Jaitley, Cancun and the WTO

Jaitley, Cancun and the WTO

K.M. Chandrasekhar

K.M. Chandrasekhar

The decision to rename Firoz Shah Kotla cricket stadium after Arun Jaitley is a tribute to a man who spent a good part of his life in the service of the DDCA. He was immensely proud of the work that he had done. Jaitley and I had known each other since my days in Geneva , when I was Ambassador to the World Trade Organisation and he was the Commerce Minister in the Vajpayee Government. I consider my days in Geneva to have been the most productive in my entire career. I must say that all my Ministers during that period were outstanding people with different attributes. While Murasoli Maran was aggressive and feared by diplomats and Trade Ministers of other countries, Arun Shourie had a great capacity to go into minute details and had no patience with shallow people. Arun Jaitley was very sharp, very friendly and once he had formed his opinion about an officer, he would trust his judgment and give him a free hand.

Jaitley was inordinately proud of the cricket stadium he had built. When I came to Delhi, he was in the Opposition, the 2004 election having been lost by the NDA. He invited me to see the stadium and personally took me through each part of the new structure. Later, knowing my decided preference for Test cricket, he would invite me to see matches and I have recollections of many enjoyable sunny winter afternoons at the Feroze Shah Kotla in his company.

Jaitley and I professionally worked together on World Trade Organisation issues, which, at that time had assumed great significance as the perception was growing that developing countries, including India, were being pushed to the limit to open their markets to developed countries, notably the US and the European Communities (EC). Murasoli Maran had waged a great and lone battle in Doha in 2002 to keep the interests of the developing countries foremost in the negotiations to follow but the general expectation was that ultimately the more powerful economies would prevail over them, as happened in the Uruguay Round, which concluded in 1995.

Following the Doha Ministerial Conference, intense negotiations took place in Geneva, the objective of the developed countries being to conclude everything and sign off at the next Ministerial Conference in 2004 to be held at Cancun in Mexico. I took over as the Ambassador shortly after the Doha meeting. Frankly, I had butterflies in my stomach because we held very strong positions on the so- called “Singapore issues” , on agriculture and on tariff protection for non-agricultural products and our support base was not too strong. The Singapore issues related to investment, competition policy, trade facilitation and government procurement. We held the view that these issues fell outside the scope of the WTO, whose mandate was limited to trade. We did not want these issues to be subject to the powerful WTO dispute settlement mechanism which provided for retaliatory tariffs if any country is found to be in violation of any agreed provision. On agriculture, our agenda was entirely defensive as we could not allow massive inflow of cheap and, in many cases, subsidised agricultural products to swamp our markets and drive our indigent small farmers into greater penury. On non-agricultural products, while our policy since 1991 had been to steadily lower tariffs, we still needed some space to support our industry whenever market conditions turned badly against them. We had positive interests in services trade, too, as India was growing stronger and stronger in this area and we wanted less restrictions to be put by other countries on the inflow of services from India and from other developing countries.

The negotiations in Geneva wore on and we managed to hold our own. In agriculture, we worked first with the European Communities, who also had a defensive agenda like us. However, as happened during the Uruguay Round, they came to a mutually beneficial agreement with the US, leaving us and other countries out in the cold. India quickly tied up with Brazil, China, South Africa , Egypt, Thailand, and other countries forming the G 20 which tabled counterproposals. . We were thus able to provide a counterweight to the big two and that,too, with a strong coalition cobbled up in a day. In Delhi, Jaitley called a Press conference and announced the formation of the new coalition. He said, “My role was only to give clearance [for the G 20 paper] over the phone, the rest of the work was done by our delegation in Geneva.” ( ““Our Man at the WTO, Rediff.com , 8th September,2003)

The Cancun Ministerial meeting opened in salubrious surroundings. Situated in the South east of Mexico, the city is on the Caribbean Sea and a major tourist destination. It is an ancient city with vestiges of pre-Columbian Mayan civilization still existing within the city and in its vicinity. There was unprecedented presence of civil society from all over the world, kept at bay from the venue of the Ministerial Conference. There was a great deal of nervousness and anxiety amongst all of us, notwithstanding the nonchalant demeanour that we assumed for public consumption. The Indian media, as usual, was dismissive about India’s ability. There was little confidence too in our coalitions in various sectors holding together. The US and EU, in particular, spread the canard that G 20, our main coalition on agriculture, would break any moment. The media representatives present repeatedly asked this question and we replied that the group is too strong to break. While there could be changes in the composition of the group, with some countries moving out and some coming in, the group itself would remain intact.

The Indian Embassy in Mexico had thoughtfully arranged a hotel for our delegation with a large ground floor room. This forethought proved to be of great advantage to us, as most G 20 meetings were held in our hotel. Jaitley, new to the ways of multilateral trade negotiations, showed some signs of hesitation in the beginning but rapidly became a dominant negotiator. With his natural flair for making friends and expressing his views firmly but without creating ill will, he emerged as a successful diplomat by the end of the meeting. In fact, his presence and his capacity to influence people, resulted in G 20 becoming a still more powerful entity with more countries coming into the fold.

However, pressures continued to be huge. Meetings on agriculture were held primarily between the G 20 and the US and EU. The agriculture text for consideration by the Ministerial Conference was considered by many of us in the developing world to be deeply flawed. Despite a series of meetings, there was little progress on subsidies, domestic support and special and differential treatment for developing countries.

On Singapore issues, the impasse continued. Ministers representing 70 countries including India and China issued a statement on 11th September, stating that there was no explicit consensus on commencing negotiations on the Singapore issues and that they had concerns about the impact of multilateral trade rules in these areas on their economies. The coalition against Singapore issues was aggressively and vociferously led by the Malaysian Trade and Industry Minister, Rafidah Aziz, who, at a press conference together with Jaitley unequivocally said “We don’t agree to launching any negotiations, there is no explicit consensus and there is need for further clarification of these issues.” On the African countries’ position, the Zambian Trade Minister said, “The Ministers in the African Union have said they don’t want a launch of negotiations on these issues. More work is required. We also don’t want linkage of these issues and other issues. Moreover, an explicit consensus is needed to launch negotiations, not an implied consensus.” On 12th September India and Malaysia presented a letter on behalf of the 70 countries against the Singapore issues to the facilitator of discussions on these issues, Pierre Pettigrew, Canadian Trade Minister and Derbez, Mexican Foreign Minister and Chairman of the Cancun Ministerial, reiterating the same views. However they chose to ignore this and persisted with the line they had adopted

On 13th September, a revised Ministerial text appeared, popularly known as the Derbez Text. It provided for commencement of negotiations on trade facilitation and government procurement. In a convoluted way, it also provided for launching negotiations on the other two issues through the convening of special sessions, linking the negotiations on these issues with the single undertaking that would appear at the end of the Doha work programme and also specifying that modalities allowing negotiations shall be adopted on an unspecified date. A footnote also provided that the date for adopting modalities shall coincide with the date for agreeing on negotiations relating to agricultural and non-agricultural products. (“The Singapore Issues in the WTO: Evolution and Implications for Developing Countries” by Martin Khor, Third World Network, 2007)

This text created a furore among the developing countries and civil society representatives. A meeting of the Heads of Delegations was held on the evening of 13th September. I maneuvered to get our Minister placed fifth in the order of speakers. I did not want him to make the opening speech but I wanted him to speak high in the order so that other developing countries would be able to hear his views before they spoke. The hall was jam packed as many civil society representatives also were present, along with members of delegations.

Jaitley, made a fiery speech. “We are disappointed”, he said, “that the draft text ignores several concerns expressed by us and many developing countries. I note that the development dimension of the Doha agenda has finally been discarded confirming the apprehension expressed by me at the plenary session that this is mere rhetoric.” He spoke of the continuing distortions in agriculture. “How can we expect developing countries to reduce tariffs on a number of items to between zero percent and five percent when the distortions against which such tariffs are supposed to compensate are sought to be enhanced?” On Singapore Issues, he said, “It represents an attempt made to thrust the views of a few countries on many developing countries.” Expressing India’s disappointment with the text, he said that it has “arbitrarily disregarded views and concerns expressed by us.” He hoped that “circumstances and environment will be created to enable us to participate constructively.”

While the language was strong, Jaitley also had the gift of expressing himself forcefully. He was heard to the end in pin drop silence. When he concluded his speech, for, I think, the first time ever in the WTO, there was thunderous ovation from all parts of the hall. After he spoke, several other Ministers from other developing countries followed his lead and spoke strongly, thus transforming the atmosphere of negotiation conclusively.

On 14th September, there was a Green Room meeting, attended by a few Heads of Delegations. Along with the Minister, the Commerce Secretary Dipak Chatterjee and I were present. There were about 30 Ministers, including representatives of the African Union, the Least Developed Countries, the African, Caribbean and Pacific Group of States. Derbez decided to start the meeting with the Singapore issues, proposing that negotiations may start on trade facilitation and government procurement but that the other two issues, investment and competition, may be dropped from the agenda. I saw this as an amazing development as all the work that we had done in Geneva had paid off and the most difficult issues, from the Indian perspective, were out of the agenda. As many developing countries had reservations still, a break was announced. The countries of the African, Caribbean and Pacific Group, the African Union and the Least Developed Countries met together separately and came back asserting their opposition to negotiations on any of the issues. South Korea, on the other hand, said they would oppose the dropping of any issue. To our surprise, Derbez then decided to abruptly close the Ministerial Conference. We had expected that there would be many more painful discussions spread through the night. According to many, the Americans knew of this outcome even before Derbez announced it as they had packed and loaded their baggage, preparing for departure. With regard to the Singapore issues, EU Trade Commissioner Pascal Lamy said that his offer to drop two or three issues from the agenda and from discussions at Geneva would remain on the table.

The conclusion of the meeting without result was greeted with loud cheers by civil society representatives of developing countries outside the premises of the conference. Jaitley became overnight a national hero in India. India’s official delegation spent a happy day on 15th at the Mayan ruins at Chichen Itza. I went back to Geneva and the Indian delegation left for Delhi. On its arrival at Delhi airport, there was a big crowd waiting to receive the Minister, including the then Minister of State, Rajiv Pratap Rudy. Writing on 18th September in “The Baltimore Sun”, John Cavanagh, with Robin Broad, said, “A generation from now, analysts may look back at the World Trade Organisation summit in Mexico as a turning point in the increasingly contentious globalisation debate. Why? Because for the first time in decades of globalisation negotiations, democracy trumped narrow elite interests.” In his article in “The Telegraph” of 20th September 2003, entitled “TRADING PLACES-India helped to keep developing nations at Cancun”, K.P.Nayar wrote , “The large function hall of the Mediterranean style Cancun hotel was filled to capacity. If a vote had been taken among the non-governmental organisations present there to chose the most popular commerce minister attending the World Trade Organisation meeting in Mexico last week, there would have been no doubt about the outcome. Arun Jaitley easily stood out among his WTO colleagues at the five-day meeting, which is now being hailed as a landmark in global politics in the new millennium.” I was grateful to the Minister that, on his return to Delhi, addressing the media, he referred to me, in cricketing parlance, as the ““man of the match.”

I kept meeting Jaitley intermittently even after I came back to Delhi. He was made Leader of the Opposition in the Rajya Sabha in 2009, even as Sushma Swaraj became Leader of the Opposition in the Lok Sabha. It is a strange coincidence that both these genial and friendly people died this year within days of each other. I last met Jaitley when he called me over for dinner at the Southern Air Command in Trivandrum; he was then holding charge as Defence Minister. Subsequently, as his health declined and he expressed his inability to join the Cabinet earlier this year,I messaged him whether he would like Dr. PM Varier, Chief Physician of Arya Vaidya Sala, Kottakkal, to see him on one of his visits to Delhi and suggest supplementary Ayurvedic medication. He replied back that he wanted to first complete his present line of treatment. Au revoir, Arun Jaitley.