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

Dhaka,
September 23, 2004, Press Release

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

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

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

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

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

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

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

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

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

Need
to Regulate Cable TV Charges: CUTS Survey

New
Delhi, September 29, 2004

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

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

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

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

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

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

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

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

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

• identify
  the level of consumer awareness about CAS

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

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

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

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

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

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

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

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

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

For
further information, please contact:

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

Implementation
of the Common Minimum Programme is a huge concern          

September 17, 2004, Press Release

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Kolkata, September 6, 2004, Press Release

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

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

Urge for more proactive South-South cooperation
on trade negotiations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

WTO July Package: Too early to uncork the
champagne bottle

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CUTS Safety Watch urges National Building
Code to be made mandatory

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

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

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

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

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

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

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

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

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

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

‘Interests of rural consumers need better
protection’

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

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

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

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

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

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

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

UNCTAD XI ends with renewed commitment to
‘development’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

c)
the co-management of joint programmes.

Call for global initiatives to fight against
hunger and poverty 

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

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

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

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

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

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

Third
round of GSTP launched with renewed vigour and commitment 
 

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

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

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

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

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

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

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

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

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

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

Foreign
direct investment: Focus on gains rather than quantity
 

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

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

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

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

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

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

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

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

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

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

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

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

CUTS
lauds Rajasthan government’s recognition of the consumer movement

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

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

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

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

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

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

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

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

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

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

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

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

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

UNCTAD
XI: Agriculture likely to occupy the Centre stage

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

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

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

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

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

Curb
Wastage to Contribute 8.9% to National Income: ‘CUTS’

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Role
Of Civil Society In WTO Recognised

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A
Silent Revolution in South-South Trade

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

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

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

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

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

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

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

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

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

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

Is
the EU Serious?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Promoting
Effective Markets in the Mekong Region 

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

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

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

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

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

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

Developing
countries need to recognise their differences while forming coalitions

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

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

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

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

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

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

Trade
Policy Capacity Building should be Demand Driven

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Afro-Asian
Civil Society Seminar on WTO Begins

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

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

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

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

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

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

        organisations and others.

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

 The
plenary sessions will focus on the following themes:

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

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

·       
Building and strengthening capacity in trade policy

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

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

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

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

CUTS Initiative
on Road Safety Issue

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

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

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

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

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

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

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

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

Playing
With Toys or Life?

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

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

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

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

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

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

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

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

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

MOCA Would Be a “Catalyst” in Consumer
Movement Says Chawla
 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bleak Future
for Doha Agenda

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

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

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

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

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

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

Bigger
Role for NGOs in Economic Regulation

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

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

CAS: 
Walking Away From The Pandora’s Box

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Real
Negotiations Are About To Start At Cancun 

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

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

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

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

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

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

No
Economic Case For An Investment Agreement:
“CUTS” 

Cancun
12 September 2003: “There is no economic case for an agreement
on investment,” said Pradeep S. Mehta, Secretary General of CUTS
and a leading expert on WTO issues. “An effort by the rich countries
under the OECD in 1995-1998 had also flopped, thus  India’s
strong opposition on investment makes eminent sense. This position
is being backed by nearly 40 countries, and surprisingly by the
US also. It needs to be buried forever at Cancun”. 

According
to a recent study by CUTS and University of Sussex under a project:
EU-India Network on Trade and Development (EINTAD: Bridging the
Differences-Analyses of Five Issues of the WTO Agenda which is being
released at Cancun), it established that an investment agreement
cannot enhance capital flows and will lock in policy spaces of 
countries, which they can ill afford. 

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

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

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

The
draft ministerial statement notes that the negotiations shall give
special attention to sectors and modes of supply of export interest
to developing countries, but does not explicitly state that concessions
should include better market access for temporary workers under
Mode-4. This limitation reflects the US intransigence against Mode-4. 

“India
should mould a Cairns-type alliance with about 50 developing countries
having a similar interest and get a better text in the final ministerial
declaration. We also have another problem on Mode-1 on export supply
such as business process outsourcing and call centres, where protectionist
pressures in the west are rearing their ugly head, which needs to
be tackled headlong at Cancun”, Mehta added. 

With
a new and modern competition law, India should not have any problem
with a multilateral framework on competition with a peer review
mechanism rather than the more onerous WTO dispute settlement provisions.
The CUTS-Sussex University EINTAD study also shows that this will
not be such a problem. 

G-21
Support Swelling, EU Still Clueless 

Cancun
11 September 2003: Agriculture continues to hog the headlines
here and any agreement appears as elusive as it was when the ministerial
began. The matter continues to agitate those outside the hallowed
portals of the convention centre. Farmers groups continued their
agitation few miles away charged by the sad incident of a Korean
farm leader committing hara-kiri. The farmer: Lee Kyung-hae climbed the high security fence waving “WTO
kills Farmers”, took out a knife and stabbed himself in the chest.
Incidentally, he was the same farmer who had camped outside the
WTO building in Geneva a few months ago asking for exclusion of
agriculture from the WTO. 

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

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

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

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

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

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

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

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

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

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

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

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