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India has no legal option in Ohio issue

Nayanima Basu  |  New Delhi 

The Ministry of Commerce and Industry has decided to register its protest against the recent move by the state of Ohio to ban outsourcing but it is not in a position to lodge a complaint against the United States in the World Trade Organisation’s (WTO) dispute settlement body as New Delhi is not a signatory to the Government Procurement Agreement (GPA).

“I will raise the offshore ban issue by Ohio at the trade policy forum meeting scheduled on September 21,” Commerce and Industry Minister Anand Sharma told Business Standard. Officials in the government, however, said India could only lodge a protest and not take legal action against the US.

GPA forms a vital part of international trade which stipulates procurement of goods and services by authorised government agencies to prevent fraud, corruption and domestic protectionism. India, which was a strong opponent for starting talks on a binding agreement on government procurement under the Doha Round, has recently sought observer status in the GPA negotiations, which will allow it to monitor the talks without being a part it. In the event India signs the agreement, it would have to provide permanent access to foreign players in governmental contracts and tenders.

Trade experts and analysts whom Business Standard spoke to agreed to the fact that legally India could do little. However, they all suggested that India raised its voice as much as possible to protect its interests.

“We really have no other option but to voice our resentment in global fora that this is resort to protectionism, which has the potential to affect the bilateral relations between both the countries,” said Anwarul Hoda of the Indian Council for Research on International Economic Relations, and a former WTO functionary.

Several leading Indian information technology companies such as Wipro and Infosys have protested against the move, including the National Association of Software and Service Companies (Nasscom) that has sought the government’s intervention in the issue. On Wednesday, US President Barack Obama announced tax cuts only for companies which create jobs within the US.

“Such measures definitely create hindrances and vitiate the trade atmosphere. The US was always known to be free and fair as a trading partner, which is now changing. We should also have these issues, including the visa Bill, bilaterally on a very strong footing. These would gradually induce India to have a relook of its own domestic policies that might create problems for the US in accessing our markets,” averred T S Vishwanath, principal adviser, APJ-SLG Law Offices.

Research and Information System for Developing Countries (RIS) Director General Biswajit Dhar said the US was going back on its commitments to keep the markets open. “Somewhere, we need to tell them very clearly that these measures affect our economic interests. Even if we could have appealed it at WTO, it would not have helped us because normally cases like these drag on for years and by that time the damage would have been made,” he said.

According to Pradeep Mehta of CUTS, this would not be converted into a law as the final signing authority rests with Obama.

“India should protest such moves in the upcoming G-20 meeting in Seoul and bring it to everyone’s notice that countries which preached liberalisation of market are not committed themselves,” said R S Ratna, professor, Centre for WTO Studies at the Indian Institute of Foreign Trade.

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First Published: Fri, September 10 2010. 01:29 IST