The agenda for the Bali Ministerial meeting seems to be moving forward slowly with two new issues identified for possible inclusion. Both these topics would be plurilateral in nature, which means covering only some of the members who support a liberalisation of this sector. The two possible areas for inclusion on the Bali agenda are expansion of the Information Technology Agreement (ITA) and government procurement. Reports from Geneva also indicate that negotiators have managed some forward movement in the multilateral negotiations on agriculture.
The expansion of the ITA has been an issue of concern in India. There has been a general opinion that ITA 1 that came into force in 1996 and to which India is a party, has not benefitted industry in the country. In fact, there is a strong view the hardware industry in India has failed to take off due to the presence of ITA 1. Therefore, India has not been a very strong advocate of ITA 2. Many other countries, too, have been concerned though member countries such as the US have been keen to push this topic onto the negotiating table.
Reports indicate that the recent meeting at Bali of the Asia-Pacific Economic Cooperation leaders resolved a disagreement with China on this issue. Negotiations, reports indicated, would now proceed with an eye to complete the talks by the upcoming ministerial in December. It will be very important for the Indian industry to provide some serious inputs to the government. The industry should give this issue a fresh look to understand if there is any benefit it can derive from the agreement.
The government procurement agreement, too, has been an area of concern for India. Studies reveal that the government procurement market around the world presents a huge potential for developing countries in advanced country markets, provided there is a level playing field.
Studies reveal that the European Union (EU) market for government procurement is approximately one per cent for the foreign companies. The EU, however, has been refuting this estimate, and clarified that the foreign companies based in the EU that are eligible for government procurement contracts should be treated as overseas units, which implies that government procurement share of foreign companies in the EU is at about 16 per cent. The EU has also reportedly suggested that if India does not become a part of the government procurement agreement then they could stop Indian companies based in EU from participating in EU contracts.
Interestingly, in countries such as Vietnam, many Indian companies are unable to participate since the country does not allow some non-EU countries to bid for certain contracts.
India is in the process of reviewing its government procurement rules and the government has introduced a Bill to harmonise procurement rules across the country. The passing of this legislation could be a starting step for India that has an observer status at the World Trade Organisation on government procurement to test the waters for becoming a part of the plurilateral agreement. Several sectors such as pharmaceuticals, information technology, etc can benefit from India becoming a part of the government procurement market. The government just needs to ensure that the small and medium sector in India receives a level playing field in their bid to be important players in the procurement market.
What will be important to ensure is that the companies do not face technical or non-tariff barriers (NTBs) if they have to export under a government procurement agreement. There is a need to check possible NTBs that may arise even if India joins this agreement at some point in time.
Reports from Geneva also indicate that progress has been achieved in the area of agricultural negotiations. The issue of a "peace clause" on any action against developing countries breaching their aggregate measure of support levels for food security reasons has found takers. The Chair of the negotiations, New Zealand ambassador John Adank, is expected to come up with a possible text on issues of convergence soon.
The progress at Geneva is reasonable. But it will be important for the industry in India to keep a close watch on the developments to ensure that there are no last-minute surprises on agreements that may happen at Bali. We should have a fair idea of the possible outcome at Bali within the next two to three weeks.
The writer is Principal Adviser at APJ-SLG Law Offices
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
