Bhagirath Lal Das is one of the world's leading authorities on the WTO. He was India's ambassador and permanent representative to the General Agreement on Tariffs and Trade (GATT). Later on, he served as director of international trade programs at the United Nations Conference on Trade and Development (UNCTAD) in Geneva. . During that period he also functioned as Chairman of the GATT Council and of the GATT Contracting Parties. Since his retirement from Indian Administrative Services as secretary to the government of India, he is serving as an advisor and consultant to several organizations. Now, he is advisor to Southern and Eastern African Trade Information and Negotiations Institute. The above mentioned contribution of author qualifies him to write on the subject. His area of research is trade and finance. He has written four books on the World Trade Organization (WTO) which provide genuine insight of WTO and its implications for developing countries.
General Summary
"The WTO and the Multilateral Trading System: Past, Present and Future" is written by Bhagirath Lal Das and published by Zed Book ltd and Third World Network in 2003. The objective of the author is to draw attention to the fact that the existing multilateral trade system should not go on in its present form at the cost of exploitation of developing countries. It requires the policy makers to look beyond short term gains for sustained and stable growth of their countries. This book comprises of six chapters which provides deep insight of global multilateral trading system under WTO. The first chapter chronically describes the evolution of WTO from GATT along with the circumstances which necessitated development of multilateral trading system. The second chapter highlights grey areas and mischiefs played by developed countries. The third chapter gives detailed account of implications faced by developing countries in the implementation of WTO agreements. The fourth chapter puts forward new issues regarding investment, competition policy, environment and labor standards etc. knocking at the door of WTO. The fifth chapter describes strengths and weaknesses of WTO processes regarding implementation of agreements and initiation of proposals. The sixth chapter stresses on improvement of ongoing multilateral trading system along with valuable recommendations. In this book, Bhagirath Lal Das has adopted analytical style of writing in describing implications of WTO for developing countries along with suggestions for future discourse. While, the book is orderly and logically written that fulfills the purpose of author to share his experiences with the readers, even with those who have little knowledge of economics.
Author's Thesis
The author claims that devastation of 2nd world war and the great depression of 1930s were the factors which necessitated developing multilateral trading system. The idea of international commercial union was floated by UK. But, the initiative was taken by United Nations in 1948 through its Economic and Social Council in convening Havana Conference in which provisions on tariff and export were agreed upon through a protocol. This protocol became Havana Charter and laid the foundation of General Agreement on Tariffs and Trade (GATT). Since then several rounds of multilateral trade negotiations took place in order to formulate a unanimous frame of action for global trading system but focus remained on reduction of tariffs. Up to Kennedy Round (1964-68) these negotiations confined among developed countries but a large number of developing countries participated in Tokyo Round (1973-79). In Tokyo Round, a code of rights and obligations was formulated regarding subsidies, dumping, customs valuation and import licensing. Later on, Uruguay Round (1986-94) started which expanded rights and obligations in the areas of services and intellectual property rights protection. Moreover, it also provided institutional base to multilateral trading system in the form of WTO which has the status of intergovernmental body. GATT existed until 31 December 1994 then it was replaced by World Trade Organization (WTO) on 1st January 1995 under the Marrakesh Agreement. WTO mainly focused on liberalization of trade but it inherited all the legacies of GATT.
According to the author, though WTO is a new platform for global trade yet the developed countries, particularly US and European Union have their hidden motives and they are evolving their interests in its objectives. It is evident from the fact that developed countries started providing subsidy to their farmers in the name of research and development in order to sustain their agricultural sector when they found it being eroded in the result of liberal trade. On the other hand subsidy is not allowed otherwise under the obligations of WTO. While, third world countries are being pressurized to eliminate subsidy given to agricultural sector and they have not sufficient resources to subsidize their agriculture sector to compete in the world. Similarly, developing countries got excel in textile sector in with the passage of time. When textile industry of developed countries found it difficult to survive, they started quota system in which they imposed quota on the imports from developing countries. This issue was raised in WTO but developed countries took the plea of balance of payment. Moreover, due to lack of coherence among developing countries and their weaker economic position forced them to retreat from their stance. It is irony that developed countries have cunningly protected their interests by bringing services sector under the ambit of WTO and ensured the protection of intellectual property rights including findings of pharmaceutical industry. Now, trade of services is free from tariff and those cannot be copied. Moreover, the developing countries have lost a big chunk of revenue by reducing tariffs on import and export. It has benefitted developed countries because they have cost efficient products and they can easily saturate the market of developing countries. It would erode indigenous industry which cannot be upgraded because the cost of transfer of technology is very high and copy of technology is barred under the protection of intellectual rights.
The author has further highlighted discrepancies in the processes of WTO. As far as the process of negotiation and decision making is concerned it is done in small groups, then the decisions are applied generally. In the case of any dispute, all the developed countries support each other while developing countries have failed to cash their numerical strength due to their divergent interests and their dependence over former. If any developing country tries to protect its economy and balance of payment, it recourse to hike in tariffs or imposition of quota but it is persecuted under the provision of inquiry and it is barred from imposing such conditions till the final report of inquiry. Moreover, the imports from that country are also lessened in retaliation. It is not the end, now developed countries are introducing provisions regarding environment, labor standards and flexibility in investment which would also erode the economic interests of developing countries. Their products would be banned on the issue of environment and standards of labor. Moreover, flexible rules of investment would cause development for a short time, ultimately it would cause the outflow of capital.
In the end the author has recommended that the existing system of multilateral trading system should be improved on parity between developed and developing countries instead of derailing it. Secondly, WTO processes of negotiation and decision making should be made transparent and democratized. Thirdly, interests of developing countries should be guarded and provisions of WTO should not be imposed unilaterally. Fourthly, complaints and grievances of developing countries should be decided judiciously at the forum of WTO. Fifthly, NGOs should be invited to play role in the awareness of people regarding WTO and its potentials. Lastly, UNCTAD should come forward to resolve the disputes of member countries of WTO and future prospects must be dealt in the light of these recommendations.
Critical Analysis
I generally agree with arguments of the author. His arguments and recommendations are not merely gossips but these are based on his experience of 30 years. He is absolutely right in judging the implications of WTO and lacunas in its processes. Because, these implications are also found with our country, who is at the mercy of developed countries.
But this book should be studied objectively because at certain points the author looks prejudiced being the representative of a developing country. He has blamed developed countries for all the evils. He has ignored the fact that developing countries also bear the responsibility of improving their standards. Though developed countries have imperialist motives yet it is the responsibility of developing countries to rely on indigenous resources and strengthen their infrastructure before exposing their markets for open competition. Moreover, the author must recommend developing countries to focus on intra-regional trading system on the pattern of ASEAN and EU so that they would be able to negotiate on strong footing. Lastly, the situation of world has been changed after economic crisis of 2008 which has jolted the economy of all the major developed countries, therefore, developing countries should try to seek new role in the multilateral trading system.
General Recommendations
This book was published for the first time in 2003 by Third World Network and Zed Book ltd. It comprises of six chapters and 249 pages which are orderly and logically synthesized. This book also contains endnotes, bibliography, index and a list of different abbreviations used in it.
Indeed this book provides deep insight of global multilateral trading system and its implications along with some remedial measures. Therefore, it is equally beneficial for think tanks and university students of developing country.
