Bhagwati Interview

Ulhas Joglekar ulhasj at
Thu Jan 27 17:54:41 PST 2000

The Economic Times Online Tuesday JAN 25 2000


Let the millennium round begin in New Delhi Jagdish Bhagwati

How different were the Indian and US positions at Seattle? Let me outline the key similarities and differences between India and the US at Seattle. Similarities first. Let me state my view, which I put to Mr Jaswant Singh both in New York and in New Delhi last October, that the differences in the Indian and the US position on the agenda for a Millennium Round were not too far apart and that there were substantial overlaps of views, despite the early language of India being that “there should be no new Round” and that of the US being that there should be a limited Round or what I have called a “core” Round. Mainly, the US wanted to extend the agenda beyond conventional trade liberalisation in agriculture, services (both already the unfinished Uruguay Round agenda) and industry, with presumably reform of the dispute settlement mechanism as well (including transparency issues). India did not really have any objections to this agenda. But there were some differences. Of these, there was a difference in one extremely essential respect: the formation of a Working Party at the WTO on labour standards. India (and indeed many poor nations) were strongly opposed to this. Among the other, more manageable, differences was the US demand to keep anti-dumping (AD) reform off the agenda — the US had surrendered to its protectionist lobbies such as steel — whereas India (and most other developing countries and Japan) wanted it on the agenda. Again, there were differences on introducing more transparency into the WTO: these again, in my view, are bridgeable as soon as the US is made to see why transparency looks dangerous to India (e.g. the fear that well-heeled pressure groups from the rich countries, able to travel to Geneva and armed with legions of lawyers and lobbyists, will pack the courts and intimidate the panelists in favour of the rich countries) and the proposed reforms to ensure it are significantly modified to eliminate those very real dangers (only underlined by the mob scenes and the complaisant behaviour of the US authorities in Seattle). In my view, the Indian position was the correct one. No compromise on that was possible if the WTO was not to become an instrument of further assault (after the earlier successful assault in the shape of the wrongful and analytically illegitimate inclusion of intellectual property protection into the WTO) on the poor countries. The poor countries had to draw a line firmly in the sand. In my view, India, Egypt and other big players among the developing countries must be applauded for sticking to this position against rumoured inducements and threats from the US. I might add that, as far as I know, neither the US nor India wanted to extend the agenda to include investment and competition policies, unlike the EU. There was, therefore, no real difference on that dimension between the two countries. Ultimately, however, some minimalist compromise on these will also be necessary with the EU. Concerning environmental issues, there is much confusion: many in the western media have reported that India and other developing countries objected to including environmental issues in the WTO. But that is really silly. The WTO already has a long-standing committee from the GATT days on Trade and the Environment: the issue is already within the WTO. And, in fact, environmental questions have already been decided upon in the dispute settlement process at the GATT and at the WTO, including at the level of the Appellate Court. The objection that I and others, and presumably important developing countries, have is to one narrow proposal: that differences among countries on their environmental standards (in the sense that the tax burdens levied for domestic pollution are less) should be regarded as dumping and be allowed to be subjected to countervailing duties by member states with higher tax burdens. This is an untenable proposition. But objecting to introducing this absurd proposal, or any of its variants such as those in the NAFTA agreement, does not mean that the developing countries object to discussing the minimal interface between trade and environment within the WTO! And, if the US gives up on its politicians’ frequent pandering to the “dumping” notion, there really should be no difference between the US and India on the question of discussing other trade-and-environmental issues at the WTO.

How intractable are these differences, particularly on labour standards? In the end, the difference of the developing countries with President Clinton on the labour standards issue was the critical one. Virtually everyone agrees now that President Clinton’s surrender to political pressures in an election year from the unions was at the heart of the Seattle debacle. The USTR had pretended that the WTO Working Party on labour standards was innocuous and would not lead to a WTO Social Clause as the developing countries feared: having already agreed earlier in Singapore that the WTO Working Party would not be demanded, the US position now seemed less than credible. Then, on Wednesday President Clinton virtually removed the fig leaf from the USTR proposal, revealing in a press interview prior to his arrival in Seattle on Thursday that he (and presumably therefore the US government) really was in favour of trade sanctions (which is what a Social Clause would imply). In the main, the poor countries see the contents of the Social Clause as heavily biased so that only the poor countries can expect to become defendants. Thus, while child labour which is a complex and difficult social and economic problem in the poor countries is included for fast-track action, there is nothing (to take only a few examples) in the US-proposed agenda against sweatshops in New York and quasi-slavery conditions for migrant labour in agriculture in the US South, or for that matter the rights of children not to suffer juvenile capital punishment (a barbaric practice now legally possible in the US despite the UN covenant on the Rights of the Child) and much else that is wrong in the rich countries in regard to the human rights of both adults and children according to modern human rights conventions. This asymmetry should be simply unacceptable: it is a travesty of the basic principle of human rights that they must apply symmetrically to all nations, shielding none. The US administration’s thinking and approach to the question of the Social Clause at the WTO, instead of at the ILO et al as the poor countries desire, is appallingly shallow and unwittingly self-serving. It suffers from fundamental defects. Under the circumstances, do you think any common ground between India and the US is possible at all. What have you proposed? If the US means really to advance labour and children’s rights agendas, instead of playing protectionist games while hiding behind moralistic language, then clearly it is not so difficult to reach a compromise that makes sense. Here is what I propose as what Prime Minister Vajpayee and President Clinton could agree upon, starting with the resolution of the Working Party on Labour and going on to spell other related ideas: (a) First, the two leaders should consider the appointment of a different sort of Expert Group on Labour issues than the US demand for a Working Party at (or involving ) the WTO (on which the poor countries cannot possibly agree in any form). Let the ILO be in formal (joint) charge of an Expert Group on Advancing Labour and Children’s Rights Worldwide, with the UNCTAD (which enjoys the full trust of the poor countries, is charged by the UN system with studying trade issues in a developmental context and has a dynamic Secretary-General in Brazil’s Rubens Ricupero). They would co-share the formal responsibility to study the problem and its solutions. The agenda for the Expert Group should ensure the inclusion of several rich-country problems such as domestic sweatshops, lack of unionisation (e.g. only 14 per cent of the US labour force is unionised, raising serious questions as to whether the government’s laws make unionisation difficult), lack of worker participation in management and treatment of migrant and immigrant labour. In the Section on Children’s Rights, this Expert Group should not confine itself to the issue of Child Labour. It should also discuss problems such as juvenile capital punishment and disproportionately high infant and child mortality rates and illiteracy rates in inner cities of the rich countries. In short, in this Section, the agenda should be extended to Children’s Rights, as embodied in the UN Covenant on the Child, in its entirety, drawing on the expertise of the UNICEF and of the Human Rights Commission and the Human Rights Committee of the UN. The appropriateness of the use of trade sanctions, where countries fall short on any of the entire spectrum of labour and children’s rights, whether through the inclusion of a wide-ranging Social Clause at the WTO or in other ways, with the important question of creating legal standing (not presently available at the WTO) for poor-country NGOs to bring legal complaints against the rich countries which can otherwise pressure the poor countries’ governments into foregoing such complaints, must also be discussed by this Expert Group. The membership of the Expert Group must reflect balance between rich and poor countries, and consist predominantly of scholars (preferably of labour and of trade) rather than lobbyists such as AFL-CIO President John Sweeney who has been often proposed by some US writers for such a role, since the objective is to study the issues rather than to negotiate lobbying positions.

If this proposal is accepted, how could we go on from there? If the US and India can agree on the broad outlines of such an ILO-UNCTAD Expert Group, it can be announced as a spectacular breakthrough in New Delhi. Both countries are, after all, great democracies; and human rights agendas should, and do, come naturally to them. By de-linking them from the WTO, and announcing a pro-active Expert Group, the two leaders could assert their joint desire to pursue both Free Trade at the WTO, which is a great public good in itself, and Human Rights (especially Labour and Children’s Rights) through other, more appropriate means. They could also announce that these are the two great agendas of the new Millennium and that it is only fitting that the world’s two great democracies, which are wedded to both free trade and to human rights and democracy, affirm them. To do both, the two leaders should also announce that, with their agreement on the ILO-UNCTAD Expert Group, the way is clear for the launch of the Millennium Round and that they would jointly pursue such a launch to jumpstart the scuttled Millennium Round at Seattle. They could also announce, if the work is done ahead of time (especially with Brazil, Egypt, Japan, the EU and Mike Moore of WTO, so as to keep them on board, while also keeping other WTO members informed at a suitable stage prior to the communique) a possible timetable to resume formal talks. The PM should also offer New Delhi as a site for the launch of the new Round; this would both do good to India and underline the need to take developing country interests fully into account in the new Round. What I propose would also help cement the important, and burgeoning, India-US friendship further.

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