10 Years of the WTO: End of an Illusion

Thursday 15 December 2005, by Liberation (Delhi)

The predicted gains to developing countries from the WTO have proved to be empty promises. During 10 years of its existence, poverty and unemployment have spiraled in developing countries as income and welfare gaps between and within countries have widened further.

The hopes raised by the revival of the solidarity of the South with the emergence of the G20 (a group of developing countries led by Brazil, India, China and South Africa) at Cancun in 2003 have been belied since. The 2004 July Framework Agreement proved, once again, that development cannot be pursued within the WTO paradigm. The July deal forms the basis of negotiations towards Hong Kong. On the present indications, the only deal that can be inked at Hong Kong will be a deal that would force developing countries to make damaging concessions in agriculture, services and industrial goods.

The present UPA Government’s stance on WTO does not reflect any significant departure from the positions adopted by the previous NDA Government. Given the structural inequality and asymmetry that is built in the various WTO agreements, which favours the developed countries, India’s long-term interests are best served by calling for a radical re-think on the institution and making common cause with developing countries.


From all accounts, India is experiencing a deep agrarian crisis. Rising cost of inputs, non- availability of cheap rural credit and exposure to volatile global market price trends have squeezed the peasantry. The lack of alternative employment opportunities and income have resulted in an unprecedented reduction in the per-capita availability of food-grains for the rural poor, pushing, three quarters of the rural population below ’the poverty line’. The widespread phenomenon of farmers’ suicides is a cruel manifestation of this crisis.

The paradigm of the WTO’s Agreement on Agriculture (AoA) is biased in favour of capital-intensive and corporate agribusiness-driven agriculture. It is insensitive to the needs of the masses of peasantry and agricultural workers. It threatens the livelihood of the vast masses of the small and marginal farmers in India and other developing countries. It has led to peasant distress not only in India but also in all countries where agriculture is a livelihood issue. If we do not challenge and change the current AoA paradigm, we will end up by opening our markets for the highly subsidised and therefore artificially low-priced imports from the developed countries. Our food security will be endangered. The peasantry will be compelled to accept the entry of corporate agribusiness on its terms and subjugate or surrender their source of livelihood to the volatile dynamics of global agriculture market and the profit -calculus of the agri-business. This will pave the way for the decimation of the already beleaguered peasantry with unimaginable consequences for our polity.

Rather than highlight the fundamental issues confronting the peasantry and agricultural workers and question the very paradigm of AoA, the G20 has focussed on market access and the prevailing domestic support and export subsidies in developed countries. Developed countries have used the former as leverage to prise open markets of developing countries. And the latter will prove to be a wild goose chase: the experience of the last ten years has shown that the total quantum of such subsidies has indeed increased. It is well known that the quantum of agricultural subsidies given by the EU under the CAP (Common Agricultural Policy) will continue till 2013 and will not be reduced before that. Moreover US subsidies under the 2002 Farm Bill is for a period of 10 years i.e. till 2012.The offers of reduction being put forward on behalf of both EU and USA are misleading and, in fact, leave a comfortable margin for future increases in the total quantum over the currently applied levels of such subsidies!


Over the last couple of decades, the policy space available for the developing countries has shrunk dramatically. And if the developed countries have their way in the current NAMA (Non Agricultural Market Access) negotiations, it will shrink over the next decade or so to the extent that has not been seen since the days of imperialism, making industrialisation and economic development in the developing world all but impossible.

The livelihood of vast masses of poor people is also threatened by the ongoing negotiations in NAMA, most importantly of those involved in fishing. Any drastic changes in tariff or other rules of market access will have direct consequences for them. The Government must therefore give special consideration to this fact and any deliberation on NAMA must entail special discussions on the impact on employment and livelihood in such sectors.

Unfortunately the Indian government has virtually accepted the contents of the earlier discredited text as the basis for NAMA negotiations. The majority of WTO members in Cancun had rejected that text. Historically, all late industrialisers including the USA developed their industry behind high protection. The key issue concerning NAMA is that while developing countries protect their markets through higher tariffs, the main mode of protection for the developed countries is through Non-Tariff Barriers (NTBs), particularly through the use of technical barriers. Those barriers in the developed countries are not being discussed simultaneously or with the same priority. Therefore a further reduction in tariffs as is being negotiated in NAMA will not lead to any greater market access for the developing countries but will certainly ensure greater market access for the developed countries. And further steep reductions in tariffs on industrial products will accentuate the process of de-industrialisation, which has already commenced with tough import competition being faced by many sectors in small and medium industries.


The focus of the GATS (General Agreement on Trade in Services) is on the liberalisation and deregulation of the services sector. Over 160 services sectors have been enumerated to illustrate its jurisdiction: basic services such as Water, Education and Health; infrastructure services such as Energy, Transport and Telecommunications; critical sectors such as Financial Services, Banking and Insurance; and the world’s largest industry; travel and tourism. These sectors constitute the target of deep liberalisation and the next frontier for corporate- led globalisation. The subject matter of GATS is incredibly broad as the term ’Service’ is defined vaguely and tautologically in the agreement so as to potentially include any and every activity.

Nevertheless, the developing countries had succeeded to some extent in building in some safeguards into GATS to protect their interests. The safeguards consisted of the following. The opening up of any sector for the negotiations was at the discretion of the member country. There was no a priori inclusion of all service sectors for liberalizing negotiations. The national policy objectives in service sectors were to be respected. The member countries, therefore, could subject the opening up of service sectors to certain conditions and limitations, as they would consider appropriate. Developing countries were expected to table fewer sectors for negotiations, only in line with their stage of development. Developed countries were expected to open up, on a priority basis, their service sectors, which were of export interest to developing countries. These safeguards constituted the saving graces of the otherwise draconian agreement. It is precisely these safeguards which are sought to be removed/diluted by the developed countries in the current phase of negotiations in the name of introducing new concepts such as "benchmarking", "quantitative targets and indicators" for liberalisation, "critical mass" of sectors to be liberalised etc. While developing countries have opposed these moves vociferously, the Indian Government has not been very clear or vocal in its opposition.

Since 1991, services policies have been altered to enable the entry of private service providers and Foreign Direct Investment (FDI). There was little effort to monitor and address these reforms from the standpoints of distributive equity, employment, and regulatory institutions. As a result, while those with disposable incomes and located in urban areas are able to consume more, a huge proportion of India’s peoples-majority of who live in rural areas-are struggling with rising costs and limited access to essential services such as health, finance, water and electricity.

It is crucial that lessons from already existing liberalisation and privatisation attempts inform India’s negotiating position in the GATS. This assessment is yet to be done by the Indian Government. It is surprising in this backdrop that India is adopting a pro-active stance in the GATS negotiations. India’s key area of interest is made out to be in the movement of highly skilled labour through the Mode 4 route, that is to say, movement of persons across the national frontier to provide a service. This mirrors the demands of big services corporations in the US. India has narrowed Mode 4 negotiations to the movement of highly skilled professionals and does not take into account unskilled or lower skilled workers. It is unacceptable that India’s Mode 4 positions are ’captured’ by US business lobbies. Furthermore, the lure of the opportunities for jobs and profits to the elite sections as, for example, in the Information Technology sector, particularly, in Business Process Outsourcing, seems to have taken the driver’s seat in the negotiating process. The result is that indiscriminate offers have been made for opening of a large number of service sectors across the board, as demanded by the foreign corporate capital. The interests of the common people are at a discount. As the picture has emerged, for securing the gains foreseen by the rich and elite sections, the costs will have to be borne by the poorer masses in terms of loss of employment and income, high costs of services to be provided by the corporate sector and loss of access to essential services.


The Agreement on Trade Related Aspects of Intellectual Rights (TRIPS) was one of the most controversial and bitterly fought agreements that ultimately formed part of the World Trade Organisation (WTO) agreement in 1995. We have been consistently of the view that TRIPS was and continues to be an inequitous agreement biased heavily in favour of Transnational Corporations. During the Uruguay Round of negotiations that led to the WTO Agreement there was a wide consensus in India against agreeing to TRIPS, but the Government of the day had proceeded nonetheless disregarding popular sentiments.

There is today growing evidence globally that the TRIPS agreement jeopardizes access to medicines and has a detrimental effect on the dissemination of scientific knowledge and technology in diverse sectors such as software and biotechnology. Keeping this in mind, India should press for a review of TRIPS, not in the narrow sense that developed countries would want (in terms of the actual translation of its provisions in the country laws of different countries) but in the broader context of reviewing its impact and pressing for changes in the Agreement itself.


The negotiating positions to be adopted by the Government in the Hong Kong Ministerial in December 2005 and the outcome of these negotiations will have far - reaching and even irreversible, adverse consequences for the country’s economy and polity, particularly for the peasantry and working classes. The Uruguay Round commitments were taken in a non-transparent manner. The fait accompli was sought to be justified in terms of highly exaggerated estimates of "gains" computed by biased "experts". Now it is an acknowledged fact that developing countries were short-changed in that round and it turned out to be a severely adverse bargain. We should learn from that bitter experience. It is thus imperative that the positions that the Government proposes to pursue at the Hong Kong Ministerial are set out in a White Paper and discussed in the Parliament during the Winter session. It is important that an informed debate takes place on the floor of Parliament and no commitment is taken without a national consensus to back it.

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