India has taken an aggressively negative stance on the multilateral investment agreement. This agreement envisages three things which India opposes: national treatment, right of establishment and international settlement of disputes. India says it abridges Indian sovereignty and is therefore not acceptable. If, for example, the multilateral investment agreement goes through, India will have to treat multinationals within the country in the same manner as it treats domestic companies "" an idea which would be anathema to large sections of Indian industry and also to most of the political parties. India may even find it difficult to continue with its preferential treatment for small-scale industries. But the fact is that this is the way things are going. India needs to work out a strategy of getting exemptions, which it began to do very late during the Uruguay Round. A lot will depend on how the negotiations develop and what kind of deals are struck.
India also needs to iron out some wrinkles in its arguments. In his inaugural address at the developing countries meet in Delhi, S P Shukla, member of the Planning Commission, argued that restrictive business practices need to be addressed by trade rules. But to the extent that you cannot talk of a competition policy without talking of investment, India's strategy seems to be buy time until about the end of this decade.
So India wants the matter to be discussed at Unctad before it comes up for discussion at the December meeting of the WTO. This way, hopes India, the matter can be postponed. But it would have made more sense for India and her friends to work out strategies and points of argument on specific issues so as to get ready for the hard bargaining and tough deals in specific areas that inevitably lie ahead. By adopting this position, India could be committing the same error as in the early phase of the Uruguay Round talks. Then, it will be recalled, it kept saying no until it was left with no choice, first, but to join the talks and then to sign the agreement. Clearly, a dose of realism will not be amiss.
The simple point is that trade policy negotiations have to be conducted in the light of specific commercial interests. It is all too easy to throw the sovereignty argument as a hide-all cloak but does it really help protect Indian commercial and economic interests? The answer is by no means clear.
