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 Future Scenario

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

Economic and Trade Policy (Contd.) Economic Indicators IndiaS. Africa GDP$2691bn$113.3bn GDP Per Capita$2570$11290 Share in World Trade 0.8%0.5% International Trade as % of GDP 15%25%

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

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

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

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

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

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

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

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

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

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

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

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

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

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.