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G. Thimmaiah

THE establishment of the WTO as a facilitator of multilateral trade among member-countries has set off a new wave of globalisation and also generated intense debate about its the hidden agenda. Such an agenda convinced the developing countries to unite and to fight for their economic interests at the Doha WTO ministerial. The gains for the developing countries at Doha have convinced right-thinking people that it is possible to use the WTO to promote multilateral trade.

This becomes clear, looking at the three waves of globalisation in recorded history. The first wave started before the birth of Christ after the conquests of Alexander the Great, who annexed vast geographical areas of Persia, Afghanistan, West Asia and the North-West of India. This conquest led not only to the establishment of political rule over these territories but also gave rise to trade and cultural relations between Greece and its colonies. To India's east, the Chola kings from South India and the rulers of Kalinga (present day Orissa) had developed flourishing trade with Indonesia, Cambodia, Thailand and Burma.

The first wave of globalisation was mutually beneficial and culturally rewarding for India and the South-East Asian countries.

The second wave of liberalisation started with the advent of technological advancement experienced by the European countries that used those developments for military conquests and creating captive markets for their manufactured products. In 15th century most non-European countries had fallen into social, political and economic decay. This way, globalisation became a political and economic tool for the European countries. After the Second World War, even after the colonies got political freedom, the erstwhile masters continued to have neo-colonial economic relations with them. But some countries such as India and China chose independent economic and trade strategies that freed them from their colonial powers, but shut them away from the benefits of global economic and trade relations.

In the third wave, globalisation has come to be defined as a process of trade propelled development in which the producers locate their production units in countries where it is cheaper to produce and source the raw materials from the cheapest country, produce at the lowest cost and market their products all over the world to maximise profit. Consequently, globalisation does not bother about national boundaries and the production and consumption decisions are made in such a way as to limit the scope of sovereignty of the nations. Those countries that were under colonial rule, fear return of the earlier exploitation in the guise of the WTO.

This fear has been further strengthened by the hidden trade and non-trade tactics adopted by the developed countries to gain access to the markets in developing countries, simultaneously denying access to the products of the developing countries. Some developed countries have tried to use non-trade measures to evade the rules of multilateral trade and escape from the responsibility mandated under the WTO agreement. In other words, the present process of globalisation is only a multilateral trade arrangement that has been mutually agreed to by independent nations. This trade arrangement is governed by the rules to be followed by both developed and developing counties. If a member-country experiences adverse trade and economic consequences from the WTO rules, it can leave by giving six months' notice and shut itself from globalisation process.

Hence, there is no need to fear or panic about the adverse trade and the resultant economic consequences of the present process of globalisation. The fear of threat should be transformed into trade opportunities. The present wave of globalisation is expected to free the Indian consumer from the exploitation of the incompetent domestic producers. The challenge posed by globalisation must be converted into an opportunity under the multilateral trade system. The New Economy producers in the software sector are already doing it. Those in the Old Economy sector must be facilitated to accept this challenge and to adapt to the new trade environment.

In the wake of removal of quantitative restrictions on the import of agricultural products, particularly at a time when there is a general fall in the prices of farm products, farmers and their leaders are up against the WTO. It is necessary to remember that the present fall in the prices of farm products is not the result of the implementation of WTO obligations. They are the result of excess capacity in the consumption pattern.

Indian agriculture was cabined and confined under protectionist policy regime. The export of agricultural products was conditioned by the domestic requirements and only when there was surplus after meeting the domestic need, were they exported. In regard to imports, even a slight rise in the prices of farm products would compel the Government to allow import of agricultural products. Such a policy turned the terms of trade against Indian agriculture.

The recent liberalisation has come as a blessing in disguise for Indian agriculture. The Government has been compelled to allow free movement of farm products in response to attractive prices. Export and import of agricultural products will be governed by the market access obligation under the WTO.

Indian farmers have a great opportunity to diversify the crops to commercial crops and export them to increase foreign exchange earnings. In order to help the farmers achieve this, the Government will have to relax tenancy laws and land ceilings, make flow of private investment into agriculture attractive, liberalise the export of farm products and encourage agro-processing industry. In a way, fundamental economic reforms will have to be introduced to make Indian agriculture internationally competitive.

(The author is a former Member of the Planning Commission.)

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