Why India opposes the WTO: "protectionism in the guise of idealism"

Louis Proyect lnp3 at SPAMpanix.com
Fri Dec 17 12:32:06 MST 1999

The New York Times

December 17, 1999


By Celia W. Dugger

NEW DELHI, Dec. 16 -- The week after global trade talks collapsed in
Seattle, India's commerce and industry minister rose in Parliament here to
denounce what he called a pernicious attempt by the richest, most powerful
nations -- led by President Clinton -- to rob developing countries of their
great advantage in trade: cheap labor.

And, he said, what had really galvanized the developing countries'
rebellion against the creation of a working group on labor in the World
Trade Organization was Mr. Clinton's remark, in an interview with a Seattle
newspaper, about an eventual use of trade sanctions against nations that
failed to comply with international labor standards.

The cabinet minister, Murasoli Maran, who was India's chief representative
at the talks, described Mr. Clinton's statements as having electrified
envoys from developing countries, made the danger to their economic
interests clear, and unified them in opposition to any linkage of trade and
labor standards.

"Sir, finally the last straw was cast by President Clinton himself," Mr.
Maran declared. "It made all the developing countries and least-developing
countries to harden their position. It created such a furor that they all
felt the danger ahead."

In large part because of Mr. Clinton's handling of the issue, the American
attempt to add labor issues to the international trade agenda widened the
gulf between rich and poor nations and contributed to the collapse of the
latest efforts to further free up world trade.

In the eyes of India, Egypt and other third world nations, Mr. Clinton's
call to link trade accords to labor standards for workers around the world
was protectionism in the guise of idealism, motivated by his desire to woo
labor union support for the presidential campaign of his vice president, Al

Some delegates from developing countries even expressed the belief that he
had orchestrated the sometimes violent street protests in Seattle to
justify the American position.

"The Western world, the industrialized world, wants to take away our
comparative advantage," Mr. Maran said. "It is a pernicious way of robbing
our comparative advantage. The developing countries consider it as a
maneuver by wealthy nations to force our wages up, to undermine our
competitiveness. This is the secret."

Opposition to the inclusion of labor standards in trade deals was not
limited to government officials. In India, even labor unions that regularly
battle employers for higher wages and improved benefits opposed using trade
negotiations as leverage for a better deal.

Before the Seattle talks began, while American unions and others were
planning street demonstrations to demand that trade accords protect
workers' rights, Indian unions were quietly meeting with government
officials and agreeing to oppose any linkage between trade and labor

D. L. Sachdev, secretary of the All India Trade Union Congress, which
represents 2.5 million workers in industrial and service jobs, said it was
peculiar to stand on the same side as employers and the government.

But he and other union leaders here maintained that making trade agreements
conditional on meeting labor standards could be used to keep out goods from
low-wage countries like India, damaging workers and employment in those

"Unfortunately, trade unions in developed countries feel that because of
cheap labor and relocation of industries by multinational corporations,
their employment prospects are imperiled," Mr. Sachdev said.

With some trade unions' backing, a group of cabinet ministers headed by
Prime Minister Atal Behari Vajpayee agreed before the country's delegation
left for Seattle that India would oppose the proposal for a working group
on labor and trade.

"This was not an issue on which there could be compromise," said N. K.
Singh, a civil servant who is one of Mr. Vajpayee's top advisers.

The developing countries won vigorous backing from a group of African,
Latin American and Asian academics, led by the Columbia University
economist Jagdish Bhagwati. They, as well as a variety of labor and
nongovernmental leaders, signed a statement against including labor and
environmental issues in trade deals. Their contention was that the labor
issues in particular are selectively used against developing countries for
the economic gain of the richer nations. For example, President Clinton had
cited child labor, a problem of developing countries like India, but had
made no mention of lax enforcement of laws to protect workers in garment
sweatshops or migrant farm workers in the United States.

Professor Bhagwati, who began calling for India to open itself to foreign
trade and investment 25 years before it began to do so, said that those who
signed the statement were strong opponents of child labor and bad working
conditions, but thought that trade deals were the wrong place to combat them.

The Indian delegation arrived in Seattle not expecting that the labor issue
would be at the top of the American agenda. Just a month earlier, the
United States trade representative, Charlene Barshefsky, had met in
Lausanne, Switzerland with ministers from more than 20 countries, including
India, Brazil, Egypt, South Africa and Argentina, and assured them that the
United States wanted a group that would only study labor issues, officials
here said. It had no intention, the officials added, of taking the matter
any further.

Since the Seattle talks collapsed on Dec. 3, President Clinton has said
that India and Pakistan, another outspoken opponent of linking trade and
labor standards, had misunderstood his remarks.

The president said he had not meant to suggest that the United States would
cut off American markets to India and Pakistan if they did not raise wages
to American levels.

But government officials and labor leaders here say they see the United
States as calculatingly pursuing its own interests on trade -- and they are
girding for future battle.

Mr. Maran, speaking in Parliament, said, "If you ask me to tell you in one
word what happened in Seattle, my answer will be, 'We have postponed D-Day.'"

Louis Proyect

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