TRADE-INDIA: Britain Offers Aid Carrot on WTO

By Ranjit Devraj Reprint | | Print |

Ranjit Devraj

NEW DELHI, Jan 17 2001 (IPS) - Britain has offered to step up development aid to India if the South Asian nation raises living standards by greater reliance on globalisation, but not many here believe this can be done.

Visiting British International Development Secretary Clare Short Tuesday offered to nearly triple her government’s development assistance to India to 500 million U.S. dollars annually by the year 2004, if India makes progress on poverty reduction through globalisation.

Short made the announcement at a meeting here to launch her government’s White Paper on how globalisation can be used to help poor nations.

Speaking at the unveiling of the document titled, ‘Eliminating World Poverty: Making Globalisation Work’, the British government leader said India has a “crucial role given its importance in the international system and its position as the world’s largest democracy.”

However, Short recognised that real political will and strong positive tides of public opinion in favour of globalisation were needed in this country before India could play this role.

India, she urged, need not be defensive in taking forward the globalisation agenda since “a WTO (World Trade Organisation) which proceeds by consensus cannot ignore the interests of developing countries who form a the majority of its membership.”

Britain is not alone in looking to India to further the cause of globalisation. The WTO Director General, Mike Moore made a similar appeal during a visit to India mid-January.

“The whole world recognises India’s unique position economically and politically. We need your advice, leadership and enthusiasm if we are to advance on all fronts and achieve the sort of progress needed in this new year,” said Moore.

Moore and Short both canvassed India’s support for a new round of WTO negotiations, arguing that this would free up trade in the information technology (IT) sector in which India has big stakes.

“Throw in the prospect of freer trade in agriculture and cuts in industrial tariffs and the case (for a new round of negotiations) becomes all the more compelling (for India),” said Moore.

Echoing his views, the British leader said the answer to India’s fears of the effects of globalisation could only be found by convening another round of WTO talks.

However, India’s concerns were spelled out for Short at the meeting by leading Indian economist Isher Judge Ahulwalia, who heads the prestigious economic think-tank, the Indian Council for Research on International Economic Relations, which helped prepare the British White Paper.

According to Ahluwalia, India, which began “engaging the world economy” a decade ago, is just beginning to feel the impact of globalisation. The Indian government has to deal with resistance to globalisation from domestic industry long used to protection, she pointed out.

The country is also worried about a series of non-tariff barriers such as labour standards, defined by non-government organisations (NGOs) based in western countries, she said.

“Things get complicated when these NGOs play into the hands of protectionist forces,” Ahluwalia said.

There are also concerns that medicines and vaccines are now being priced out of the reach of ordinary people because of the country’s compliance with the new world trade rules, she said.

Ahluwalia said that developing countries like India with weak intellectual property rights (IPR) systems, could also end up paying royalties to foreign patent holders for their own traditional medicines and cures.

She said it was true that India had registered major successes in areas like computer software, but it was important to remember that two- thirds of the one billion Indians still depend on agriculture for their livelihood.

“The software engineer in Bangalore (India’s main IT development centre) is already benefiting from globalisation. But the slum dweller…is unlikely to do so without substantial improvements in infrastructure and education and healthcare and new opportunities for employment,” Ahluwalia reminded Short.

Short acknowledged that there were sharp socio-economic imbalances within India. “In 1980, the richest major state in India had a per capita income which was 2.8 times that of the poorest state. By 1997 this difference had increased to a factor of 4.2 times,” Short noted.

But the British leader said it was the responsibility of the government to “help manage the process of change and maximise economic opportunities for all and to equip people through education and appropriate labour market policies.”

She argued that India could still benefit from globalisation by reducing internal and external barriers to trade and investment and by facilitating growth in well-paid and secure jobs in manufacturing and services.

In her view, global inequality between the richest and poorest 20 percent of the world’s population has declined largely due to rapid economic development in India and China.