We Must Keep The Dialogue Going On Contentious Issue
A: It was highly interesting. On our proposal for an interim agreement on government procurement which would be a negotiation that would start in Singapore and end perhaps a year or two later, they were interested and asked for more information. Regarding a discussion group on labour standards, I think I got a good hearing. We made it clear that there are a number of ideas we would not be prepared to discuss such as wage rates and we were prepared to agree on the primacy of the International Labour Organisation on setting standards for labour.
In this area, the most important development is that we agreed to activate the Trade Working Group of US-Indian Sub Commission and well exchange ideas on the agenda for that. On investment, the multilateral agreement on investment (MAI) is not going to be discussed at Singapore. It is a negotiation that is going on in Paris under the OECD. There is no intention, except on the part of the European Union, to have the MAI discussed at Singapore.
Q: What about Canada?
A: Canada and Japan have a proposal to begin an educational process - of discussion only - separate from the MAI - in Singapore. We can accept that proposal because its modest and it wont interfere with the MAI negotiations in Paris. We would not support bringing the MAI to the WTO.
Q: What has been the response of the Indian government to the Patents issue?
A: I think they understand how profound our concern is. They have assured us that they have taken that on board and would like to push ahead for the enactment of the necessary legislation. But they are were not able to guarantee a time when they will come into compliance with the WTO obligations.
Q: How soon will you ask for the setting up of a dispute panel at the WTO?
A: I am not going to negotiate on the front pages of your newspaper. Well make our strategic and tactical decisions ourselves. But we will remain in close touch with the Indian government.
Q: If they fail to move the Bill in the winter session, what will be your stance?
A: I am not going to predict our reaction. But it is of great concern to us and we will be watching it very closely.
Q: You had a meeting with the telecommunications secretary MP Modi. What was his response to the Information Technology Agreement?
A: The Information Technology Agreement is a tariff cutting exercise so it was mainly a concern of commerce secretary Tejendra Khanna as I understand the assignments of the government. Their response was, I think, generally favorable. I also discussed this with the finance secretary and the secretary, PMO. All of them are interested and seek benefits for India. Of course, they need to do more work on the detail. But I think the visit has excited interest in the matter and we hope to keep the dialogue going on this. There are some meetings later this week in Geneva and we urged secretary Khanna to attend these meetings so that we can begin a discussion about product coverage and time for phasing out the duties. Our discussion with Modi was mainly on improving the Indian offer in the telecommunications services negotiation which is related to ITA because you need both cheap low priced information technology goods and you also need a low priced service in terms of information technology. We think that offering competition is the best way to do that.
Q: What kind of offer are you seeking from India in this area ?
A: We are seeking an offer that first makes the maximum use of market access for foreigners under Indian law. For instance, Indian law permits foreigners to own 49 per cent of a facility based carrier that competes with a monopoly but the offer only allows 25 per cent ownership. We think India ought to make an offer at least as good as that. We also need to look at innovative ways of improving the offer on telecommunication services. We have some competition now - some competition - in cellular and local circles. But it may be possible in two or three years to have full competition say on the international sector. Or maybe open up domestic resale of long distance. That would be a good addition to the offer.
We urged Modi to come to the high level meetings on telecommunications services which I will be attending and which will be held in Geneva in roughly mid-November.
Q: Did you discuss the issue of balance of payments and import of consumer goods restrictions maintained by India ?
A: Indeed, we did - in great detail. We are very concerned about these balance of payments restrictions. By our estimates, they cover around 40 per cent of the tariff lines in the Indian schedule. First, I dont think it has anything to do with balance of payments. I realise there is concern about the subject but since its not an across the board restriction on trade you could suddenly experience imports in the 60 per cent that is not subject to these restrictions and you would have a balance of payments problems. It seems to me that this is designed mainly for import protection.
Now, in any event, the IMF will conclude that there is no basis for balance of payments restrictions. So the question is how can we get rid of these restrictions.
The officials from the Indian side invited us to make proposals on this subject. We accept the invitation and will respond. But it is important that these restrictions be removed. Not only because they are interfering with our access to the market but also because a big country like India taking a huge balance of payments exception for 35 years strikes all the countries that arent taking these exceptions - and remember Brazil gave these up last year - as undermining the benefits of concessions for all of them. Its of great concern to us.
Q: Is it likely that there will be negotiations on the issue of trade and environment at the WTO meeting ?
A: I think what is most likely is that the committee on trade and environment will submit a report and an agreement on negotiating objectives over the next couple of years and possibly on a framework for that negotiation.
Q: India is disappointed with the progress of the MFA phaseout and the change in the rules of origin the US has made. Can you comment on this?
A: As far as the rules of origin is concerned, there was an understanding in the Uruguay Round that the rules of origin could change and that they could be an appropriate subject to be brought before the textile monitoring body. We are prepared to enter into those discussions whenever India wants to take it up and our textile negotiator said that she was ready to enter into consultations any time. On the larger issue of the phase out, I have looked closely at these and they are subject to a lot of interpretations.
We are actually a textile exporter just as India is an apparel and textile operator. We have tried to make the best offer to textile exporters and I know that last year Indias exports to the US in the sector rose at twice the rate of our imports from developing countries generally. I recognise it is a subject of tension and if India wants to raise it in discussions, its fine.
Q: Did the textile secretary bring up the issue ?
A: Yes. I am not in a position to renegotiate the textiles agreement. It was sold to the Congress and it was very difficult to sell. We cant renegotiate it. But certainly if there are concerns about implementation we are ready to listen to them.
Q: Did insurance come up during your discussions with the finance secretary?
A: Yes. We encouraged attention to this at an early date given the fact that the financial services negotiation does not end till the end of 1997. We encouraged secretary Ahluwalia to look at this situation at an early date and try and improve the offer. I think this was taken favourably. I understand he has a state monopoly to deal with but competition in this sector would also benefit an ordinary Indian.
Q: What would the implications be if India fails to open up insurance sector for negotiations?
A: We have purposely kept this flexible - you know this idea of critical mass. It is clear that in negotiations like financial services and telecommunications there cant be success without adequate commitments from Asia. And I think its in Indias interest to make these commitments and open up both these markets.
We will try and convince the government of this. I am not prepared to say what specifically constitutes critical mass at this stage - thats the subject of negotiation.