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VIEWPOINT: KAUTILYA
The Dragon Strikes Again
China bags the 2008 Olympics and also puts the seal
on a 2001 WTO entry
By Jairam Ramesh
You
have to hand it to the Chinese. They pursue their objectives with a single-minded
sense of national purpose. For the past decade, they have been lobbying
hard for hosting the Summer Olympics. That effort has finally paid off
and the 2008 Games will be held in Beijing. But what is even more significant
is the manner in which China has moved swiftly in the past few weeks to
resolve all outstanding issues to facilitate its entry into the WTO, probably
in November this year, completing a tortuous 15 years of hard bargaining
and tough negotiations. Immediately following China's accession, Taiwan
will also become a member. This is very much what the Chinese also want
since Taiwan is critical to their plans of becoming an IT superpower.
 China
has had to make major compromises but it has not baulked at doing so.
For example, the WTO stipulates a ceiling of 10 per cent (of the value
of production) on agricultural subsidies for developing countries and
5 per cent for developed countries. China's level of subsidies is currently
around 2 per cent of the value of production. It wanted to be treated
as a developing country while the Americans wanted it to be in the developed
category. Ultimately, the ceiling for China has been fixed at 8.5 per
cent. On almost all pending issues like trading rights, technical barriers
to trade and intellectual property rights, China has yielded to the demands
of its trading partners. We should thank our stars that we got in at a
vastly lower entry price.
China has stood firm and rejected the demand
to reduce average tariff levels to that of developed countries. But even
here, China is ahead of India. World Bank data reveals that the average
tariff levels in China for all products are in the range of 17-19 per
cent as compared to 28-33 per cent in India. Again in contrast to India,
by deciding to forego the transitional period allowed to developing countries,
China has obtained the capability for implementing Trade Related Aspects
of Intellectual Property Rights (TRIPS) Agreement fully.
In the past year, the "atmospherics"
surrounding TRIPS had changed dramatically with countries like Brazil
and South Africa asserting their sovereignty to ensure cheap anti-aids
drugs. The Americans have not retaliated knowing that it would be a public-relations
disaster to fight on behalf of multinationals and be seen to be insensitive
to the needs of poor and suffering patients. The WTO itself has taken
the lead in looking at TRIPS from the angle of consumers. Undoubtedly,
China will assume a leadership role on TRIPS, a role that we could be
playing if only our Government is bold and our Parliament can pass laws
on time. Ironically, it is an Indian company, Cipla, and an Indian scholar,
Jayashree Watal, who have played prominent roles in redefining TRIPS.
China has also come out publicly and unequivocally
in favour of a new round of multilateral trade negotiations. On the other
hand, India's public stance has been one of opposition and, as usual,
it stands virtually alone. Our stated position so far has been that no
new round is required and that the priority is for implementation of commitments
made during the earlier Uruguay Round. To be sure, implementation is important
but the question is how best to address it.
The WTO has already started negotiations on
agriculture and services, two areas in which we stand to gain from liberalisation.
The TRIPS review has also begun. But these discussions will meander along.
It is only in the framework of a "round", which is a politically-mandated
process of intensive negotiations in a focused manner, that India can
even hope to have its legitimate concerns on implementation addressed
meaningfully. It is only in a round encompassing various issues like agriculture,
services, industrial tariffs, anti-dumping and TRIPS that countries can
indulge in give and take which is what negotiations are all about. Industrial
tariffs are particularly important since we face high import duties for
labour-intensive manufactured goods, an area in which we can take on the
Chinese provided we get our domestic policy right as well. Further, only
a new global round can help counter protectionism in the West and also
mitigate the adverse impacts of mushrooming bilateral and regional free
trade agreements and preferential trading arrangements.
A new round is inevitable and will, in all probability,
be given shape when the WTO meets in Qatar in three months' time. We can
either hope to influence its agenda proactively or be dragged into it
reluctantly. It is possible that the Government, for reasons of domestic
politics, wants to follow the latter route, while privately giving assurances
to the Americans that India will come on board eventually. This two-faced
approach would be entirely consistent with our penchant for hypocrisy
but will do our rapidly shrinking international standing no good.
(The author is with the Congress party. These
are his personal views.)
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