Positional Imbalance

prepared a note on phasing out quantitative restrictions, but this could not be pushed through the Union Cabinet, and India asked for more time. A new export import policy was also due on March 31. The talks were postponed, on mutual agreement, to June 1997. While the new policy incorporated some easing of quantitative restrictions, it failed to indicate a time frame for eliminating the remaining ones by 2000, the last year of the policy. This time frame has now been submitted at the Geneva talks: 26 per cent of QRs will be phased out by 2000, a further 46 per cent by 2003 and the remaining 28 per cent by 2006.

 

It comes as no surprise that the international community has rejected the nine-year phase-out. The WTO wants two years and even the Commerce Ministrys draft note had said five years. Until a fresh time frame is cleared by the Cabinet, the talks will remain suspended. It will be incorrect to diagnose this impasse as a confrontation between the developed and developing countries. It is true the countries (and grouping) which opposed Indias time frame are all developed: the United States, Canada, Japan, the European Union, Switzerland, Norway, Australia and New Zealand. It is also true that countries which supported India are all developing: Brazil, Egypt, Nigeria, El Salvador, Pakistan and Sri Lanka. Note, however, that only six countries in the world have QRs on BoP grounds now India, Bangladesh, Pakistan, Sri Lanka, Nigeria and Turkey. This explains some of the support India has been able to garner. The problem with Indias defence is an embarrassment of riches in the external sector. The success of

reforms in boosting foreign exchange reserves is articulated in every Economic Survey. Reserves (including gold) are now $28 billion and the Tarapore Committee considers their state a minor problem in the transition to capital account convertibility. It is a logical contradiction to flaunt this success for home consumption and then turn around and argue otherwise in Geneva. If India does not want the WTO dispute settlement provisions to be used, and a WTO panel will undoubtedly rule against India, her time frame had better be revised. Trade liberalisation for petroleum products and urea is difficult without domestic deregulation. But why cant imports of consumer goods, agro products and textiles be liberalised?