The WTO ministerial meeting in Seattle failed to reach any agreement. Nevertheless all sides left Seattle claiming victory. The developing countries for successfully resisting the attempt to link trade with environmental and social concerns. The US and some other developed countries for succeeding in focussing so much attention on non-trade issues. While the protestors returned home claiming victory for stalling the WTO.
Not surprisingly, trade was the first casualty of such animated posturing, and in the name of protecting everything else.
Consider agriculture. The problem for farmers in India and many other LDCs, is that they have to carry the twin burden of draconian domestic regulations and at the same time lack of access to international markets. Should it cause any surprise that having forced to sell their produce perpetually at below market prices, the farmers in these countries have little incentive to grow more crops or invest in agriculture.
Access to markets in developed countries and removal of export subsidies can help, but only if the domestic reforms are carried out to substantially remove the bottlenecks in storage and transportation. Unless the domestic handicaps are removed, the competitive advantage that many Indian farm produces exist will never get harnessed.
On the other hand, the problem for farmers in many developed countries is of over production. One got the impression that the scare mongering surrounding biotechnology was motivated by fear that a further increase in world food production would further depress the prices for farmers in the developed countries. While there were other group of farmers and agriculture scientists in Seattle, for instance the Farmers for Abundance, who blamed the subsidies for distorting agricultural markets and called for free agricultural trade and benefits of new technologies in boosting crop yields further.
For instance, the Cairns group on agriculture which had members from all parts of the world united in their demand for opening up the agricultural markets, could not understand why India with so much stake in agriculture, failed to cooperate even informally with this influential group.
The official Indian delegates were rarely visible either on the streets or in the media centre. In fact the general impression of delegates from many Asian and Latin American countries was that India was not working to build up issue-based coalitions of nations with similar interests. Seattle provided a very good opportunity to identify and build coalitions to on issues of mutual interest among official and unofficial channels.
In this battle for ideas, the government of India also failed to enlist the support of two of the foremost Indian academics in support of free trade, and against linking trade with with non-trade issues - Prof. Jagdish Bhagwati, and Prof. Deepak Lal, both of whom were present in Seattle.
It is ironic that the issue of linkage between trade and environmental and labour standards that left the talks deadlocked. For this may slow down potential economic growth in developing countries, and quite characteristically leave the children and the environment in those countries (India of course very much included) impoverished.
The WTO might help in liberalising the international trade regime. But the events in Seattle demonstrated that unless there is an internal desire for reform within each country, the WTO might end up as a favourite political whipping boy.
The best way to realise the competitive advantage that an opportunity to trade provides is through universal and unilateral removal of self-imposed barriers to trade and economic growth. This requires not international negotiations, but sovereign decision based on intellectual and historical evidence that trade is a positive sum game. The evidence of prosperity is clear from a diverse group of countries that instituted domestic reforms and adopted relatively open trading systems.
The WTO can at best be a catalyst for change, let us stop making it a scapegoat for our own domestic follies. Let us first fix the Indian economy.
(The author is with the Liberty Institute, New Delhi.)
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