NEWS FROM CUTS

CUTS calls for strict watch over the safety of joyrides during Pujas

Kolkata, October 13, 2004, Press Release

Come Puja, and there will be lot of joyrides operating in the city violating all safety norms, warns Somi Home Roy, researcher, CUTS Safety Watch group, a premier consumer rights organisation working on consumer safety issues.

“One can hardly assess the hidden dangers of many rides that operate during different festivals, which seldom follow any safety standards. The rides might assure children a lot of fun but the parents do not know that these rides might cost their children a lifetime of trauma and pain” stated Roy. While children are the main victims of faulty rides, adults are no exception.

The business of amusement and fun is getting bigger in India. An estimated 600 million Indians venture out to various fairs and exhibitions year after year. But while everyone is keen on making profits, hardly anybody gives adequate attention to safety measures.

“It is a very common phenomenon, that after every accident, the licencing authority suggests the examination of the rides to see whether they have been maintained properly as required under the licence agreement. But no body answers the question as to why the authorities have to always wait for an accident to happen and then take action, especially when such accidents are so serious. Every year, several such accidents take place, many of which go unreported”, stated Roy.

Roy pointed out that the main cause of deaths and injuries on amusement rides is preventable. This would include things like lack of routine maintenance and disregard for safety rules by the operators. Each of these rides require rigorous quality control, be it in the manufacture of the parts, assembly at the fair site or its subsequent maintenance. The wear and tear caused by the speed, vibrations, weather and everything has to be carefully studied to ensure the safety of these rides. If these are not done properly, another shocking accident may be just round the corner.

Roy demanded that certificates for rides at fairs and carnivals should be revalidated each time a ride is moved to a new location.

She also pointed out the need of a competent licencing authority. Roy demanded that there should be random follow-up inspection during puja and other festivals and fairs to ensure compliance with the norms and regulations and licences should be revoked in case of failure.

Roy informed that very recently the Bureau of Indian Standards (BIS) has come up with “Code of Recommended Practice” for “Amusement Ride Safety” (IS 15475) and “Safety in Water Parks” (IS 15492). The statutory authority will give licences to the ride operators on the basis of compliance with these BIS recommendations. Roy suggested that the statutory authority while granting licence to the safe rides can put a logo on them, which will signify that the rides are safe. This will help people to identify a safe ride for their children and themselves and many accident could be avoided in future.

For further information, please contact:

Soumi Home Roy
Consumer Unity & Trust Society (CUTS)- Safety Watch
3 Suren Tagore Road, 2nd Floor,
Calcutta-700019, India
Telefax: 91-33-24601424
Mo: 9831445631

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

17 September 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

06 September 04, 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.

Consumer group hails National Foreign Trade Policy

“The five-year National Foreign Trade Policy adopted by the Government of India is a step in the right direction. This is not only in consonance with the letter and spirit of the National Common Minimum Programme, but also will help India achieving a greater role in international trade negotiations,” said Pradeep S. Mehta, Secretary General of CUTS International, while welcoming its announcement. The Policy has several innovative measures to achieve the twin objectives of increasing India’s share from the current level of approximately one percent to 1.5 percent of world trade by 2009 and employment generation at a mass scale, he added.

The proposal to form a Board of Trade is welcome. However, the Commerce Minister should head this Board. Only then there will be political legitimacy of its activities. Instead eminent persons could head sub-groups, which will look at specific issues. Members of the Board and its sub-groups should be drawn from various fields, representing different interests such as business, consumers, trade unions, political parties, state government officials.

“Meeting the objectives of the Policy will crucially depend on the role of the state governments vis-à-vis international trade,” argued Bipul Chatterjee, Director of CUTS Centre for International Trade, Economics & Environment. For a better political buy-in of this Policy, the Government of India should conduct regular consultation with state government officials, local chambers and other interested parties. The Government should also urge the states to form state trade bodies, which can act as a platform to discuss and debate issues relating to international trade and their implications on the ground, Chatterjee suggested.

“It is heartening to see that the Policy is based on the principle of achieving coherence between the emerging international trading system and national development strategy as in today’s world, international trade is much more than export and import,” said Mehta. This Policy will strengthen India’s position during the Doha Round of WTO negotiations. Other than this broad policy direction, the Government should also come out with a domestic agenda of reforms taking into consideration the Framework Agreement on the basis of which the Doha Round of WTO negotiations is being held. This will help our negotiators to place proactive demands, based on ground realities, at the negotiating table.

For more information, please contact:
Pradeep S. Mehta, 98102 06633
Bipul Chatterjee, 98102 74001

Urge for more proactive South-South cooperation on trade negotiations

Islamabad,19 August 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,18 August 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

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.

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.

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.