WORLD TRADE WT/MIN(96)/ST/27
9December 1996
ORGANIZATION(96-5193)
MINISTERIAL CONFERENCE Original: English
Singapore, 9-13December 1996
INDIA
Statement byDr.B.B.Ramaiah
Minister ofCommerce
TheUruguay Round negotiations, which culminated intheFinal ActatMarrakesh in1994
andledtotheestablishment oftheWorld Trade Organization, brought about fundamental changes
intheworking ofthemultilateral trading system. Allcountries hadmade significant compromises
andsubstantial sacrifices inorder tocreate thisnewsystem. Though mycountry continues tohave
strong reservations about certain aspects ofsome oftheUruguay Round Agreements, itisalsotrue
thattheestablishment ofthenewmultilateral trading system hasresulted inseveral important gains.
Thefirstandforemost ofthese isthecreation oftheinstitutional structure foroverseeing international
trade andofaneffective dispute settlement mechanism toensure orderly progress. Thecommitment
tointegrate thetextiles andclothing trade within themultilateral framework wasanother significant
stepforward. TheAgreement onAgriculture promises anewfuture forfarmers allovertheworld.
While implementing thevarious agreements many developing countries, including India, are
facing alarge number ofproblems. Apart from theprocedural problems ofhaving todealwiththe
innumerable notifications andtheproblems ofinadequate financial andhuman resources, problems
havealsobeenencounteredarisingfromtheneedtobuildpoliticalconsensusinfavourofimplementation
ofcertain segments oftheAgreements.
Acaseinpoint istheTRIPS Agreement, which waslargely theresult ofaninitiative taken
bythedeveloped world. Concerns havebeenexpressed inourcountry regarding thepossible adverse
effects ofthisAgreement onprices ofpharmaceutical products andagro-chemicals. There isafeeling
thatthedeveloping countries mayhavetoincur heavy costs inimplementing thisAgreement byway
ofhigherroyaltypayments,increasedadministrativecostsandpossibletransnationalmonopolisticcontrol
insome sectors. Iwould hope thatwewillcollectively findways andmeans ofaddressing these
concerns.
Weremain deeply concerned about thelackofcommercially meaningful integration oftextiles
andclothing products bytheimporting countries. Asweallknow, inthefirstphase ofintegration,
except foroneproduct byonecountry, there wasnointegration ofanyrestrained product. Even the
latest indications ontheattitude oftheimporting countries relating tothesecond phase ofintegration
doesnotgiveusmuch cause forhope. Wearealsoconcerned about thesystematic attempts being
made bysome ofourmajor trading partners todelink theintegration process fromliberalization. We
aredismayed attheindiscriminate useoftheexceptional transitional safeguard mechanism, which has
serious negative impact onexports oftextiles. Weareanxious thatthetextiles andclothing sector
should nolonger beanareaofbilateralism andthatrecognition should begiven tothefactthatthe
Agreement onTextiles andClothing isnowabinding multilateral arrangement.
Intheservices area,weareconcerned thatnegotiations onmovement ofnatural persons which
came toanendinJuly1995 didnotyield particularly meaningful results, from ourperspective. InWT/MIN(96)/ST/27
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many cases, themovement ofnatural persons waslinked tocommercial presence. Where the
commitments wereundertaken independent ofcommercial presence, anumber ofconditions, likethe
economic needs test,wereattached, thussignificantly reducing theirvalue. Itisnoexaggeration to
saythatinsome cases access toskilled persons fromIndia have, infact,beenmade more restrictive
during thelasttwoyears. Thisisamatter weintend pursuing.
TheAgreement onAgriculture wasdesigned toimprove world trade, raiseprices ofagricultural
products andensure higher standards ofliving forfarmers. Theretention ofdomestic subsidies at
ahighratebymany developed countries continues togiveuscause forconcern. Theclamour for
greater market access inagricultural products would carry more conviction ifadefinite effort isalso
made toforce thepaceinrespect ofdrawing down subsidies.
Inmyopinion, there isanother point thatdeserves tobeappreciated bythisaugust body. A
distinction hasclearly tobemade between those countries thataremajor exporters ofagricultural
products andthose thatprimarily catertotheirowndomestic market. While subsidies cannodoubt
distort global trade inrespect oftheformer group ofcountries, insignificant exporters ofagricultural
products should havethefreedom toretain theirowninternal regime ofsubsidies, which areaimed
more atprotecting thefarmers andachieving agreater degree ofself-sufficiency infood, thanat
influencing world trade.
Another important achievement oftheUruguay Round wasthefurther reduction intariffs and
theconsequent greater market access. Inactual fact,there hasbeenatendency onthepartofsome
developed countries todeny thisbenefit forarange ofproducts ofparticular interest todeveloping
countries suchastextiles andclothing, leather, rubber, footwear, travel goods andfoodstuffs.
Itisourviewthatfurther tariffliberalization should subserve thelarger objective ofdevelopment
inindividual countries. Anypremature action toforce developing countries toscale down tariffs
precipitately inthename oftradeliberalization canleadtoanegative impact onthedevelopment process.
Intherecent past, there hasbeen frequent andunwarranted initiation ofanti-dumping
investigations andcountervailing dutyactions, principally bydeveloped countries against theexports
ofdeveloping countries. Inmany cases action wasnottaken asnocasecould beestablished. However,
serious damage iscaused toourexporters interms oflitigation costsandriskofuncertainty. Greater
caution andrestraint should beexercised byourtrading partners andusemust bemade ofother
instruments suchasbilateral consultations orprior warning systems before suchinvestigations are
launched.
Invarious Uruguay Round Agreements, therearedifferent provisions forfurther negotiations
orreviews orwork along withanindication regarding thetime-frame. While somuch work remains
tobedone, Iamconcerned tonotethatsome developed countries arenowproposing tointroduce several
newitems intheagenda oftheWTO. More suchattempts maybemade inthefuture aswell.
While considering thequestion ofWTO 'sbasic competence andpropriety intaking onboard
anynewissue, Iwould strongly urgetheCommittee ofWTO Members toremember thatinternational
tradeisthemeans ofexchange ofgoods andservices produced within acountry withgoods andservices
produced inothercountries. Trade should notencroach ontheproduction system itselfinoneoranother
country. Anyattempt bytheWTO tooverstep thelegitimate boundaries oftrade andinvade the
jurisdiction ofdomestic production systems isbound tocreate serious problems andraisebasicquestions
about WTO 'scompetence andcredibility. Westrongly feelthattheWTO should notloseitsbasic
focus ontrade.WT/MIN(96)/ST/27
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Iwould nowliketodealwiththeproposal relating toinitiation ofadiscussion oraneducative
process intheWTO onthesubject ofinvestment. Theproponents ofsuchaproposal seem tobelieve
thatastradeandinvestment areclosely linked andassubstantial tradeliberalization hasbeenachieved,
theWTO should nowturntoliberalization ofinvestment regimes. Wewould urgeMinisters and
delegations present heretoreflect onwhether suchasubject fallswithin thenatural boundaries oftheir
multilateral trade relations.
Wefeelthatwhile foreign direct investment (FDI) hasindirect linkages withtrade, ithasmore
intricate linkages withdevelopment. Theinvestment policy ofacountry hastotakeintoaccount a
whole hostofcomplex andinterrelated matters ofnational importance -regional disparities, income
inequalities, employment, taxation andsocial justice. FDIcantherefore playamore positive rolein
promoting overall development ofthehostcountry onlywhen itisundertaken within aframework
ofregulation andpolicy ashasbeenestablished bytheexperience ofSouth-East Asia. Thepoint is
whether amultilateral framework oninvestment withasetofuniform disciplines canreally respond
toevery country 'sspecific requirements. There aremany unresolved questions onthis.
Moreover, theproduction system involves theinterplay ofseveral factors suchasland,labour,
capital, entrepreneurship andtechnology. Canoneseek, ingoodconscience andequity, theselective
liberalization ofjustonefactor ofproduction, namely, capital, while maintaining restrictive regimes
onother equally important factors suchaslabour andtechnology?
Weareaware thattheNinth UNCTAD Meeting atMidrand heldearlier thisyearhasalready
mandated thatsuchastudy should beundertaken. Onthefaceofit,webelieve thatauniform
multilateral regime oninvestment, inwhichever forum itisdeveloped, isnotintheinterest ofpromoting
equitable global development. Thisisbecause itwillseriously constrain thefreedom ofindividual
countries toprescribe theroletheymaywishtoassign toFDIintheirnational development strategy.
Thiswillalsorestrict theirfreedom tosetconditionalities oninvestments suchthattheseareconsistent
withtheirmultidimensional developmental objectives, including regional development, employment,
encouragement ofthesmall andtinysectors andtheaccording ofpreferences toencourage domestic
entrepreneurship. Therefore, inourview, these complex matters should becarefully studied in
UNCTAD, which isamore transparent anduniversal forum.
Inrespect ofcompetition policy also,wewould liketoseethework tobeinitially undertaken
inUNCTAD. Irecall atthisjuncture, thatUNCTAD haddrawn upaCode ofConduct forTransnational
Corporations. However, because oflackofenthusiasm onthepartofmajor delegations fortheconcept
ofsupervision overtransnational corporations theCode ofConduct wasnotapproved. Justasinrespect
ofinvestment policy, inthecaseofcompetition policy also,thesubject hastobelooked intoaspart
oftheTRIMS review in1999-2000. Inthemeanwhile, UNCTAD should examine alltheaspects of
competition policy asalready decided atMidrand.
Inrespect ofgovernment procurement, there canbenodifference ofviewregarding theneed
fortransparency ingovernment purchases. Itisourunderstanding thattheproposals made donothave
anyimplication ontheprovision ofmarket access. Iwould beinterested indealing withthesubject
purelyasdesignedtowardsachievingaproceduralagreementprovidingfortransparency.Iaminterested
inhearing theviews oftheother delegations onthissubject. Inrespect ofthesubject oftradefacilitation
also,wefeeltheconcept isgood. However, wewould liketogetsome aspects oftheproposal clarified.
Theintroduction ofbasic rights andinterests ofworkers, alsocalled "core labour standards",
onthefuture agenda oftheWTO hasbeenopposed bymany countries. India hasalonghistory of
commitment andadherence totheILOconventions which dealwithsuchrights andinterests. Wedo
notseeanypurpose inbringing thissubject intotheWTO except possibly tousetrade measures to
enforce labour standards, ifnotnow, thenatafuture date. Weareoftheopinion thattrade measuresWT/MIN(96)/ST/27
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should notbeusedtoaddress non-trade objectives, however laudable theymaybe.Itisalsoour
considered viewthattheInternational Labour Organization isclearly theinstitution thathastheexclusive
mandate, competence andresponsibility todealwiththesubject.
Inconclusion, Iwould liketostatethatIndia willsincerely andconstructively participate in
thedeliberations ofthisConference, clearly articulating herviews andstriving toachieve thebalance
required tomake thisendeavour asuccess. Iwould earnestly urgeallthedistinguished delegates present
heretowork unitedly towards thisgoal.
While expressing mysincere hopethatthismeeting willsucceed instrengthening theevolution
ofanequitable global trading system, Iwould liketowarmly thank theGovernment ofSingapore and
theChairman ofthemeeting fortheexcellent arrangements made fortheorganization ofthemeeting
aswellastheDirector-General andtheSecretariat oftheWTO fortheirearnest anddedicated efforts
inundertaking theelaborate preparatory work fortheConference.