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PM questions West on globalisation, WTO

PM says the approach of developed nations towards global affairs is not acceptable, report Gaurav Choudhury & Deepak Joshi.

india Updated: Dec 18, 2006 18:33 IST

Economists have not paid enough attention to the politics of globalisation and its political management, Prime Minister Manmohan Singh observed on Monday.

Speaking at a seminar on "Making Globalisation Work: An Indian Perspective" organised jointly by FICCI and the Shriram Centre, and attended by eminent economists including Joseph Stiglitz, Amartya Sen and Lord Meghnad Desai, Singh noted that only the economic consequences of globalisation had been studied closely so far. He called for greater attention to the politics as well, and wanted "rules of the game" to be instituted to both manage global peace and security, as well as ensure optimal utilisation of resources in a world order driven by a free trade regime.

The Prime Minister said the United Nations could have been a political instrument for managing globalisation, but so far it has not succeeded in doing so. "It will not succeed, unless it reforms itself as an institution, and its own management becomes more democratic and more representative," said Singh.

The Prime Minister also strongly emphasised that the trade-distorting subsidies of the developed countries went against the development agenda of a rule-based multi-lateral trade order.

The Doha round had been explicitly called a "Development Round" because of anxieties generated by the globalisation process. "If the Doha round has to have a successful outcome, it must remain true to its original mandate of being a Development Round. We cannot continue to live in a world of 'butter mountains' and 'rivers of milk', liberally funded by government subsidies, when the poor starve in the villages of the Third World. We all know subsidies distort trade. But the agricultural subsidies offered by the developed industrial economies not only distort trade, they destroy lives," he said.

Nobel laureate Joseph Stiglitz, speaking soon after, echoed similar views. "The Doha round did not deserve to be named as the Development Round. The United States has actually doubled its agricultural subsidies and it is maintaining double standards in non-tariff barriers, predatory pricing and anti-dumping policies," said Sitglitz.

If the same rules were applied domestically and internationally, "two-thirds of American firms would be faulted for dumping", he added.

Stiglitz, Professor of economics at Columbia University, in the US, also came down heavily on the Trade Related Intellectual Property Rights (TRIPS) regime, and said it was designed to prevent cheap generic drugs being made available to the poor countries of the world.

"TRIPS has actually served a death warrant on hundreds and thousands of people of sub-Saharan Africa," he said.

Nobel laureate Professor Amartya Sen said that the rules of market economy do not work well for knowledge, as it has an "interactive" aspect. "Very little incentive is given for research and development of medicine for diseases people of poor countries widely suffer from. Malaria is an example," he said.

"The asymmetries in liberalisation of labour, capital and services flows have resulted in reduced bargaining power of the workers," said Stiglitz, questioning the very premise of the agenda of a free-trade regime. "The agenda was not based on global efficiency. The focus on labour movement is on skilled services and not on labour intensive unskilled services."

Prime Minister Singh also noted that there was yet no framework for movement of people across international borders. "Developed economies are becoming more restrictive with respect to immigration and movement of labour. Even economic theory has largely focused on merchandise trade and capital flows, paying little attention to the economics and politics of migration in the modern world," Singh said.

Stiglitz said that the underlying volatility in international capital movements was primarily driven by the trade deficit of the richest country of the world , the US, which borrows about $3 billion (Rs 13,500 crore) a day, resulting in "inequitable" movement of capital from the poor countries to the richer nations.

Earlier, FICCI president Saroj Kumar Poddar raised the concerns of developing nations over the impact of globalisation and the intellectual property rights regime as outlined by the World Trade Organisation, and stressed on the need to channelise the flow of capital to small and medium enterprises.

First Published: Dec 18, 2006 13:45 IST