By Ranjit Devraj
NEW DELHI, Nov 29 2003 (IPS)

India and the European Union inched toward narrowing differences in difficult trade issues, including the pace of liberalisation that developing countries are comfortable with, at a major two-day business summit that closed in the capital on Saturday.

European Union President Romano Prodi used the Fourth India-EU Business Summit to push for a revival of the Doha process of the World Trade Organisation (WTO) because it offered ”the best trade rules”.

"The stalled talks at Cancun have stopped us from moving forward, just as it looked like we were getting into gear. We all need to lend a hand to push-start the Doha process again,” Prodi said.

He was addressing Indian Prime Minister Atal Bihari Vajpayee and other leaders of a country accused of taking a leading role in the stalling of freer trade at the world trade meeting in Cancun, Mexico in September.

Prodi was more charitable about the progress of the summit itself, saying it had helped in a ”joining of forces to confront common global challenges”.

There was new stress, he said, on smoothening trade relations and he said the EU was about to launch trade and investment development initiatives that would enable European companies to invest in India easier than at present.

Partly addressing concerns expressed by India regarding non-trade barriers that affected its exports to the EU, Prodi said: "We are also working together on food-testing for India’s exports to the EU and on IPR matters.”

On its part, India did not seem about to give up its newfound role of championing the cause of developing countries and resistance to the WTO agenda displayed at Doha in 2001 and in Cancun.

"We have to recognise that unless the developmental concerns of the poorer countries of the world are taken into account, popular support for economic liberalisation will collapse in the developing countries,” said Vajpayee.

The prime minister minced no words when he warned that unless the views of the developing world are taken into account, there could be ”disastrous consequences for our future discussions on the international trading regime”.

Vajpayee said it was important not to upset the carefully balanced agenda of interests that resulted from hard-fought negotiations and compromises in Doha, which had seen discussion on issues of concern to developing countries – like allowing the production of HIV/AIDS drugs through the easing of intellectual property rights.

The Cancun talks collapsed on issues ranging from agricultural subsidies to the inclusion of more areas in world trade rules, as key developing countries like India and Brazil led the way in opposing a new round of trade negotiations until poorer nations’ concerns about a more level playing field on trade are addressed.

"We can move forward successfully only at a pace with which all parties are comfortableàà it is the principle that we in India follow in the coalition that I lead and in the measured pace of our economic reforms," Vajpayee said.

Observing that agriculture provided the core livelihood of millions of people from a huge number of developing countries, Vajpayee said any decision taken by the WTO will need to take this basic fact into account.

Vajpayee also argued against the developed world trying to limit business process outsourcing (BPO) and resultant migration of jobs to countries like India, saying that two basic points were being missed.

"The first is that outsourcing is increasing the competitiveness and global reach of European and American companies. The resultant boost to the balance sheets and increased dividend payouts are very much in these countries," he added.

Vajpayee also warned that more jobs would move to India if western governments cut back on visas and work permits for Indian professionals. "The demographic profile of Europe and America necessarily means that these countries will need the induction of a younger work force from outside in the coming decades.”

"In the absence of such a liberal regime, outsourcing is inevitable. If people cannot go to where the business is, business will eventually come to where the people are," he said.

Vajpayee said India hoped to replicate its known expertise in information software technology in biotechnology and other areas, driven by "our reservoir of millions of scientists, engineers, technicians and managers”.

Criticising the reluctance of European business leaders to invest in India, the prime minister said that although nearly 200 of Fortune 500 companies extensively used India as a research and development base, very few of these were from Europe.

In fact, India accounts for less than two percent of Europe’s global trade. EU officials like Chris Patten, commissioner for external relations who attended the summit, have blamed the situation on this country’s ”reputation of being a hard country to do business with" and on the "excessive red tape, poor infrastructure and rigid labour laws”.

A joint statement issued at the end of the summit said a high-level dialogue on multilateral trade issues would continue and announced that efforts would soon begin to double Indo-EU trade to 50 billion U.S. dollars.

Vajpayee also announced India’s decision to participate in the European Satellite project, in which New Delhi is widely expected to commit 300 million dollars and its own experience in developing and operating satellites.

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