Financial Daily from THE HINDU group of publications
Saturday, Jan 22, 2005

News
Features
Stocks
Port Info
Archives
Google

Group Sites

Industry & Economy - WTO


WTO: Making multilateralism meaningful

G. Srinivasan

New Delhi , Jan. 21

THE report on "The Future of WTO" by eight eminent persons from a group of top business leaders and economists presented in Geneva to mark the first decade of the world trade monitoring body presumably focuses not only on institutional improvements but also revisits some of the fundamental principles of the multilateral trading system.

The recommendations of the Consultative Group headed by the last Director-General of the then General Agreement on Trade and Tariffs (GATT), Mr Peter D. Sutherland, with celebrity members like Prof. Jagdish Bhagwati of Columbia University and Prof. Kochi Hamada of Yale University, besides the Chairman, Reuters, Mr Niall FitzGerald, range from "realisable reforms" largely pertaining to technical nature for rejuvenating the institution to helping developing countries find their feet in adjusting to the WTO-dominated global trading system.

An important conclusion of consequence for developing countries like India which is not a part of any major regional trading bloc and is only lately discovering the virtue of going in for preferential trading arrangements (PTAs) with like-minded countries, the Board has expressed qualified reservations.

The eminent persons remain "unconvinced by the economic case for them and especially concerned that preferential treatment is becoming merely a reward for governments pursuing non-trade related objectives".

The Group rightly apprehends that the "non-discriminatory, most-favoured nation (MFN) treatment — a fundamental principle of the WTO — is close to becoming exceptional treatment".

Stating that the first test of any new initiative should be that it clearly improves trading and development prospects of beneficiaries and does not harm the interests of those outside, the experts caution the member governments to show "restraint or risk more damage to the multilateral trading system".

Moving a step further, they say the long-term remedy to the "spaghetti bowl" of discriminatory preferences is through the effective reduction of MFN tariffs and non-tariff measures in multilateral trade negotiations. In this regard, they ask the advanced members of the WTO to consider seriously a commitment to establish a date by which all their tariffs will move to zero.

Again, they duly recognise the fact that developing countries, as they increasingly turn to trade liberalisation, often could not afford adjustment mechanisms to cushion the short-term impact on employment and other aspects of social welfare. "International development agencies, chiefly the World Bank, should have, or should improve, programmes to fund trade policy related adjustment assistance for developing countries", the Group said.

In the post-WTO regime governing global trade, interaction with civil societies in developing countries by the WTO has become an accepted reality and hence the experts note the "improved WTO relationships with civil society cannot be achieved without more resources".

On WTO's Dispute Settlement Understanding (DSU) which is a positive step in the general system of rules-based international trade diplomacy and which helped many a developing country to wrest victory against arbitrary and unilateral trade policy measures of trade majors, the experts pertinently point out that "any measures or ideas for reform that would create a sort of `diplomatic veto' or the opportunity for specific disputants to "nullify" or change aspects of the final adopted panel report should be strongly resisted". The issue of compliance with panel and Appellate Body rulings is important and in some respects, worrisome, the Group said. In particular, the notion that the DSU provides a free choice to losing parties whether to implement obligations or otherwise, to provide compensation or endure retaliation is erroneous.

Rightly do the experts say that "buying out" of obligations is harmful to the systems, to the trading conditions and to the interests of developing country complainants, which cannot resort to a credible retaliatory option? Monetary compensation to poorer complaints, as a palliative pending full compliance, might be an apt response "worthy of experimentation".

On organisational issues, proposals like holding WTO Ministerial Conference on an annual basis, the Director General of the WTO to report on trade policy developments to ministers in writing on a six-monthly basis and a WTO summit of world leaders to be held in every five years would not only help strengthen political leadership of member countries in keeping abreast of developments to their constituencies but also demystify much of the miasma of mistrust currently shrouding the WTO.

Considering the fact that out of the five ministerials held in a decade of its existence, Seattle and Cancun meetings came a cropper for want of understanding with divisions between developed and developing countries wider, the Consultative Board has come out with suggestions worthy to ponder over if multilateralism is to be meaningful, say trade policy analysts.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page


Stories in this Section
Directory of R&D institutions in Kerala


`Gulf Dream' rebounds with new vigour
Naturol BioEnergy set to achieve financial closure by March
MSEB looks to wind power, biomass to tackle shortage
Brazil lifts dumping duty on Indian jute bags
Mid-term review of dumping duty on Vitamin AD3
Govt urged to extend Sarfaesi Act to NBFCs
Kerala Budget on Feb 4
Agrochem industry answers Jammu call
FICCI plans to rev up manufacturing sector
`Growth of manufacturing sector key to combat unemployment'
`World Bank committed to supporting reform process'
India, Chile launch joint business forum
Tobacco industry calls for continuation of AED regime
EEPC opens out to CIS nations
India to prepare `sensitive list' for negotiations with Thailand
Nitric oxide saves life of newborn
Keltron bags orders from Navy
KRL officers say swap ratio with BPCL unfavourable
Concern over import of life-expired gas cylinders
Pvt petro outlets fare better with small network
`Molecular medicine next big opportunity'
AES Corp, CLP Power are back; bid for UP project
High-voltage distribution system in AP soon
Draft steel policy targets 110 mt output by 2020
Shifting of service tax liability: Traders unhappy
Minister not in favour of taxing industry for reviving sick firms
Luxury tax militates against Centre-States' pact: Experts
FICCI moots measures to enlarge tax base
`EOUs should be exempted from central sales tax'
FIEO flays VAT refund clause
Garment technology expo 2005 begins
Archaic laws stifle textile sector competitiveness
Post-quota regime: Yarn exporters turning to domestic production
Spinners' plea to sort out conversion charges issue
CII in pact with UK chamber for SMEs
Plea to safeguard interests of SMEs in trade accords
SISI training programme in Vijayawada
Herbal cosmetics sector to contend with new players
Gem, jewellery exports rise 38 pc
BDMA, Ramky sign pact for Pharma City lands
Leather exporters focus on finished goods
Bengal leather sector seeks more funds for upgradation
Rs 5-cr S&T incubation fund to be set up
Divest loss-making Kerala PSEs: Chamber
WTO: Making multilateralism meaningful
Cruise cos scout for Indian staff
Kerala plantation workers plan rally
Chidambaram to attend G-7 meet
Creating value in services sector — `Leadership from manufacturing holds key'
Swan song
PM to inaugurate meet on CEOs today
Corporate quiz
Consumer grievances
Should all deductions and exemptions go?
Exports under deferred payment deals to get advance licence benefits
S. Asian tsunami warning system may cost $200 m
LIC expedites settlement of claims over tsunami casualties
Contributions to The Hindu Relief Fund
`Lab networking must to monitor pesticide residues'


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line