Transcript India`s Trade Policy: The WTO and India-South

WTO and India-S. Africa Relations
Convergence and Divergence
By
Pradeep S Mehta
Secretary General,
CUTS International, India
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India and South Africa
• Economic and Trade Policy
• Economic and Trade Relations
• Respective Positions in WTO
• Current Initiatives Within and Outside
WTO
• Future Scenario
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Economic and Trade Policy
Policy-Related
• Practiced import-substitution strategy till
1990
• Embarked on to comprehensive trade and
economic policy reforms in early 1990s
• Multilateralism as their first priority but
negotiating a few FTAs simultaneously
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Economic and Trade Policy
(Contd.)
Economic Indicators
India
S. Africa
GDP
$2691bn
$113.3bn
GDP Per Capita
$2570
$11290
Share in World
Trade
0.8%
0.5%
International Trade
as % of GDP
15%
25%
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Economic and Trade Relations
• Strong cultural and social ties but weak
economic and trade relations
• S. Africa’s exports to India: 6-7% of
total exports
• India’s exports to S. Africa: Approx.
1% of total exports
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India and S.Africa:
Positions in WTO
Background
• Both are founder members of WTO
• Both are key regional players
• Being a ‘developed’ developing country S.
Africa identifies its interests more with
developed nations
• India prefers to adopt a more orthodox line
in negotiations
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India and S. Africa: Positions in
WTO
On Major WTO Issues: Commonality
• Agriculture: Being the architects of G-20
alliance; hold common position against
North
• TRIPs and Public Health: Both played a
crucial role in brokering the deal at Doha
• Bring effective disciplines on the use of
trade remedy instruments
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India and S. Africa:
Positions in WTO
On Major WTO Issues: Divergence
• On “New Round”: S.Africa supported New
Round consisting of a wider negotiating
agenda; India opposed till the end at Doha
• Singapore Issues: S. Africa favours a
modified less ambitious and carefully
defined Agenda; India strongly opposes any
negotiations
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India and S.Africa:
Positions in WTO
On Negotiating Strategy: S.Africa
• Holds a more flexible approach
• Priority to trade interests over political diplomacy
• Negotiate outcomes favourable to economic
development in general and to S.Africa in
particular
• Positions in Africa Group awkward and
ambiguous
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India and S.Africa:
Positions in WTO (Contd.)
On Negotiating Strategy: India
• Normally holds a hardline stance
• Political diplomacy gets precedence over
trade interests
• Often sacrifices own trading interests for
larger political gain
• Go along well with its regional partners and
other developing nations
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Current Initiatives:
In and Outside the WTO
S. Africa:Major Shift from Doha
• At Doha, sided with developed countries on
the new round and new issues; at Cancun
went along with developing countries
• Active member of G-20 at Cancun but did
not join LMG at Doha
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Current Initiatives: In and
Outside the WTO (Contd.)
• Working to strengthen the IBSA group that
includes India and Brazil
• Supported the demand of four W African
countries on cotton subsidy
• Prioritised eleven “strategic partner”
countries outside Africa; India is one of
them
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Current Initiatives: In and
Outside the WTO (Contd.)
India: Holding on from Doha
• Opposed “New Issues” at Cancun
• Led G-20 alliance along with Brazil and South
Africa
• Working to further consolidate G-20 positions in
post-Cancun era
• Working towards enhancing South-South trade –
negotiating FTAs with ASEAN, S.Africa, IBSA,
Mercosur and SAARC
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Emerging Future Scenario
• No major breakthrough after Cancun
• Negotiating positions on agriculture are still
polarised
• G-20 has emerged as a third axis on the
global trading landscape along with US and
EU
• Both Northern and Southern countries are
on FTAs spree
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Emerging Future Scenario
(Contd.)
• Initiatives from within South and from
WTO to enhance South-South trade
• EU will have new Trade Commissioner by
year end
• USA may have new administration after
election
• India may also have new government but
positions unlikely to change
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India and S.Africa: What Should
be their Response?
Enhancing South-South Trade: Capitalise
on G-20 Alliance
• Accounts for only 10% of global trade
• Means to reduce dependence on North
• Increase diversification of Southern exports
beyond primary commodities
• A better bargaining strength in trade
negotiations
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India and S.Africa: What Should
be their Response? (Contd.)
Synergy with Smaller Regional Partners
• Demonstrated at Cancun; it should be
continued
• To pursue a broader Southern alliance
• Smaller countries are vulnerable to “armtwisting” and sops offered by rich countries
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India and S. Africa: What Should
be Their Response? (Contd.)
Challenges/Opportunities from Cancun
• Developing countries showed a new kind of
solidarity at Cancun – How to sustain it?
• G-20; Alliance on Cotton; Alliance on Singapore
Issues – How to consolidate it further?
• After Cancun, developed countries cannot take
developing countries for granted – Be proactive
in negotiations.
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