Introduction

The detailed note on WTO Negotiations provided by the Government does not
reflect any significant departure from the positions adopted by the previous
Government. Given the structural inequality and asymmetry that is built in the
WTO agreement, which favours the developed countries, India’s long-term
interests are best served by making common cause with the developing countries.
The formation of the G 20 and the G 33 at the time of the Ministerial in Cancun in
2003 was a positive step in that direction. Subsequent events, especially India’s
becoming a part of the “Five Interested Parties” and its role in bringing about the
“July Framework Agreement” in 2004, and lately, India’s co-chairing the Services
group with USA and maintaining silence on the attempts by developed countries
to front-load the negotiating outcome against the developing countries, have
raised questions regarding our commitment to the unity of the developing
countries. In this context, the formulation contained in the Government’s note:
“wherever there are common interests on specific issues, India has worked closely with
developed countries also”, causes concern. The solidarity of the South, and not
expedient “issue- based” coalitions with USA/EU, must be the bed-rock of our
strategy in WTO. Some of the concerns on India’s negotiating position on the
issues of Agriculture, NAMA, GATS and TRIPS and some suggestions are
elaborated below.

 Agriculture

From all accounts, we are experiencing a deep agrarian crisis. The lack of employment
opportunities and income have resulted in an unprecedented reduction in the per
capita availability of food-grains for the rural poor, pushing, by some of the estimates,
three quarters of the rural population below “the poverty line”. The condition of even
the relatively better off sections of farmers seeking higher returns due to their exposure
to the volatile world agriculture market, particularly in the period of a deep cyclical
downturn, on the one hand, and on the other, the sharp rise in the cost of inputs,
drastic reduction in the availability of credit and declining state procurement at
remunerative price. Widespread phenomenon of farmers’ suicides is a result of this
crisis.

WTO’s Agreement on Agriculture (AoA) paradigm favours capital-intensive
and corporate agribusiness-driven agriculture, and is insensitive to the needs of the
masses of peasantry and threatens the livelihood of the vast masses of the small and
marginal farmers in developing countries such as India. It is this thrust of the AoA
agreement that has led to peasant distress not only in India but also in all countries
where agriculture is a livelihood issue. If we do not question and change the current
AoA paradigm, we will end by furnishing access to our markets to the corporate led,
highly subsidised and therefore artificially low-priced imports from the developed
countries to the detriment of the already beleaguered peasantry.

The Government seems to be focussing on opening up of the agriculture sector
to corporate capital and introduction of large-scale corporate agriculture to address
the agrarian crisis. The arena of operation of the corporate sector is situated in the
context of integration with the world agriculture markets within the framework of the
WTO’s Agreement on Agriculture (AoA). We do not think that a solution to the
current agrarian crisis lies in this direction. A necessary, though not sufficient,
condition to enable fashioning of an appropriate strategy to meet the crisis, is the
insistence on a change in the current AoA paradigm itself. This requires a South -South
co-operation axis and also being sensitive to the needs of other developing countries.
The hopes raised by the revival of the solidarity of the South with the emergence of G-
20 at Cancun in 2003 have been dampened by the compromise accepted in the socalled
July 2004 framework. India brokered this compromise as part of the “Five
Interested Parties”. The much publicised achievement of having made EU to agree to
eliminate export subsidies on all agricultural products by “a credible end date” and
the New Delhi declaration of G-20 specifying a five year period for the purpose have
to be seen in the context of the substantial improvement in access to our markets
through severe reduction in our tariffs being sought by the developed countries as a
quid pro quo.

The G20 proposal for reduction of subsidies by the developed world will not come into
effect, at least till 2012-13. It is well known that agricultural subsidies given by the EU
under the CAP (Common Agricultural Programme) will continue till 2013 and cannot
be withdrawn before that. Moreover US subsidies under the 2002 Farm Bill is for a
period of 10 years i.e. till 2012. Therefore, there will be no reduction in subsidies of the
developed countries at least till 2012. Even the G20 demand on export subsidies grant
developed nations 5 years for elimination. This means that up to 2011 (from Jan 2006),
export subsidies will continue. However, the market access that is being negotiated
starts from 2007! Even if the developed countries do not wriggle out of their subsidy
reduction commitments as they have done in the past, once the developing countries
lower their tariff barriers, the cheap, subsidised imports from the developed countries
could devastate the developing countries in these five years.

The G20’s position on domestic supports in developed countries has been weakened
considerably in comparison to their position in Cancun. The G20 had then asked for
capping of the Green Box and they had rejected the Blue Box expansion. Today, they
seemed to have softened their stand on the Green Box, possibly due to trade-offs with
the EU, and their position on the Blue Box has been reduced to ensuring that there are
some criteria/limits put on the US’ use of it. Both of these positions are not acceptable.
The developed countries will continue with the Green and Blue Box subsidies in the
foreseeable future. India and other developing countries must insist on their right to
the use of QRs to protect their domestic markets from such subsidised exports from the
developed countries.

Rather than highlight fundamental issues confronting farmers and agricultural labour
the G20 has focused on the narrow subject of market access. In July 2005, the group
proposed a market access formula for tariff reduction (a middle ground between the
Swiss and Uruguay round formulae), which has been widely accepted as a basis for
further negotiation. This proposal calls for a banded approach to tariff reductions with
4 bands for developing and 5 for developed countries. Each band would be subjected
to a linear tariff reduction approach with overall caps on high tariffs differentiated
between developed and developing countries. Market access will primarily benefit
agri-business interests in countries like Brazil and will do little to solve the agrarian
crisis in the south.

The Government’s response states that: “India has thus calibrated reduction of its own
agricultural tariffs to the substantial and effective reduction in the level of subsidies
that hugely distort international market, with the proviso that recourse to specific
instruments to safeguard our vast rural poor ag ainst depressions in prices and import
surges will be necessary”. There is little evidence of such “calibration” especially given
the fact that we have agreed to give up the principal instrument to safeguard our
agriculture in the form of Quantitative Restrictions (QRs) in precisely the period when
subsidies provided to agriculture in developed countries have actually gone up. Under
the July Framework the provisos sought in terms of limited and highly conditional
safeguards such as “Sensitive and Special Products” and “Special Safeguard
Measures” will not be equal to the task of meeting the stupendous problems that the
rural masses will continue to face in the wake of further integration of our agriculture
with the world agriculture market.

Despite the G20 focusing on market access, Sanitary and Phyto-Sanitary (SPS)
measures and technical barriers to trade (TBT) are frequently used by developed
nations to stop imports from developing countries.
The developed countries use the protection of sensitive and special products allowed
for developed nations and thereby deny market access. Further, they also uses Special
Safeguard Mechanism (SSM) to restrict imports from developing countries - Canada reserves the right to use SSM for 150 tariff lines, EU for 539 tariff lines, Japan for 121
tariff lines, US for 189 tariff lines and Switzerland for 961 tariff lines. On the other
hand only 22 developing countries can use SSM.

It is unrealistic to expect that corporatisation of the farming sector and increased
opportunities for export will help bring about an agricultural transformation in India.
Enormous displacement of peasantry that this would entail (without providing
alternative avenues for employment) is fraught with the danger of destabilization of
the democratic polity. Therefore, it is of paramount importance for India , and also for
a large number of similarly placed other developing countries, to insist on the right to
use quantitative restrictions (QRs) and secure adequate space for exploring
appropriate strategies to solve their agrarian question.

It is eminently possible to claim that QRs are consistent with the GATT/WTO
approach and agreements. A mere look at the Agreement on Textiles and Clothing
which was very much an integral part of WTO; recalling the whole exercise of
tariffication which preceded the AoA; and the extant provisions of Article XVIII of
GATT - will show how entrenched the QRs are in the system. What is more, the
developed countries have provided for themselves a quota system, a version of QRs,
in AoA, in the name of Tariff Rate Quotas (TRQs), where a fixed volume of imports is
allowed at a lower tariff rate and beyond that level, imports are allowed only at
prohibitive tariffs. If the protection of the decrepit textile industry in the developed
countries, which admittedly formed a very minor part of their economies, could
justify imposition of QRs for five decades; if QRs could be resorted to by agricultural
giants almost throughout the life of GATT and beyond; if safeguarding the external
financial position of the developing countries could justify resort to QRs; then the
paramount need to safeguard the livelihood of billions of peasants in the developing
world should certainly provide an even more sound and compelling justification for
resort to QRs.

While this move to insist on QRs may not be opposed as such by the agriculture
exporting countries in G-20 like Brazil and Argentina , it has to be recognised that it
does not offer them prospect of expanding markets for their agricultural exports. This
requirement could be met by negotiating improved access to such exports under a
calibrated regime of inter-developing countries’ trade liberalisation where the danger
of unfair competition is practically non-existing and where proper safeguards could
also be built in more easily to ensure a degree of freedom necessary to allow working
out of appropriate national strategies for agrarian transformation. Similarly, in order
to take on board the concerns of food -import dependent countries in G-20 like Egypt,
multilateral, regional or bilateral food security measures, including direct trade
measures such as long-term contracts at affordable prices, could be envisaged as an
integral part of the inter developing countries’ trade and economic co-operation. It is
this realignment in agriculture that India should seek. And India’s national interests are best served by taking a lead to mobilise the South on such a platform.

Based on the above and keeping our interests in mind we believe that the following
should form the basis of our negotiating positions in the AoA:

1. There is a need to examine the outcome of the AoA as compared with the
promise that was held out in terms of benefits to developing countries,
before finalising the next phase of liberalisation.

2. All export subsidies, including export credit, export credit guarantee and
export insurance by the developed countries should be eliminated
immediately. Dropping the Blue Box (domestic support listed in Article 6.5
of the AoA) in any form as was originally visualised in the AoA, but was
reversed in the July framework, needs to be re-emphasized. Further, it
needs to be pointed out that most Green Box measures (domestic support
listed in paragraphs 5 to 13 of Annex II to the AoA) are indeed trade
distorting and thereby demand a reduction in the total producer support
provided to agriculture in the US and the EU in return for any concession
that developing countries may offer. Apart from notifying the Green Box
subsidies within a month of the new negotiations, there should be
reduction/elimination of these subsidies in a time-bound fashion.

3. Considering the vital role that agriculture plays in providing livelihood to
the large majority of the work force in developing countries, taking into
account the nature of small -scale, largely rain-fed, small -and marginal-
peasant- dominated nature of their agrarian economies, recalling the
notorious volatility of world agricultural prices, (particularly the severe
downturn in the recent years after the coming into being of AoA) and the
continuing heavy subsidisation of agricultural production and trade by
developed countries, the right of developing countries to impose QRs to
safeguard the livelihood of three billion strong peasantry needs to be
enshrined as an integral part of AoA on the lines of Article XVIII B of
GATT.

4. The developing countries should be entitled provide subsidies (outside the
scope of reduction commitments) for domestic production of food products
for domestic consumption in order to ensure food security. The developing
countries may also be entitled to provide subsidies (outside the scope of
reduction commitments) to farmers for the purpose of protecting their
livelihood.

5. The developing countries that have been denied the facility of the special
safeguard in agriculture until now should have access to it. Developing
countries should be allowed to use the “Special Safeguard Mechanism” in
respect of all agricultural commodities.

6. A developing country may take SSM for protection against price falls. This
cannot be dependent on an import surge as suggested in the July
Framework, as domestic price falls are not necessarily triggered by import
surges, but, more often than not, are induced by the fall of prices of
commodities in the international market. For a price slide, it may be
stipulated that a developing country may take SSM if the price of the
product falls below a certain percentage of the previous years’ average
price.

7. There should be expansion of TRQs maintained by developed countries
beyond the levels earmarked for specific countries, and it should be
available to all countries without discrimination. Various Non-Tariff
Barriers imposed by the developed countries also need to be eliminated.
8. Under S&D provisions, the developing countries may provide export
subsidy, specially for adoption of higher technology and adaptation to
product and process standards as well as to compensate for various
handicaps for e.g. in financing, guarantees and insurance, in respect of
production and export.

 NAMA

The Government’s position on NAMA is a cause of serious concern. The “July
Framework”, to which India is a party, resurrects in NAMA the Derbez Text that
was rejected by majority of the WTO-member countries including India in
Cancun. The key issue in NAMA is that while developing countries protect their
markets through higher tariffs, the main mode of protection for the developed
countries is through Non-Tariff Barriers (NTBs), particularly through the use of
technical barriers. Therefore a further reduction in tariffs as is being negotiated in
NAMA will not lead to any greater market access for the developing countries but
will certainly ensure greater market access for the developed countries. Cuts in
bound tariffs for developing countries would be drastic and make it difficult for
countries like India to use tariff protection as a tool for industrial policy in the
future.

By submitting a proposal in the middle of April this year along with Argentina
and Brazil (ABI proposal), India has agreed to a non-linear Swiss-type formula for line-by-line tariff reduction for all bound tariff rates. India has also agreed to bind
its unbound tariff lines. All these unilateral concessions have been made without
any corresponding concession on the part of the developed countries for
providing greater market access and easing up on the NTBs. The Government’s
note tries to provide some justification for this. For instance it is stated that “The
July framework agreement in its Annex B paragraph 4 requires the Negotiating Group to
continue its work on a non-linear formula applied on a line-by-line basis...” (emphasis
added). However, according to the very first paragraph of the Annex B of the July
Framework agreement: “..this framework contains initial elements for future work
on modalities by the Negotiating Group on Market Access. Additional
negotiations are required to reach agreement on the specifics of some of the
elements. These relate to formula, the issues concerning treatment of unbound
tariffs...the flexibilities for developing country participants, the issue of
participation in the sectoral tariff component preferences”. Hence no point
mentioned in the subsequent paragraphs of Annex B (paragraph 4 for instance)
should be treated as binding. Instead, going by the opening paragraph, “the
specifics of some of the elements” should be treated as open for negotiations. The
developing countries have the right to reject any approach mentioned in Annex B,
as its essential elements do not have the status of being accepted; they are still to
be negotiated.

The Government’s note has further claimed that “The line by line approach is the best
method to deal with the problem of tariff peaks, tariff escalations and high tariff; major
problems faced by the developing countries vis-à-vis developed countries” (emphasis
added). This is difficult to accept. The problem of tariff peaks, high tariff and tariff
escalations has already been raised by developing countries and is recognized in
paragraph 2 of the Annex B. This problem can be resolved within the framework
of average tariff rate reduction commitments. For instance, the highest tariff rate
leviable by any country can be specified as a fixed mark up over the newly
calculated tariff average, the mark up being negotiable for each country. Another
method to deal with tariff peaks is by introducing suitable tariff caps, with
developing countries capping their tariffs by a factor ‘x’ higher than that for the
developed countries. The problem of tariff escalation over HS Chapters can be
similarly regulated.

The Government’s note states, “For countries like India, which has a flat tariff binding
structure with a small dispersion of individual tariff around the average, no significant
advantage is gained by the average based tariff reduction method when compared to the line-by-line tariff reduction method”. This line of thinking has its pitfalls since WTO
commitments are not about the current regime internal to the country but the
options a sovereign country has in dealing with the international economy. If we
undertake a line-by-line reduction of the bound tariffs rates, then in future, the
Government will not be left with any option to exercise its right to protect the economy from a possible fall in the international price of some manufactured
goods by increasing tariffs. This is not a theoretical issue. We have recently
witnessed a decline in the prices of agricultural products in the global market.
There are indications that with increasing capacity being built in the developing
countries, we are likely to see a fall in the international prices of some
manufactured goods also in the near future. This may eventually lead to a surge of
imports in India resulting in de-industrialization. It is therefore important to draw
a distinction between autonomous tariff adjustments as a part of our domestic
policy and an obligation in the WTO to bind our tariffs. The former process can be
modified in accordance with our needs from time to time. But a commitment in
the WTO is practically irreversible and will close our option to raise the tariffs
beyond their bound level.

The current ABI formula has two proposals; one for bound tariff rates and another
for unbound tariff rates. For bound rates the formula has a parameter “B” that is
negotiable, the other components being the average tariff rate and the applied rate.
The formula for unbound rates has an additional parameter x, which is the markup
over the applied rate, x being negotiable for countries. In order to make some
estimates of the extent of tariff reductions that would be required under the ABI
formula, let us assume the value of x to be 2 and take India’s average tariff rate as
44.5%. Here for all unbound rates, majority of which have applied tariff rate of
35%, the value of base rate is 70% (mark-up value, x=2). Most of the manufactured
items in India have a bound rate of 40%, or in some cases 25%.

BASE RATE	B=0.25	B=0.5	B=1	B=1.5	B=2
25%	7.70%	11.77%	16%	18.19%	19.52%
40%	8.70%	14.30%	21.06%	25.01%	27.60%
70%	9.60%	16.88%	27.20%	34.17%	39.18%

The above table shows different levels of the reduced tariff rates against the
current applied rates, for different parametric values of B. If B=1, tariff rates will
have to be reduced to 16%, 21.06% and 27.20% for current applied rates of 25%,
40% and 70% respectively. Tariff reductions of this order (which has been
calculated under plausible assumptions) are bound to have an adverse impact on
domestic industries. The non-linear formula of tariff reduction is detrimental to
the interest of the Indian Manufacturing Sector and should be revised. The
commitment of line-by-line tariff reduction is also totally unwarranted and should
be reconsidered.

NTBs are used as the primary tool for blocking import by all developed countries.
Today, 44% of Indian exports to the US and 23% to the EU face NTBs. Technical
Barriers to Trade (TBT) and Sanitary and Psytosanitary (SPS) measures are the main NTBs affecting Indian exports. Though recognized as a major problem, no
unified system of recognizing NTBs or their abusive usage has been devised till
date. The Government should address the issue of NTBs concurrently with that of
tariff reduction. There should be no agreement on tariff reductions unless an
agreement is reached on how NTBs are to be reined in. Moreover, the issue of
sectoral tariff elimination proposed with specifications by the NGMA (Negotiating
Group on Market Access) Chairman’s Draft but subsequently diluted in the July
Agreement, Annex B remains to be an important area of concern. The items
originally identified by the Draft were fish and fish items, leather goods, textile
and clothing, footwear, stones and precious metals, electronics and electrical
goods and motor vehicle parts and components. Although these items have not
been specified in the July Agreement, the point regarding sectoral elimination of
tariff remains. Although India has export interests in some of the items proposed
in the Draft mentioned above, some of them also come under SSI. Attempts to
eliminate tariff for these items should be avoided. Over-optimism regarding
export potential should not result in overlooking the interests of the domestic SSIs.

The issue of livelihood of innumerable poor people is also associated with NAMA,
most importantly those involved in fishing. Any drastic changes in tariff or other
rules of market access will have direct consequences for them. The Government
must therefore give special consideration to this fact and any deliberation on
NAMA must entail special discussions on the impact on employment and
livelihood in such sectors.

On the basis of the issues detailed above, the following should be incorporated in
the negotiating position on NAMA.

1. The Non-linear ABI formula should be reconsidered.

2. Instead of line-by-line tariff cuts, the Uruguay Round approach of
average cuts, together with minimum cuts per tariff line should form the basis of
our negotiating position.

3. The problem of tariff peak can be solved by negotiating that the
highest tariff rate leviable by any country can be specified as a fixed
mark up over the newly calculated tariff average, the mark up being
negotiable for each country. Another method to deal with tariff peaks
is by introducing suitable tariff caps, with developing countries
capping their tariffs by a factor ‘x’ higher than that for the developed
countries.

4. India should reiterate its earlier position of not binding unbound lines.
The position against harmonization must be steadfastly adhered to.

5. The issue of NTBs should be addressed concurrently with that of tariff
reduction. There should be no agreement on tariff cuts without any
agreement on how NTBs are to be reined in.

6. SSIs should be given special consideration before formulating
positions on tariff reductions.

7. There should not be any sectoral tariff elimination commitment.

8. India must oppose attempts to convert livelihood issues into trade
issues, for e.g. the inclusion of the fishing sector under NAMA.

 GATS

The GATS had some built in safeguards wherein it was largely left to the countries
to decide whether or not they will make commitments and what those
commitments will comprise. The pace of liberalisation under GATS was to be in
line with the stage of development of the developing countries. It was recognised
that the dev eloping countries would undertake opening up of fewer sectors and
the developed countries would give priority to opening up of those sectors where
the developing countries have export interest. However, the developed countries
are now trying to unravel this basic structure of the GATS in the name of
“benchmarking approach”, “a common baseline approach” or more recently
“complementary approaches” to negotiations. The thrust of these approaches is to
compel the developing countries to open up a critical mass of their markets to the
service providers of developed countries. Since the developed countries already
have a more liberalized services sector, such an approach essentially implies that
the burden of opening up the services market in the current round have to be
borne by the developing countries. In other words, if the developed countries get
away with this approach, they will extract concessions from developing countries
in this round of negotiations virtually “for free”. Instead of nipping this move in
the bud, India seems to be approving of it by its silence.

It is surprising in this backdrop that India is adopting a pro-active stance in the
GATS negotiations. A very extensive “offer list” covering a large number of
sectors and sub-sectors have been submitted, which includes sectors like water,
health and education. Although the Government’s note mentions that it “..will
calibrate its offer based on how India’s requests have been accommodated by its major
trading partners like US and EC”, going by the extensive offers that have been made,
there seems to be a willingness to open up several sectors of the economy if some
concessions in terms of liberalization in Mode 4 (movement of natural persons)
and Mode 1 (cross border supply including BPO) are attained. The Government
has itself noted that “Preliminary analysis of the revised offers tabled by US and EC in the WTO recently shows that EU has marginally improved its offer on Mode-4 specifically in respect of CSS and IP.. However, US has struck to its Uruguay Round commitments of Contractual Services Suppliers (CSS) and Independent Professions (IP)”. In contrast to this India’s offer covers a large number of sectors and sub-sectors including architectural, integrated engineering and urban planning and landscaping
services, veterinary services, environmental services, distribution services,
construction and related engineering services, tourism services, educational
services, telecommunication services, computer related services, life insurance
services, ban king and financial services, medical and dental services, research and
development services, professional services, rental and leasing services, real estate
services, etc. Furthermore, for all these sectors and sub-sectors, virtually
unrestricted access has been offered for movement of persons. The proposed
horizontal regime of market access for natural persons and corporate employees is
offered on a “bound” basis. The mismatch between the aggressive and extensive
Indian offer of liberalization and the niggardly response of the US and EU in the
areas of India’s ‘offensive interest’ cannot be missed.

India should adopt a cautious approach vis-à-vis making offers and desist from
making commitments on so many sub-sectors of the services sector. Moreover, the
basic principle of binding India’s autonomous regime in most sectors that has
been enunciated in the Government’s note does not qualify for a ‘reasonable offer,
which is conditional and can be withdrawn if our satisfaction levels are not met’. Unlike
the autonomous liberalization regime upon which the Government has some
degree of control, in the case of a withdrawal of the GATS commitment for certain
sub-sectors in the future India would be liable to pay a heavy compensation to the
Member countries. It would introduce an element of irreversibility and
compromise the freedom of the Government to protect or regulate those sectors in
future. India’s offer list also does not reflect the concerns related to domestic
regulation of FDI. The only limitation that India has specified as a horizontal
commitment (applicable to all sectors included in a schedule) is that in case of joint
ventures/collaboration with PSUs, preference in access will be given to foreign
service providers who offer the best terms for transfer of technology. The 51%
equity cap on FDI that has been specified is too high for several sub-sectors and
needs to be urgently reviewed.

Opening up of basic sectors like health and education and trading-off deregulation
in highly sensitive areas like banking and financial services in order to ensure freer
movement of skilled personnel to the developed countries under Mode 4 does not
seem to be justified. Even the overoptimistic assessments of 20 million direct jobs
through remote services (Mode 1) and import of customers (Mode 2) or annual
revenue gains between $150 billion and $200 billion from Mode 4 liberalization,
quoted in the Government’s note, do not justify the opening up of such sensitive
sectors in return. India’s software and service outsourcing industry seems to be keen on including these services under a WTO agreement. While India is likely to
gain from offshore outsourcing in terms of employment and foreign exchange it is
myopic to cement these gains through a GATS framework. Prudence lies in
retaining regulatory space over these emerging and fast changing sectors and not
rush into making binding commitments.

India’s offer list should be thoroughly revised. The offers made by India appear to
be driven by the requests from developed countries rather than an application of
the need based criteria. We should open up only those sectors which will help us
to generate employment and serve other national interests. Before tabling the offer
on any sector there should be extensive consultations with all the domestic
stakeholders. Our domestic needs vis-à-vis skilled professionals in different
sectors also have to be assessed. It is not clear whether sufficiently broad based
consultations were held or such assessments made by the Government. Besides
the areas like legal services, retail and auditing, which the Government has itself
decided to keep out of the revised offer, other sensitive areas like water, health
and education should also be kept out of the offer list. Moreover, there should not
be any dilution of India’s defensive position in Agriculture or NAMA in order to
get concessions on ‘offensive interests’ in Mode 1 and Mode 4 liberalization.
The following suggestions are being made for incorporation into the negotiating
position on the GATS:

1. India must resolutely oppose the moves of developed countries to introduce
new concepts such as “benchmarking-” “baseline-” or “complementary
approaches” into the GATS seeking to destroy the built- in Special and
Differential Treatment in favour of developing countries. As other developing
countries are opposed to these moves, our task of pre-empting this attempted
sabotage of GATS should not prove difficult.

2. Withdraw the offers submitted with respect to the commitments for market
access for basic services like water, health and education.

3. Revise the offer list in view of the response of the US and EU. Movement on the
offer process should be preceded by extensive domestic consultation with the
stakeholders of every sub-sector which is being included in the offer.

4. Review upwards the FDI cap of 51% specified in the offer list. Sensitive sectors
which presently have FDI caps below 51% in India should be taken out of the offer
list.

5. No dilution of defensive position on Agriculture or NAMA in ord er to get
concessions on ‘offensive interests’ in Mode 1 and Mode 4 liberalization.

 TRIPS

The Doha Ministerial Conference held in November 2001 stipulated that the
following issues of Trade Related Aspects of the Intellectual Property Rights
(TRIPS) would be negotiated and reviewed. These issues in the relevant
paragraphs are as follows:

1. Implementation of Article 23(4) of TRIPS: Establishment of a multilateral
system of notification and registration of geographical indications for
wines, and spirits and establishment of protection of geographical
indications provided in Article 23 to products other than wines and spirits;

2. Review of Article 27.3 (b) relating to patentability of micro -organisms and
non-biological and micro-biological processes;

3. Review of implementation of TRIPS Agreement under Article 71.1 and
other relevant new development raised by the members pursuant to this
Article;

4. To examine inter alia the relationship between the TRIPS Agreement and
the Convention on Biological Diversity and protection of traditional
knowledge and folklore;

5. To examine relationship between Trade and Transfer of Technology and
increased flows of technology to the developing countries.

The Doha Ministerial Declaration under Para 19 also stipulated that in
undertaking the Work Programme relating to TRIPS Agreement ‘the TRIPS
Council shall be guided by the objectives and principles set out in Articles 7 and 8
of TRIPS Agreement and shall take fully into account the development
dimensions’ arising from the mandate of the Work Programme. Para 12 point (b)
of the Declaration also provides that ‘the other outstanding implementation issues
shall be addressed as a matter of priority by the relevant WTO bodies, which shall
report to the Trade Negotiations Committee by the end of 2002 for appropriate
action’.

It is observed from the deliberations in the General Council during its meetings on
July 27 and 29, 2005 that progress in regard to the negotiations on TRIPS related
issues have been rather slow or incomplete. The fact rem ains that the developed
countries seem to be disinterested in the TRIPS related issues. The developing
countries have to take a pro -active approach to settle these issues and India should
play a leading role in this regard. Some suggestions on the TRIPS related issues,
keeping in view stipulations in Para 19 of Declaration are as follows:
Protection of Geographical indications: Protection under geographical indications
has to be extended to agriculture, natural goods, manufactured goods or any goods of handicraft or goods of industry or food stuff. It is important to prevent
any unauthorized persons for misusing geographical indications relevant to our
country. We should operationalise our 1999 Act on Geographical Indications of
Goods (Registration and Protection) and simultaneously expedite negotiations in
this area in the WTO.

Patentability of micro-organisms and non-biological and micro-biological
processes: Patenting of micro-organisms and non-biological and micro-biological
processes have tremendous implications both for agriculture and industrial
sectors. Precisely because Art.27.3 (b) of TRIPS was such a contentious provision, a
mandatory review was provided for in the TRIPS agreement. In the ongoing
review of this provision India should argue for exclusion of these subject matter
from patentability. Micro-organisms occur in nature and as such their discoveries
cannot be treated as inventions. Meanwhile we should take steps to rectify the
provision made in this respect in our patent laws about their exclusion.
Review of TRIPS: Art.71 of TRIPS says: “The Council shall, having regard to the
experience gained in its implementation, review it two years after that date, and at
identical intervals thereafter. The Council may also undertake reviews in the light of any
relevant new developments which might warrant modification or amendment of this
Agreement”. There is today growing evidence globally that the TRIPS agreement
jeopardizes access to medicines and has a detrimental effect on the dissemination
of scientific knowledge in diverse sectors such as software and biotechnology.
Keeping this in mind India should press for a review of TRIPS, not in the narrow
sense that developed countries would want (in terms of the actual translation of its
provisions in the country laws of different countries) but in the broader context of
reviewing its impact and pressing for changes in the Agreement itself. (A detailed
proposal for the Review of TRIPS is provided in the Annexure).

Relationship between the TRIPS Agreement and Convention on Biological
Diversity: There are three issues which have to be negotiated in this respect. They
are: 1. Access to biological resources or traditional knowledge; 2. Prior informed
consent from the provider of these resources or knowledge; and 3. Benefit sharing
from their commercial use accruing from the patented product. These issues
should be pursued in the WTO. It is also important that our patent laws and laws
of the member countries of the Biodiversity Convention should stipulate these
provisions. This will help in resolving the matter at the WTO expeditiously.
General Public License (GPL) in Software and Biotechnology: In order to reduce
the concentration of IPR in the hands of the large global MNCs, the concepts of
Open Software, General Public Licenses and Biological Open Source Licenses have
arisen. Developing countries like India need to promote these in order to
encourage public domain science. A major hurdle in the development of public domain knowledge is that softwares put in the public domain are being used to do
work which is being copyrighted. The GPL license can provide legal protection
and stop such privatisation of public domain software. A similar initiative has
taken place in biotechnology where initiatives have been taken to fashion in
patenting, a similar licensing concept. Here too, if a patent is put into public
domain, and is then incorporated in a further innovation, then the resulting
innovation should also be in public domain.

Trade and Transfer of Technology: Article 7 of TRIPS Agreement stipulates that
‘the protection and enforcement of intellectual property rights should contribute
to the promotion of technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of producers and users of
technological knowledge and in a manner conducive to social and economic
welfare, and to a balance of rights and obligations’. In view of the above
unambiguous stipulation in Article 7 the matter is for the member countries to
provide in their patent laws for transfer of technology rather than negotiating the
issue, which is otherwise quite clear.

On the basis of the understanding elaborated above, the following suggestions are
made for the consideration of the Government in the area of TRIPS:

1. Expedite negotiations on Protection of Geographical Indicators in the WTO, in
order to extend it to agriculture, natural goods, manufactured goods or any
goods of handicraft or goods of industry or food stuff on the lines elaborated
earlier.

2. In the ongoing review of the Patentability of micro-organisms and nonbiological
and micro -biological processes, India should argue for the exclusion
of these subject matter from patentability.

3. India should press for a review of TRIPS in the broader context of reviewing its
impact and pressing for changes in the Agreement itself on the lines elaborated
in the Annexure.

4. The issues of access to biological resources, prior informed consent and benefit
sharing should be pursued in the WTO in line with the CBD.

5. India should propose mechanisms to promote public domain science.
Specifically, General Public License in software & bio-technology needs to be
argued for on the basis of the principle that all inventions and software that
make use of knowledge in the public domain under open licenses cannot be
copyrighted or patented and the laws of all countries should reflect this
protection.

6. The patent law of each country should provide for technology transfer
promptly without further negotiations.

7. The Motta Text imposes severe impediment to the provision of Parallel Import
by bringing in strict conditionalities. These should be interpreted as barriers to
trade and done away with.

 Conclusion

The negotiating positions adopted by the Government in the Hong Kong
Ministerial in December 2005 and the outcome of these negotiations will have far -
reaching and even irreversible, adverse consequences for the country’s economy
and polity, particularly for the peasantry and working classes. The Uruguay
Round commitments were made in a non-transparent manner. The fait accompli
was sought to be justified in the initial years in terms of highly exaggerated
estimates of “gains” computed by biased “experts”. Now it is an acknowledged
fact that developing countries were short-changed in that round and it turned out
to be a severely adverse bargain. We should learn from that bitter experience. It is
thus imperative that the positions that the Government proposes to pursue at the
Hong Kong Ministerial are set out in a White Paper and discussed in the
Parliament during the Winter session. It is important that an informed debate
takes place on the floor of Parliament and no commitment is made without a
national consensus to back it.

 Annexure

India should press for a comprehensive Review of the TRIPS which should
include the following:

1. The Doha Declaration on TRIPS Agreement and Public Health clarifies that
“the (TRIPS) Agreement can and should be interpreted and implemented in a
manner supportive of WTO Members’ right to protect public health and, in
particular, to promote access to medicines for all”. It is not possible to
implement this provision to protect the public health of our people where a
large population is suffering from HIV/AIDS, tuberculosis, malaria etc, as
patent protection has to be provided according to Article 27 for ‘any invention
in all fields of technology’. This aspect needs to be reviewed to enable member
countries to exclude patenting of drugs, which are needed for use in critical
diseases relevant to their country. Further the definition of ‘invention’ for
patentability should be applicable only to ‘basic invention’ so that the scope of
patentability is applied to only real research based inventions.

2. Article 27 also provides that the imports of patented products by the patent
holders will enjoy without discrimination the same right as are applicable to
the locally produced patented products. This stipulation absolves the patent
holder to manufacture his patented product even in such countries where large
demands would generate because of the size of the country. This aspect
requires to be reviewed.

3. Article 31 of the TRIPS in sub-article (h) provides that the right holder shall be
paid adequate remuneration taking into account the economic value of the
authorization (compulsory licence). This kind of stipulation can raise disputes
between the patent holder and the licensee. A ceiling of 4% on royalty
payment in respect of all compulsory licence should be taken up as a review
issue.

4. Article 33 provides for a term of twenty years for the patent holder. This term
under the new circumstances when the products are fast changing in less than
4-5 years appears to be too long. The interest of patent holder may diminish in
a much shorter period but the compulsory licence holder will be under
obligation to pay royalty right upto the end of the patent term. This provision
needs to be rectified with the following suggested stipulation: “The term of
protection available shall not end before the expiration of period of twenty years counted from the filing date or ten years from the date of grant of patent
whichever is shorter”.

5. TRIPS must provide mechanisms to promote public domain science.
Specifically, General Public License in software & bio-technology needs to be
provided for on the basis of the principle that all inventions and software that
make use of knowledge in the public domain under open licenses cannot be
copyrighted or patented and the laws of all countries should reflect this
protection.