New Delhi: Before he became New Zealand’s trade minister last year, Tim Groser led his country’s delegation in the World Trade Organization (WTO) talks for several years. Groser, in India on a visit, and commerce minister Kamal Nath have agreed to start talks for a Free Trade Agreement, or FTA, between the two countries by July. In an interview, Groser spoke about the proposed FTA and the Doha Round of WTO talks. Edited excerpts:
How do you think India will gain from the proposed FTA?
We are a tiny market (for India). The main thing that India will gain is from the greater integration of the two economies. There is no reason why we should source so much of our imports from China and less than 1% from India. This will change. This is not a big deal for India, let’s be clear about it. This is a small incremental process, but I think India needs some small friends around the world.
You have a long experience in WTO negotiations, which are multilateral in nature. How do you see these islands of bilateral trade that are being built among nations?
Well, I think these two are entirely complementary. If you look at economic literature, there is a huge debate popularly associated with two leading intellectuals—on one side of the debate is famous (India-born) US economist Jagdish Bhagwati and on the other side is Fred Bergsten (also a US economist). Bhagwati’s view is a purist’s view, which says we should not have these bilateral trade agreements... Bergsten’s view is we can do both provided they are done in a complementary way. Frankly, the world has accepted that (Bergsten’s) view.
Bigger picture: Groser says the proposed trade pact between India and New Zealand will help in the greater integration of the two economies. Ramesh Pathania / Mint
There is a strong view among Indian officials that the failure of WTO talks has more to do with the differences between the US and China than the much-publicized SSM issue, which India stuck to... (SSM, or special safeguards mechanism, was intended to allow developing countries to protect domestic producers when imports cross a certain limit in terms of volume or if imports come at a price below a certain level).
Well, absolutely. I entirely agree with that. India is not the only bad boy, definitely not. What I am trying to argue is that in the great scheme of things, the flexibility that we are asking from India, China, the US, the European Union, Japan...is very small in relationship to the price (of failure). I fully agree with Pascal Lamy (WTO’s director-general) when he says 80% (of the agreement) is done and we are arguing over the remaining 20%... If this is the first round after 1947 to fail, the consequences cannot be the same but they are all bad. There is another strong case for concluding this (Doha) Round, against the backdrop of deleveraging of the world trade that is taking place internationally. So, we are seeing a situation where for the first time since 1982, world trade is turning backwards. And this is...causing unemployment across the world… So be conscious that it is the big picture that matters.
Do you expect the US to show more flexibility on the SSM issue?
...they have a new government in place... Everyone understands that. This is a period of reflection to allow the largest economy in the world to decide where it wants to go. The (G-20) meeting of economic leaders in London in April is the first test (in) which the new Obama administration has to contemplate some language to be agreed with the other major economies.