New opportunities

On Saturday, one of the world's most iniquitous arrangements in international trade will have ceased to exist.

The infamous multifibre arrangement (MFA), designed to protect textile industry jobs in the rich countries at the expense of jobs in poorer ones, will come to an end, and with it will go the quotas allotted to each developing country for exporting textiles to the developed ones.

Since it has been known for almost a decade that this was going to happen, most developing countries have been making structural changes in their domestic industries, to be prepared for the free-for-all competition that should emerge.

India was tardy off the blocks, but has started to do what needed to be done by, first, removing the handicaps of small-scale reservation and, second, fixing the tax regime as it applies to the textile industry.

Much-needed investment has begun to flow into the industry and this should yield results in the new year in the form of higher exports. Many people worry that by then China and others will have sewn up markets but these fears are exaggerated.

In the end what matters are price and quality, and if India can deliver these, it should be able to garner the benefits. The optimists think India can double textile exports in three years and multiply its share of textile trade five-fold in a decade, taking it from 3 per cent to 15 per cent. Even if less spectacular results are achieved, the economic benefits will be substantial.

But there is a problem. Whether or not India can benefit from the end of the MFA will depend on whether it is able to pass legislation to alter its intellectual property protection regime with a view to fulfilling its WTO commitments.

This linkage has arisen because India and others were required to amend their IPR laws before they could benefit from the freed-up trade in textiles. Since no one gives up something for nothing, the US, which has been pushing the IPR law change for two decades, forced this linkage on the world.

India, which does in fact stand to gain from altering its patent laws, has not been able to get Parliament to make the changes because of opposition from two not so strange bedfellows: vested business interests and the Left.

So, the government had no choice but to issue an ordinance amending the patent regime. But this is the wrong way to go about it because the Left will not allow the patent law changes to be passed in the next session of Parliament.

Failing that, when the Ordinance lapses after six months, it will have to be re-promulgated. The question is: how many times will the same Ordinance be issued? Bihar has had a long history of rule by ordinance, which makes a mockery of the democratic process.

Is the Centre going to be reduced to the same? The government should call the Left's bluff by saying that it is prepared to go down if the Left withdraws support over the issue. The challenge for the government now would be to get the Bill passed in the next session of Parliament without any further delay.