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Others Guest Column Retrofit: The integrator function of trade in a globalised environment, and its impact on Ministries

Guest Column Retrofit: The integrator function of trade in a globalised environment, and its impact on Ministries

Author | Sandeep Bamzai | Wednesday, Jun 10,2009 7:32 AM

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Guest Column Retrofit: The integrator function of trade in a globalised environment, and its impact on Ministries

Smoke and mirrors, maybe? Over the last decade or so, at the very core of the global trade talks, Indian trade ministers have held sway in the slippery corridors of the worldwide mercantile system. Not only have they held sway, but they have held their own, which I guess is more important. Murasoli Maran, Arun Jaitley and finally Kamal Nath did not give a quarter nor ask for one in the tedious confabulations of the World Trade Organisation. The last named was particularly tough and unrelenting, and I saw this at close quarters when I accompanied the minister to the London G6 Summit talks in March 2006. His position, at all times, was clear - the rights of India’s farmers cannot be compromised at any cost.

After five years of unceasing and bruising dialogue on trade, Kamal Nath was replaced as India’s Commerce and Industry Minister in the recently completed Cabinet reshuffle. Representing 600 million agrarian farmers, Kamal Nath who managed to get a terrific grip on the entire gamut of trade issues, refused to back down and give in to the threats emanating out of US and European Union's bullying and dilatory tactics. I have personally seen him get up and call off deliberations because he believed they were not for the common good of Indian farmers, a constituency no Indian trade minister can afford to ignore. He would just tell his US-EU adversaries that the meeting was over because they were not willing to bend. And with India walking out, trade talks collapsed in Hong Kong, London, Potsdam and Geneva amongst other pit stops.

I remember one of his bureaucrats telling him that he couldn't take a tough stand against the French Government when the Mittal takeover of Arcelor was in the works. He shrugged it aside by saying that he thought his position was right and he would go ahead with his stance.

D Ravi Kanth wrote in the Business Standard: “A Cabinet reshuffle in New Delhi but celebrations in Geneva! That is what happened when PM Manmohan Singh announced some major changes to his Cabinet for the second term. Getting ‘rid of the commerce minister, who was widely blamed for scuppering trade talks under the Doha Round in Geneva’ figured prominently in The Economist. For liberal socialists like Pascal Lamy, director general of the WTO, and other western commentators, it was a moment of celebration.”

Interestingly the same thoughts were echoed on May 29. Food policy analyst Devinder Sharma, writing in his blog ‘Ground reality’, said, “Geneva heaves a sigh of relief. With Kamal Nath moved out of the Commerce Ministry, the probability of concluding the contentious Doha Development Round of the WTO appears brighter.”

So, was Kamal Nath tripped under US-EU pressure and divested of the Commerce and Industry portfolio? The fact that he has been given roads and highways would be seen to be equally important for India’s much needed push on its ambitious national highway development programme, after it had come to a complete standstill under the DMK's TR Baalu.

One can argue that PM Manmohan Singh might have gone to his go-to man Kamal Nath to deliver infrastructure by revitalising the Ministry in his typical doer style. But the telltale signs are visible in Ravi Kanth, Devinder Sharma and The Economist’s writings of what could well be a politically motivated divestiture. All this leaves one a little confused. The short point is that it has taken columnists and bloggers to bring forth an important issue. Was Kamal Nath sacrificed at the altar of an US-EU appeasement exercise? No journo raised the pitch on this asymmetrical move -- it was a surprise when Anand Sharma got the heavyweight portfolio of Commerce and Industry.

Industry and Heavy Industries are no longer portfolios that matter, as with the unfettering of the economy and the abolition of the license permit raj, their efficacy and clout to dictate have evaporated. The joke in Shastri Bhawan is that Heavy Industries is a ministry for BHEL, India’s power and capital goods major. Commerce on the other hand has acquired a very important hue in the recent past. The reason is simple -- trade is an integrator in a globalised environment.

The Seventh WTO ministerial is slated for Hong Kong from November 30 to December 2. This meet is believed to be crucial. Kamal Nath was refusing to buckle under pressure; he was not willing to compromise India’s position (read farmers’ rights) vis-a-vis agricultural subsidies and non-agricultural market access (NAMA). When the last round of WTO collapsed in Geneva in August 2008, Kamal Nath braved enormous pressure. India’s civilian nuclear deal was being rammed through, and I guess the US wanted some sort of quid pro quo.

The elusive Doha deal may well have hung in the balance at this vital juncture. It is well known that George Bush rang up PM Manmohan Singh thrice to convey the early resolution of the trade talks. But Kamal Nath stood his ground and the trade talks turned to dust yet again. It was not just nationalism which goaded him into taking his abrasive position; it was driven and determined by the conditionality attached to the trade talks, which saw Indian farmers’ interests being compromised by trade distorting subsidies. The chasm between the developed and developing nations widened with the passing of each confab. And Kamal Nath along with Brazil and South Africa first, and then China, subsequently became a rallying point for the poor and underprivileged of the developing world. He became a leader of IBSA, and in his articulate and forthright manner negotiated a no-nonsense approach to global mercantile trade.

Ravi Kanth and Devinder Sharma have done a fascinating analysis in their respective pieces. Ravi Kanth in particular, in his column ‘Trading Thoughts’, has explained the machinations lucidly. He writes, “In the blinkered weltanschauung of the WTO elite - dominated by the US and EU member countries - which includes some Indian lackeys, there is no place for the genuine trade concerns of the developing countries. They have no idea that over 100,000 farmers committed suicide over the last decade because of some pernicious external factors. These poor nations are told that the problem is not with the subsidies but with their inefficient marketing network.” Ravi Kanth ends his brilliant exposition by saying: “Poor countries in Africa and elsewhere look up to India for leadership because their demands and concerns are often ignored without murmur. And India’s demands come close to their interests.”

I found out that Ravi Kanth is a Geneva-based writer for BS, apparently he used to cover the commerce ministry during his earlier stint with BS in Delhi. So, his grasp of the matters at hand cannot be questioned.

Tradeoffs between tariffs and subsidies led Kamal Nath to take a strident position because it impinged on India’s economic sovereignty. India’s subsistence farmers have been caught in the trade talk’s maelstrom. Trade distorting subsidies have been something that IBSA has been fighting against. I remember shadowing Kamal Nath in London during the G6 summit and his constant refrain after nerve wracking deliberations with people like US Trade Representative Rob Portman and EU Trade Commissioner Peter Mandleson was “there is no formula. Ask Portman and Mandleson what they are willing to offer, I cannot compromise the lives of 300 million farmers who earn less than a dollar a day.” Nath is a politician, while he has found his metier as India’s trade minister, he would have quickly realised that his new assignment offers him immense scope to change India’s infrastructural landscape by doing what President Eisenhower did in the early 1960s in the US - build roads and connect everyone with everyone else in America. Kamal Nath will rue the fact that he has lost commerce, but at the same time, he will be excited with the opportunity to leave his indelible imprint by constructing roads and highways.

Meanwhile expect a breakthrough at the world trade talks by November for one of the biggest impediments is out of the way.

(Sandeep Bamzai is a well-known journalist, who started his career as a stringer with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi. In late 2008, he joined three old friends to launch a start-up – Sportzpower Network – which combines his two passions of business and sport. Familiar with all four media – print, television, Internet and radio, Bamzai is the author of three different books on cricket and Kashmir. The views expressed here are of the writer’s and not those of the editors and publisher of exchange4media.com.)

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