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International Trade and Finance

Notes 3. Double Standards of Developed Countries
The basic question is : Developed countries demand so many concessions and reduction of
tariffs from the developing countries, but are they encouraging free flow of trade, capital and
technology across states; or are they using globalisation to their advantage ? It would be of
interest to consider certain issues :
Unfair Game in Agreements on Textiles : India is quite competitive in textiles. But developed
countries through various protectionist measures deny access to cost efficient textile producers.
These measures take the form of anti-dumping duties, unilateral change in the rule of origin
and unjustifiable foisting of environmental issues. All these measures are taken to protect
domestic industry in developed countries and thus, these measures hamper free flow of Indian
textile exports.
Developed countries have proposed ten long years to reduce quotas in their domestic textile
industries, but they pressurise the developing countries to reduece their tariffs, remove
quantitative restrictions, introduce Intellectual Property Rights (IPRs) etc. immediately. Obvious
developed countries play an unfair game so far as textile agreements are concerned.
The United States has signed WTO agreements with the proviso that all such agreements will
have to be passed by the US Congress, being a sovereign body. There is another assurance
given by the US President to the Congress. In case, the decisions of Dispute Settlement Machinery
of WTO go against the United States, they will be reviewed by US justices. If they find the
decisions unfair, the US has unilaterally reserved for itself right to walk out of the WTO.
Criticising this big brother like attitude, some commentators believe that the rule makers are
not going to tolerate being over-ruled. Many of the US laws like Section 301 of US Trade Act is
clearly a violation of WTO agreement. This matter was considered by the Dispute Settlement
Panel of WTO which gave its verdict that those laws are WTO compliant. This has emboldened
the US to continue to use unilateral action against countries that are not considered by US
administration as compliant with US trading interests. It passes one’s comprehension how the
US Congress should be considered as a super-body over the WTO, while the parliaments of
other members of the WTO, especially the developing countries, are denied this right. Although
sixteen countries petitioned against the US, but since WTO has supported the US position.
Fourthly, reduction and elimination of tariffs in non-agricultural goods and other barriers, particularly
on products that are important to developing countries, is mother major gain for India.
Fifthly, WTO ministerial declaration has stressed the need for establishing a system of registration
for wines and spirits known by the region where they are made like champagne. Extension of
this geographical indication to other items like basmati rice will also be looked into.
Lastly, US agreed to review anti-dumping rules, but there is a fear that this may not be achieved
unless the developing countries build up strong pressure on the US to do so.
Gains for India
The Commerce and Industry Minister who represented India at the Doha WTO Conference
succeeded in sending a strong message that India can no longer be ridden roughshod over by
the developed countries, more especially US and the European Union. The biggest gain was
that WTO chairman declared that negotiations on Sinapore issues–investment, competition,
labour standards and environment would be held only after an "explicit concensus” was reached
at the Fifth Ministerial. Such a concensus may not be easy to emerge even in 2003, keeping in
view the reservations expressed by the developing nations at the Doha Conference.
Another major gain was that instead of opening discussion on new issues, it was agreed under
pressure from India and other developing countries that it would be more advisable to undertake
an exercise on a more complete implementation of Uruguay Round recommendations. This
would involve review of bottlenecks and constraints arising out of the roadblocks in the way of
fulfillment of their obligations by the developed countries. This would be particularly directed
towards the US, Japan and countries of the European Union to open markets to products in
which the developing countries enjoyed a comparative advantage.

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