Financial Daily from THE HINDU group of publications
Saturday, Apr 15, 2006
Columns - E-Dimension
Will Pascal's Law work in Lamy's case?
Telling stories, and hopping from country to country, Mr Pascal Lamy has been a busy man. As the Director-General of the World Trade Organisation (WTO), he was in India last week in the course of a whistle-stop tour of key member countries, optimistically pushing for results.
But with only weeks to go for the April 30 deadline mandated in the Doha and Hong Kong Declarations for finalising modalities in agriculture and other contentious areas, pessimistic voices too are audible. For instance, the 18-nation Cairns Group of agricultural exporting countries has warned of `dangerous' consequences if major trading blocs do not agree to significant cuts in tariffs and farm subsidies, as reported by www.mg.co.za.
"Japan, U.S. both see WTO accord by end of April as difficult," notes Japan Economic Newswire on www.tmcnet.com. The report dated April 7 also talks about Tokyo's plans "to start free trade agreement talks with 15 Asian neighbours the 10-member Association of South-East Asian Nations, China, South Korea, India, Australia and New Zealand in 2008, with the goal of concluding the talks in 2010." One learns that the planned economic zone "could match the European Union (EU) and the North American Free Trade Agreement (NAFTA) in terms of economic scale and effects, with an overall population of 3 billion and gross domestic product of about $9 trillion."
TRIANGLE OF ISSUES
The EU's trade chief, Mr Peter Mandelson, has said it will be hard to reach an agreement on the Doha trade talks, as Helena Spongenberg reports on http://euobserver.com, in an April 11 story. But Mr Lamy is trying hard to get agreement on the `triangle of issues' reduction of agricultural domestic subsidies, cuts in tariffs on agricultural products and industrial products.
Worryingly, though, for the WTO, its key members too are in a triangle, as in formula movie themes: "The EU needs to do more on agricultural tariffs; the US needs to do more on reducing agricultural subsidies and the G-20 group of countries, where India is a key member, needs to do more on industrial tariffs."
Thus fretted Mr Lamy in his April 6 speech in New Delhi, after he had begun with an earthy narrative of how a child is named in some traditional societies. "On the seventh day, the parents throw a big party and the relatives collectively decide on the name of the child. Then the eldest man of the family holds the baby in his lap, turns his face to the South, and whispers the name into the ear of the baby three times."
Turning to the South Block, the WTO chief didn't whisper his message. It came loud and clear more than once, that developing countries stand to lose much if trade talks fail. "It would be a huge collective mistake to postpone the establishment of modalities by the end of April," he rued. "India would be the first to suffer if protectionism prevails," he cautioned.
LIKE OLYMPICS PREPARATIONS
As if to soften the stick, he told us also why trade talks are like preparations for the Olympics; what the 17th century French mathematician Pierre Simon Laplace told about Indian numbers; and how India is one of the elephants of the world trading system.
Pascal's Law, of Blaise Pascal, is that pressure applied to a confined fluid at any point is transmitted undiminished throughout the fluid in all directions and acts upon every part of the confining vessel at right angles to its interior surfaces and equally upon equal areas, as www.answers.com educates. World trade is in fluid state, and so one wonders if the hydraulic law will come to Mr Lamy's rescue even as he applies persuasive pressure on the member countries, expecting the same to get transmitted throughout the system and get translated into the right modalities.
For `an Indian perspective on emerging issues,' take help from Beyond the Transition Phase of WTO, from Academic Foundation (www.academicfoundation.com). Edited by Dipankar Sengupta, Debashis Chakraborty, and Pritam Banerjee, the book begins with agriculture.
A chapter on agricultural subsidy declares that the `only way to extract benefits' from the EU and the US is `to move through collective action'. Amir Ullah Khan's essay on seed protection and genetically modified crops concedes, "For economists, it is often not clear what is objected to: market forces, trans-national companies, monopolies, patents or biotechnology itself." Pavel Chakravarty studies trends in agricultural exports and observers, "The growth in cereal exports are a matter of off-loading stocks the costs of storing which have become too much to bear and yet continue to pile up given the high support prices."
The book has sections on industry impact of WTO, barriers to trade, services and e-commerce. `Some Future Concerns' include discussions on RTAs (regional trade agreements), dispute resolution experience, and precautionary principle as `a newly emerging non-tariff barrier'.
WTO AND ENVIRONMENT
Another apt book to thumb through just when the air is thick with world trade chatter is The WTO and International Environmental Law: Towards Conciliation, by Anupam Goyal, from Oxford (www.oup.com).
Major environmental problems are not confined to an individual nation or some local area, points out the author. He traces the evolution of global environment laws, from Trail Smelter Arbitration in 1941, "the first significant event in the development of international law in the field of environment." The case was about "sulphur dioxide fumes originating in Canada and causing damage in the US."
The chapter on `Environmental Exceptions Of GATT' discusses the word `necessary', appearing in Article XX (b). This allows parties to adopt measures that are inconsistent with the core GATT obligations if the measures are `necessary to protect human, animal, or plant life or health'. For instance, in the `Thailand Cigarette case' it was accepted that Thai's import licensing restrictions were justified since "smoking constituted a serious risk to human health"; however, "the panel found that Thailand's practice of permitting the sale of domestic cigarettes while not permitting the importation of foreign cigarettes was not `necessary'."
HAZARDOUS WASTE DISPOSAL
Another area of concern is hazardous waste disposal. "When the cost of lawful disposal domestically is greater than the cost of disposal abroad, inclusive of transportation costs, hazardous waste producers will choose to export their waste," explains the author. The case of asbestos-laden Clemenceau from France that yo-yoed on the high seas is a recent example. "Financial incentives for accepting hazardous waste from abroad can be very great for cash-poor, developing nations." But these countries lack the infrastructure to control hazardous waste, cautions Goyal. "Once environmental havoc is created by toxic waste, the costs of reversing the process are exorbitant." The chapter on IPRs (intellectual property rights) notes how, in the case of traditional knowledge, secrecy can be problematic. An Australian case of relevance is Franklin vs Giddins (1978). "The defendant stole some cuttings from plaintiff's genetically unique nectarine trees. An action was taken for the improper acquisition of confidential information embodied within the genetic code of the trees."
The judge made an interesting remark: "The parent tree may be likened to a safe within which there are locked up a number of copies of a formula for making a nectarine tree with special characteristics... when a twig of budwood is taken from the tree, it is as though a copy of the formula is taken out of the safe."
In conclusion, the author observes, "Trade is not an end in itself, it is a means to an end." The end, according to him, is `environmentally sustainable development'. Therefore, "measures needed to protect the environment cannot be forsworn simply because they may adversely affect free trading relationships."
Books that can sustain you through the weekend.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, 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