Legal and Commercial Frameworks of World Trade Organisation

On April 15, 1994, trade ministers of more than 120 governments signed the Uruguay Round Final Act, which embodies the results of the Uruguay Round of multilateral trade negotiations, and paves the way for the setting up of the World  Trade Organisation, with effect from January 1, 1995.  The ministers also adopted, what is being described as, the Marrakesh Declaration, which reiterates their commitment to the new multilateral trade framework.

Ministers from about 120 countries gathered in the ancient city of Morocco (Marrakesh) in the month of April, 1994, to negotiate and sign the Final Act for the establishment of the World Trade Organisation (WTO), successor to GATT. The agreement, which came into force from January 1, 1995, is expected to pump an additional $200-300 billion annually into the world economy. India would also be able to increase its exports by $2 billion annually.

The former GATT chief, Mr. Arthur Dunkel, has suggested the creation of regional trade grouping of south Asian countries to integrate markets in India, Pakistan and Bangladesh. He is of the view that regional trade blocs can actually lead to simplification of global trading, as it may reduce the number of members in the newly formed World Trade Organisation.

The author of the controversial Dunkel Draft, Mr. Arthur Dunkel, has clarified that he did not have any ambition to be in the post after having spent a long time as the head of GATT during the Uruguay Round. Terming the WTO as “the most modern legal agreement ever conceived by human intelligence”, he noted that no country had easily accepted the GATT proposals. He said even his own native Switzerland had not yet ratified the document.

On the inclusion of the social clause, Mr. Dunkel felt India should not be seen as the leader of the opposition to the proposal; he was himself opposed to the social clause; he argued that India need not be worried over the issue as it had an excellent record in human rights. The only problem area was child labour, where also efforts were being made to improve the situation. India’s op-position to the social clause would ultimately benefit such countries as have a bad record on human rights.

Asked about the impact of regional trade blocs on the rule based system evolved by GATT, he maintained that more such groupings would reduce the number of members in the WTO. But much depended on the type of trade blocs being created, as only the European Union and a customs union, making it a kind of supra-nationalist institution. Others were more nebulous like NAFTA or even ASEAN. The ultimate aim would be to have free trading with the regional group while the bloc could operate within the rules of the WTO in relation to the rest of the world, he said in case more blocs had customs union like the EU, he felt it would be possible to simplify the international system.

Regarding benefits to India through the new WTO dispensation, Mr. Dunkel pointed out that it had the most to gain in the new open trading environment. In this context, he observed that he had seen many more television cameras in Delhi in a single day, than in Geneva. He was upbeat about the Indian economy in view of the reservoir of trained manpower, large domestic market and bright prospects for export to developed countries with lower tariff levels. In future, he said, the new regime of intellectual property rights would protect Indian designs and innovations.

Replying to a question on the American threat of imposing Super 301 on developing countries, he said such bilateral issues could not be raised under the rules of the WTO unless the particular item was outside the purview of the institution.

World Trade Organisation prescribes a specific type of mechanism for the trading nations to observe. Liberalisation in an economy means in effect that a State has to abandon its inalienable right to make choice about what kind of enterprises would best suit the needs of its people. It also means that the government has no more responsibility to enter into the ‘market’ to support, regulate or contain prices. It would also encourage uncontrolled entry of foreign capital, and goods and services, irrespective of the requirement in relation to its broader national goals. In simple terms, `globalisation’ means internationalisation of the competitive capacity. Knowing fully well that in all high-tech areas of the world’s manufacturing sector, India may not be able to compete effectively with any of the ‘developed’ countries, it was not perfectly right for our Prime Minister and Finance Minister to field in favour of foreign interests, which are often dictated and controlled by the I by combine. While some of Indian economists, enslaved by Adam Smith’s doctrines, argue that it opens the doors for India to compete abroad for our own benefit, they ignore the fact that the first step should have been to make Indian industry and enterprises really competitive domestically, before setting them against the giant transnational corporations of the capitalist world.  

One of the proud leaders of India’s national success stork in the cooperative sector, V. Kurien, has this to say about globalisation: “The fact is that globalisation means hamburgers, pizzas, colas, fancy clothes and new movies to titillate the elite. It can ultimately mean that India’s what farmers labour for a privately held company run by bandits in Minnesota, while the women who raise and feed our milch animals earn dividends for stockholders in Geneva. To this you add sex-trade and drug trafficking, which are essential evils of capitalist economy and the future scene is perfect for India to be devoured by the new kind of high-tech colonialism.

These prescriptions of ‘competition’, ‘liberalisation’ and `globalisation’ that our ruling class is so glamourised about, are the ‘medicines’ from the economists of America and Europe that are constantly imposed upon the poor countries of Asia, Africa and Latin America. The ex-colonial powers are well aware that their pattern of ‘sustainable development’, which they would like to retain for themselves, cannot be sustained without plundering the natural resources of the three continents. In other words, their consumerism and wasteland—culture must be maintained at the cost of Asian countries, including India. This is possible only when our markets are flooded with their goods, no matter whether we need them or not. At the same time, our best product, tea, coffee, cashew nuts, fruits, vegetables, ores and minerals, etc.—must not be available to our poor countrymen. The South must continue to feed, nurture and maintain the North, while Asians should continue to fight among themselves with aims purchased from the North. This, in short, is what the WTO is finally aiming at. For this objective the North will do anything. Unbridled militarisation thus becomes a necessary evil they must cling on to, in order to subjugate the South and force the poor countries to kneel down at their doorsteps with permanent begging bowls.

An educated, skilled and patriotic citizenry, a strong and growing agriculture, an equitable economy, a constructive educational pattern and a stable government with integrity are the essential preconditions for a sustainable growth.

WTO’s Impact on India :

Our bureaucracy and organised labour must also share part of the responsibility which landed this country into such an incredible predicament. The bureaucracy still lives and acts with a colonial mentality which has never done justice to the aspirations of the millions. It is just concerned with its own pay, promotion, pension and cloistered life, no matter what happens to the country. Similarly the organised labour, by and large, have been mainly concerned with their pay, allowance, increment, bonus, etc. without an equal commitment to the quality of production, the output and success of products, the compatibility and credibility in market, the performance and success of the large public sector which constitutes the real economic basis for reconstruction of society into a true egalitarian, socialistic, people’s democracy.

These two above factors fell into the hands of our liberalisms and globalists as very convenient tools with which they could not only justify their case but also push the country into debt-traps and global network of free-marketers. While unpatriotic Indians are reported to have stacked away about 90 billion dollars in Swiss banks, their motherland is groaning under the pains of foreign debts to the tune of 91 billion. Consequently, our budget allocation for paying interest alone to foreigners is 26 per cent. Added to this is another deplorable story of the defence sector which grabs 12 per cent of the budget in order to ‘defend’ the republic of criminals, black-marketeers, drug-traffickers, feudal lords and worthless political bandicoots. What is left for all administrative and develop-mental purposes of 90 crores of people, is a. mere 61 paise per rupee in the nation’s treasury. Where is India heading to?

There is one point in the framework of WTO mechanism which is supposed to be in favour of the developing countries. This is voting power of all members on a one-to-one basis. The ‘sense of equality’ on the world trade forum has already been questioned by the so-called super-power policemen of the world by saying: How can we sit with the Bangladeshis and the Nepalese on an equal term across the table?” Some right-wingers in the US have been demanding that “America should get out of WTO”. On the whole, the WTO is the creation for protecting the interests of the G-7 powers.

For one thousand years, India has fought, suffered and survived as a divided house against itself. Unless this character changes, we Indians do not have any comfortable future, though we are quite ‘content’ with ‘glorious memories of our past’. Indians must wake up from their stupor, break their own fetters of caste, religion, chauvinism, moksha syndrome and many other frenzied madnesses and ritualistic behaviours.

American consumer activist and environmentalist advises us:  “India should not join the World Trade Organisation because it would violate national sovereignty and have the power, to decide in secret, permanent sanctions against a member country that does not accept decisions taken by a group of bureaucrats. The United States would be most likely to use provisions of the new trade agreement to force open the markets of India on other developing countries that have history of using local laws to block US products. Indian administration, like Clinton’s, has argued that the interests of the world’s population will be best served by a trade agreement that transfers power to a secretive and unaccountable group of technocrats in Geneva. Citizen’s groups in the US and in India have countered that the best interests of the world’s people can be realised by shifting power to the grass-roots.”

Chitra Subramaniam, a senior journalist based at Geneva, has this to say on GATT, WTO mechanisms : “The real story of Indian negotiations is one of lies, secret deals by handful of bureaucrats, eager to please the major powers for narrow personal interests, last minute phone-calls from the GATT secretariat, and foisting the bogey of Indian isolation at the negotiations on an unsuspecting nation. As one senior European negotiator, known in GATT circles for driving a hard bargain, told me at Marrakesh: ‘Nobody lets India down like the Indians themselves.’

The world in which the Uruguay Round of GATT is concluded is very different from that in which it was launched. With the collapse of the Soviet system and the decisive, almost surgical, victory of the United States and its allies in the Gulf War, those countries have acquired greater confidence and are displaying greater arrogance of power. They are now out to establish a ‘new world order’ in which they can best safeguard their interests, and over which they would have complete hegemony.

By the time the GATT was launched, Western colonialism and its gun-bat diplomacy had given way to new forms of control and domination. Western national interests were now sought to be served by the weapon of economic strength against the weakness and dependency of developing countries, after ruining them materially and politically through centuries of colonial plunders.

The second world war had taught all nations a bitter common lesson that development, progress and peace could not be considered as divided objectives. The World Bank had already been established with a view to “contribute materially to a reduction of inequality in international distribution of wealth and income.” Similarly, GATT was also originally intended “to set up ‘rules of the game’ for international trade would be of assistance in achieving this objective.” Therefore, GATT had two main purposes : (a) international trade transactions should be mutually beneficial, not exploitative of the such transactions the growth process in the developing countries should be quickened.

Thus, starting from 1947, by the time negotiations entered their final stage, called the Uruguay Round in 1987, all noble ideas and objectives were thrown to the winds by the developed world, because the Europeans and Americans saw that Japan, Germany and the ‘Asian Tigers’ were overtaking them in world markets. This situation compelled the then Director General, Arthur Dunkel, embark upon preparing a new draft which was finally adopted at Marrakesh in April 94, after a long period of negotiations for seven Years Simultaneously, it was also decided that this organisational structure would be given a new name World Trade Organisation—with extraordinary powers at its disposal, to determine the fate of all signatory nations, with regard to their relationships with the rest of the world in trade and commerce. And India also decided to sign against the will and wish of all right-thinking citizens, whose primary concern was the welfare of 80 per cent of the people.

Against the above background, when we study the present economic liberalisation policy of the Government of India, it can be convincingly concluded that in the long run this policy will only be detrimental to the basic interests of 80 per cent of our population. Reckless borrowing from the international financial institutions like the World Bank and IMF, unbridled defence expenditures in our national budgets, incompetent economic management of resources, lack of national budgets, lack of national discipline and commitment in the field of production, distribution and quality management, and the unstable political scenario in the country from 1989 on-wards, were all major factors which contributed to the crisis period of 1991 when the new government of PVN-MMS combine threw up their hands and declared that India had no other alternative but to adopt the free-market oriented economic policy, promoted by enchanting terms like ‘liberalisation’ and globalisation’, under the consistent and persistent sinister designs of US, through the compulsions and dictates of World Bank and IMF.

Accepting that there was a domestic crisis which required mediate attention, if our new government had adopted a national policy of reconciliation and consensus, giving up the ego factor of political mechanisms and power games, the outcome would have been a positive collective commitment to which political leaders of all parties, prominent thinkers, eminent professionals, capable economists, leaders of corporate houses and social scientists could have sincerely contributed their might. A broad-based national economic policy could than have emerged without shaking our 50_ year—old foundation of national sovereignty based upon indigenous concepts like self-reliance, self sufficiency and political independence. No, our new leadership did not trust the people of India, nor did they display the spirit of freedom and democracy in the true sense. Instead, they went on repeating the same pathetic justification for their anti-national action: “there was no alternative but to open our doors to foreigners”.