Saturday, 7 December 2013

How about a WTO deal inside India

If you can get 159 people to agree to anything, you must be a magician. Well, Roberto Azevêdo, did just that. The Brazilian is the Director General of the World Trade Organisation and today 159 countries agreed to a treaty. For years and years, nothing but bickering has the been the result - in Geneva, in Seattle, in Cancun, in Doha.  But at last in Bali today, something has been signed. Modest it may be, that will set common customs standards and ease the flow of goods through borders around the world. But to get all 159 countries to sign up (even one could scuttle any deal), is a major achievement.

They almost didn't. The chief spoiler was India - at the end of the negotiations, virtually every country was pissed off with India. India was threatening to veto the deal on the issue of its programme to feed 75% of its population at subsidised rates (the unfortunate Right to Food Programme).  India's stand in most multilateral forums is to shout loudly, be a spoiler, pontificate, and in general be a nuisance. Such a position was usually the role of the United States, which remains very good in pontificating. But in the last decade, the developing countries have been big noise makers - none more so than India. At the end of the Bali round, Anand Sharma, India's Commerce Minister is not going to be very welcome in most parts of the world. But finally he did relent and India signed too.

A global free trade agreement is in everybody's interests, although the loony left usually rail against any form of globalisation. Most countries have come to realise the value of free trade, except for the problem that they want it to be free when it suits them and want to shamelessly protect when they encounter some lobby or the other. One of the chief culprits is the self appointed bastion of free trade , the United States. It champions free trade to other countries, but has horrible market distorting subsidies in a wide range of industries - chiefly farming. So does the EU. Both of them want free trade, but do everything in their power to stop free movement of services - the draconian visa restrictions is as trade blocking a move as any customs barrier. India wants the US and everybody else to let it freely export IT services (the one thing it is good at), but refuses to import say wheat or onions . China wants to export to the world, but will not allow foreigners anywhere near banking, insurance, etc. Everybody is protecting special lobbies and screwing the consumers in the bargain - the consumer has a right to the best and cheapest product, wherever it may originate from and yet governments do their best to block this, citing the need to protect some powerful lobby, usually of the rich.

It is not this blog's intention to make the case for free trade - it has been well made by far more illustrious men and women.  In any case, no rational argument is going to convince the loony left and the rabid right - so why even try ? This post instead is going to plead for a "National Trade Organisation" inside India itself. If you thought there is free trade inside India, you are grossly mistaken. Each state draws it boundaries, and the sight of the long queue of trucks on the state border is enough to tell you that every possible block is made on the free movement of goods. The honourable lady in charge of one of our Eastern states went even to the extent of banning the movement of potatoes from her state to the North East recently, ostensibly to reduce potato prices in her state. She was literally playing with a nuclear bomb - first of all her act was grossly unconstitutional and secondly if every state decided to copy her, what will become of India.

For years, India has been trying to implement the Goods and Services Tax - a common indirect tax regime across the country.  Nobody can get the States to agree (although I am sure none of the honourable finance ministers of any state can cogently argue why he is opposing this ). BJP Chief Ministers are the chief blockers although the idea itself came about when Vajpayee was the Prime Minister and the move was a BJP brain child. Freeing up the state borders will do wonders to India's economy. The only person it will hurt is Ramamritham - and he along with his political masters are doing their best to block this.

Mr Anand Sharma is not going to be very welcome outside India. Maybe he may want to sit in Delhi and try and get a national treaty signed by all states. After all, there are only 35 states and union territories. And if 159 countries can agree to a treaty, surely 35 states  can. Oh I forgot. In the WTO, there is only 1 India - Inside,  there are 35 India types, each worse than the other. Fat chance of a deal.

9 comments:

Reflections said...

"The only person it will hurt is Ramamritham - and he along with his political masters are doing their best to block this."

But why/how wd it hurt him??? I mean there are enough people in India for him not to lose out, then what does he gain out of blocking it???

Ramesh said...

@Reflections - Oh the entire area of sales tax, octroi, inter state permits, forms, etc etc is all the creation of Ramamritham and he exhibits unbridled delight at the complexity. If you abolish all this nonsense, Ramamritham will be deeply hurt. His entire pleasure comes from intricate procedures, complex regulations, millions of forms to be filled in, and all the rest of it. What will he do if we simplify life ....

Sriram Khé said...

Whenever you feel like complaining about Indians arguing, well, think of the wonderful title of one of AK Sen's book: "The Argumentative Indian" ;)
It is in our genes to argue--even when we agree!!!

I won't get into the US and the EU and their fancy pontificating--because, there is nothing to disagree with you!

I don't have anything to disagree with you about the restrictions on the internal movement of goods within India.

Damn, whatever happened to the argumentative Indian in me???? I guess I have truly become American!!! muahahaha ;)

When we were kids, my father's aunt lived in Trivandrum and she didn't care much for the rice grown in Kerala. She then had to get permits to regularly take rice from across the border, which I could not understand. To move it a hundred kilometers within India!

India is a strange country, and it seems hell bent on making sure it remains strange :(

Ramesh said...

@Sriram - Please don't show the red rag of Amartya Sen - you are in grave danger of being clobbered for the said gentleman is in the same class as Paul Krugman for me. He gets a Nobel Prize for writing an unintelligble equation that says you are poor because you are poor. Thankfully Jagdish Bhagwati has been tearing into him ; so at least he is kept in check. His book is completely unreadable - except for the catchy title of course.

India's strangeness , at least in this sphere, is entirely due to Ramamritham. One of the worst enduring legacies that the British left us with is the desi version of Sir Humphrey Appleby.

Sriram Khé said...

Paul Krugman
AK Sen
Ramamritham

Paul Krugman
AK Sen
Ramamritham

Paul Krugman
AK Sen
Ramamritham

Paul Krugman
AK Sen
Ramamritham

muahahahahahahahahahaha ;)

Ramesh said...

@Sriram

Add Arundhati Roy & P Sainath and ..........

Sriram Khé said...

I agree with you re. Arundhati Roy ...
But, not about Sainath.

Here is why:

While I might disagree with Sainath more often than the times I agree with his analysis and commentaries, his writings convey to me the authenticity that I find lacking in Roy's.

Reading (or listening to) Roy, she does come across as echoing the views of people like Chomsky here. I have always wondered what it was that Roy did in order to gain such a prominent place. If her initial claim to fame was that Booker-winning novel, even that was bizarre to me--I could barely read a few pages of that. And, it is not that I don't love fiction, or Indian fiction, or fiction set in Kerala. (http://t.co/8wI6vOfN20) ... she has had way, way more than the 15 Warhol minutes of fame!

Vincy said...

oh yeah talk about interstate restrictions. My husband hails from Thalassery which has a good green cover and it is a custom aroudn there to grow teak/rosewood and mahogany for ones own purposes like buidling a house or furniture needed. Since we were not planning to settel there, we wanted to get the rosewood logs earmarked for us by the family to Chennai and just going through the procedures for inter state permits / NOCs and what not, put us off and we never got around to get our own stuff here.

It must be next to impossible to get the 35 India's within India to agree on one deal. Our famous threesome of ladies in the states are sure shot spoilers, to begin with.

Ramesh said...

@Vincy - Its hard enough for businesses to move stuff between states. As for individuals - we can forget it. Your experience is absolutely typical.

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