A Voice of the Developing Nations: Kamal Nath of India Insists WTO Must Establish Fair Trade, Not Free Trade

by Cecelia Fuentes
– USA –

One day in July, after picking up the New York Times, an article, “A Voice of Developing Nations Asks the West for Compromise on Trade” attracted my attention. My eye was caught less by the title of the article, a subject in which I am very much interested, but more by the photo accompanying the piece. Looking out from the page was the face of Kamal Nath, Minister of Commerce and Industry for India, a man the reporter was calling “the unofficial voice of the deadlocked World Trade Organization (WTO) talks,” adding that he had also been called “stubborn and irresponsible.”

To me the expression on his face spoke volumes; his eyes reflected the weariness of battle, but I thought I also saw a steely, determined conviction and resolve that the urgency of his message must be heeded.
The article said that Mr. Nath and Brazil’s foreign minister, Celso Amorim, had walked out of the latest round of WTO trade talks in a show of unity. A deadlock had occurred when the United States refused to consider a meaningful reduction of US agricultural subsidies.

I was incensed at the language of our trade representative Susan Schwab who “described their actions as ‘inflexible’ and ‘low ambition.’” She went further, declaring their attitudes could actually “harm emerging nations.” Since the story focused on Mr. Nath, I immediately wrote him an email care of his governmental department in India.

I explained that I had written my master’s thesis at the London School of Economics on the dispute settlement body (DSB) within the WTO. My analysis was that the WTO was not a solid and inevitable structure. Rather, it was and is an organization in the making, whose rules have been made up as they went along, using litigation between states as an effective way to set precedent and enshrine new rules. I noted that the litigation method of setting precedents was mainly used by the US and EU to manage issues of interest to them.

Because litigation is time consuming and expensive, less developed countries historically have not been able to avail themselves of this remedy; therefore the process is skewed against them. I brashly declared that the developed nations needed to make sure that improvements in the system were implemented. I also went out on a limb and said I felt the name calling by Susan Schwab was unfortunate: his position was the opposite of low ambition. In fact, that the less developed countries (LDCs) have unified in such determined fashion, knowing that a long fight may still be ahead, but spurred by the realization that at last they are demanding nothing less than full equity in this organization – that is extremely ambitious.

To my astonishment, two days later I had a reply from Mr. Nath himself! He was genuine and informative in his communications and offered to be whatever help he could. He was honestly grateful to “hear” my thoughts. I could only think that there must come a time in the life of a tireless public servant when they wonder why they keep on.

I received several personal emails in which Mr. Nath briefly answered my queries; then he sent me a compilation of his speeches. After two months, his staff contacted me to say my interview would be a week hence.

So we met recently at the Four Seasons Hotel in New York City. I shook with fear and sheer wonder; how could I be interviewing a cabinet level international official? Finally he swept into the room.

Mr. Nath is a compact and dynamic person. His presence fills the room. 61 years old, from the state of Madhya Pradesh, he is a member of the Indian National Congress (INC). He seems much bigger than he is. Impeccably dressed in a black silk kurta jacket, his shiny jet black hair was combed straight back from his crease-free face. His large black wide-set eyes are heavy lidded but notably intelligent. His prominent nose and the matter of fact set of his mouth are probably the features that make him appear “resolute, even stubborn”.

Mr. Nath radiates energy. He has very quick movements, rat-a-tat-tat speech, and drank deeply from his water glass, as if he had just hurried off the tennis court – all the while expounding on his latest thought. He was a man in a hurry, on a mission. He constantly checked his Blackberry, read emails and directed his staff during the interview, while remaining fully present and responsive to my questions.

“From…the beginning of the WTO, the rules of the game and the agreement were really controlled by a handful of nations,” he declared. “Eight or ten developed countries just deciding ‘this is it,’ and every country had to be on board…free trade became the mantra.”

Using the slogan ‘Free Trade’ as a marketing tool for the WTO brand, its advocates have promoted its continued existence as the only way to long-term peace and prosperity. Workers across the world today are buckling under its dominance, but WTO’s continued trade governance is considered inevitable. But free trade is more hype than reality; few are certain what it really means. Even the initiated grant the term has little intrinsic value.

Only after an extended stay in India had I realized the effect that WTO policies could have. Outside the main cities and technology centers, India is a vast land, two-thirds of whose people are almost wholly dependant on agriculture. They still ride in bullock carts and collect dung for use as fuel; they depend on the weather for irrigation. Farmers commit suicide when their crops fail because they have no alternative means of support. Mr. Nath encapsulated the dilemma: “You can’t just be talking about free trade; you’ve got to talk about fair trade.”

The United States and the European Union hand over billions of dollars in trade-distorting subsidies to their agricultural industries. In the United States this money is mostly given to large scale agribusiness farms growing crops and livestock as commodities for profit. Only 2% of the up to $22 billion spent yearly in the US goes to small-scale family farms.

Meanwhile, more than half a billion Indian subsistence farmers receive no aid. They are in fact wholly dependant on their crops to sustain life itself. And these small farmers are asked to compete in the open market against large scale Western agribusinesses which also receive billions of dollars in subsidies? Clearly, this is not free trade.

“Now how can that be acceptable?” asks Mr. Nath, who had been negotiating in Geneva to lower the subsidies. “You can play commerce versus commerce…you can’t play commerce versus subsistence,” he says, referring to the unfair mis-match between diversified, subsidized agribusiness and Indian farmers.

The World Trade Organization (WTO) was created only 12 years ago in 1995, supplanting the General Agreement on Tariffs and Trade (GATT), which stimulated trade after the devastation of WWII. The WTO was to free markets from constraints that act as barriers to trade. It was to increase productivity and prosperity for all. Instead, it has been dominated by the United States and the European Union and their prerogatives.

“Developing countries did not have the wherewithal, did not have the technical expertise, to understand the content of the agreement and the implications of the agreement,” explained Mr. Nath. In 1995, most developing nations had no idea whether the agreements they were signing would be good or bad for them. They were afraid of being isolated and they had too much at stake. If they refused to participate, they might risk their standing with the World Bank and the IMF, two institutions which have imposed draconian reforms on borrower countries in the past and forced them to open their markets, all too often with terrible results. So they signed up and hoped it would work.

But in 1999 at the Seattle Ministerial meeting, activists from civil society flooded the city to protest the WTO’s elitist structure, its lack of equity and transparency. Seattle was the first time the WTO registered in the average American’s consciousness. That idea, fair trade, struck a chord even in the developed world. From then on, it was an ideal to be achieved.

Civil society questioned the very premise of a World Trade Organization that under-represented less developed countries (LDCs), much less one whose rules would supercede local and national social and environmental laws. The unprecedented attention caused the WTO to create a “Development Round” of talks, which were inaugurated in 2001 at Doha, Qatar to address structural problems within the organization and to further integrate the LDCs as equitable partners.

Not only have the talks been long and contentious. One other potential wedge factor must be calculated: because of their recently robust economies, Brazil and India are now considered “advanced developing countries.” US trade representative Susan Schwab has tried to make an issue of fractures between India and Brazil and the less developed countries whose economies are truly devastated, like Zimbabwe’s. Despite Ms. Schwab, the resolve of Mr. Nath and Mr. Amorim to make fair trade (not the so-called free trade) a key to the success of the so-called Development Round is really the height of ambition. If they prevail, it will help the LDCs across a range of issues that demand scrutiny and reform.

The attempt to pit the LDCs against each other is a screen to obscure the most alarming US proposal: the US actually wants to raise its farm subsidies even higher, certainly not reduce them. US trade negotiators complain their recent payments have been lower than normal. They “need” the security! In contrast, they want concessions from India and other LDCs that will lower their tariffs for industrial goods (these issues are known as non agricultural market access or NAMA).

But this proposal has been resolutely refused; negotiating teams from LDCs have formed solid blocks of influence and are working together within the WTO structure to enhance their positions at the bargaining table. When asked about Ms. Schwab’s remarks, Mr. Nath comments, “She’s imagining divisions. There are no divisions.” He acknowledges that there are obviously contradictory interests within “the South” (WTO code for the developing nations), just as there is in “the North” (WTO jargon for the developed nations), but he maintains that “Within the developing countries there is complete unity, that we want first the structural flaws… of trade distorting subsidies corrected,” before any LDC markets will be opened to industrial goods.

This year was seen as crucial to concluding this round of talks because the US President had a so-called Fast Track authority until July 2007. Now many believe that US elections in 2008 and Indian elections in 2009 will delay progress for years. Meanwhile, WTO credibility is strained, as nations vigorously pursue bi-lateral trade agreements.

Activists celebrate the failure charging that the WTO is an unfair club which promotes the greed of corporations over the needs of people. The Institute for Agriculture and Trade Policy (IATP) website carries a letter signed by over 90 civil society organizations from more than 35 countries that states, “We believe that the time has come to officially declare the Doha Round of the WTO negotiations dead and to provide the necessary space to re-think the kind of multilateral trade rules that are needed to create employment and achieve sustainable development.”

With a distressing six years of talks nearing an ignominious end, the intensely focused Mr. Nath remains unconcerned. “I can’t be pushed by timelines. I want to be pushed by content.” Striking the table three times for emphasis, he declares, “For me the content is more important than any deadline. You can’t have an agreement which only perpetuates the structural flaws and inequities.”

Still, Mr. Nath wants the dialog to succeed and insists it will. “It’s going to happen sometime, I see it happening, it must happen. Everybody wants it.”

“But,” I ask, “What would happen if all sides couldn’t agree? Would that be a blow to the WTO? Wouldn’t that be politically harmful to the pro-business government of Indian President Manmohan Singh?”

In a matter of fact tone, looking directly at me with the determined expression I have seen in a hundred news photos, he emphasizes that if no agreement is reached, “There will be no round. The world carries on.”

That moment reminded me of all the Indian people from my trip. I remember the patience, fortitude, intelligence and perseverance on the faces of the women trudging uphill in the village of Dwarahut, carrying enormous loads on their heads. I remember Mr. Mittal in New Delhi, a man of few words but endless energy, persistence and hope, building a business for his sons to carry on. I think I understand some of Mr. Nath’s hopes for his country and how he is able to face the wrath of the US trade commissioner.

I have reservations about WTO reform, but if it is to survive, it will be because India, Brazil and the less developed countries unified around this cause. Insisting on equality and respect for their people, they refuse to back down. “In the end,” says Mr. Nath, “the way I see it is, this round will only happen by respecting the sensitivities of everybody.”

About the Author

Cecelia Fuentes is a journalist based in Los Angeles. She became interested in international trade while working as a designer for an international clothing manufacturer. When the company decided to move their factories from Taiwan to the Chinese mainland, thereby disrupting the lives of its workers, she decided to learn more about how these kinds of decisions come to be made. After graduating from UCLA with a BA in Political Science with Honors and The London School of Economics with a MSc. in European Political Economy, Cecelia worked as a contractor for the Department of Homeland Security from 2002 to 2006.

Cecelia is now writing a book on how developing nations are affecting the new economic architecture in international trade. Cecelia continues to create and for the past five years her jewelry designs have been manufactured in Jaipur, India.