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WTO and India-S. Africa Relations Convergence and Divergence. By Pradeep S Mehta Secretary General, CUTS International, India. India and South Africa. Economic and Trade Policy Economic and Trade Relations Respective Positions in WTO Current Initiatives Within and Outside WTO

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wto and india s africa relations convergence and divergence
WTO and India-S. Africa Relations Convergence and Divergence

By

Pradeep S Mehta

Secretary General,

CUTS International, India

www.cuts-international.org

india and south africa
India and South Africa
  • Economic and Trade Policy
  • Economic and Trade Relations
  • Respective Positions in WTO
  • Current Initiatives Within and Outside WTO
  • Future Scenario

www.cuts-international.org

economic and trade policy
Economic and Trade Policy

Policy-Related

  • Practiced import-substitution strategy till 1990
  • Embarked on to comprehensive trade and economic policy reforms in early 1990s
  • Multilateralism as their first priority but negotiating a few FTAs simultaneously

www.cuts-international.org

economic and trade policy contd
Economic and Trade Policy (Contd.)

Economic Indicators

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economic and trade relations
Economic and Trade Relations
  • Strong cultural and social ties but weak economic and trade relations
  • S. Africa’s exports to India: 6-7% of total exports
  • India’s exports to S. Africa: Approx. 1% of total exports

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india and s africa positions in wto
India and S.Africa: Positions in WTO

Background

  • Both are founder members of WTO
  • Both are key regional players
  • Being a ‘developed’ developing country S. Africa identifies its interests more with developed nations
  • India prefers to adopt a more orthodox line in negotiations

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india and s africa positions in wto1
India and S. Africa: Positions in WTO

On Major WTO Issues: Commonality

  • Agriculture: Being the architects of G-20 alliance; hold common position against North
  • TRIPs and Public Health: Both played a crucial role in brokering the deal at Doha
  • Bring effective disciplines on the use of trade remedy instruments

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india and s africa positions in wto2
India and S. Africa: Positions in WTO

On Major WTO Issues: Divergence

  • On “New Round”: S.Africa supported New Round consisting of a wider negotiating agenda; India opposed till the end at Doha
  • Singapore Issues: S. Africa favours a modified less ambitious and carefully defined Agenda; India strongly opposes any negotiations

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india and s africa positions in wto3
India and S.Africa: Positions in WTO

On Negotiating Strategy: S.Africa

  • Holds a more flexible approach
  • Priority to trade interests over political diplomacy
  • Negotiate outcomes favourable to economic development in general and to S.Africa in particular
  • Positions in Africa Group awkward and ambiguous

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india and s africa positions in wto contd
India and S.Africa: Positions in WTO (Contd.)

On Negotiating Strategy: India

  • Normally holds a hardline stance
  • Political diplomacy gets precedence over trade interests
  • Often sacrifices own trading interests for larger political gain
  • Go along well with its regional partners and other developing nations

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current initiatives in and outside the wto
Current Initiatives: In and Outside the WTO

S. Africa:Major Shift from Doha

  • At Doha, sided with developed countries on the new round and new issues; at Cancun went along with developing countries
  • Active member of G-20 at Cancun but did not join LMG at Doha

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current initiatives in and outside the wto contd
Current Initiatives: In and Outside the WTO (Contd.)
  • Working to strengthen the IBSA group that includes India and Brazil
  • Supported the demand of four W African countries on cotton subsidy
  • Prioritised eleven “strategic partner” countries outside Africa; India is one of them

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current initiatives in and outside the wto contd1
Current Initiatives: In and Outside the WTO (Contd.)

India: Holding on from Doha

  • Opposed “New Issues” at Cancun
  • Led G-20 alliance along with Brazil and South Africa
  • Working to further consolidate G-20 positions in post-Cancun era
  • Working towards enhancing South-South trade – negotiating FTAs with ASEAN, S.Africa, IBSA, Mercosur and SAARC

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emerging future scenario
Emerging Future Scenario
  • No major breakthrough after Cancun
  • Negotiating positions on agriculture are still polarised
  • G-20 has emerged as a third axis on the global trading landscape along with US and EU
  • Both Northern and Southern countries are on FTAs spree

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emerging future scenario contd
Emerging Future Scenario (Contd.)
  • Initiatives from within South and from WTO to enhance South-South trade
  • EU will have new Trade Commissioner by year end
  • USA may have new administration after election
  • India may also have new government but positions unlikely to change

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india and s africa what should be their response
India and S.Africa: What Should be their Response?

Enhancing South-South Trade: Capitalise on G-20 Alliance

  • Accounts for only 10% of global trade
  • Means to reduce dependence on North
  • Increase diversification of Southern exports beyond primary commodities
  • A better bargaining strength in trade negotiations

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india and s africa what should be their response contd
India and S.Africa: What Should be their Response? (Contd.)

Synergy with Smaller Regional Partners

  • Demonstrated at Cancun; it should be continued
  • To pursue a broader Southern alliance
  • Smaller countries are vulnerable to “arm-twisting” and sops offered by rich countries

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india and s africa what should be their response contd1
India and S. Africa: What Should be Their Response? (Contd.)

Challenges/Opportunities from Cancun

  • Developing countries showed a new kind of solidarity at Cancun – How to sustain it?
  • G-20; Alliance on Cotton; Alliance on Singapore Issues – How to consolidate it further?
  • After Cancun, developed countries cannot take developing countries for granted – Be proactive in negotiations.

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