‘We underline the importance of an open, predictable, rules-based, transparent multilateral trading system’

Published: August 6, 2012 - 16:07 Updated: August 6, 2012 - 16:28

Face to Face: Dr Harsha Vardhana Singh, Deputy Director General of World Trade Organisation

Sanjay Kapoor Delhi 

Dr Harsha Vardhana Singh, Deputy Director General of World Trade Organisation (WTO), is a realist. He believes that while it may take longer to bring in a “definitive end to the crisis”, current efforts by the political leadership in creating a credible mechanism for saving the Eurozone could work. He regrets the protectionist measures countries have taken ostensibly to save their industry, which is hurting the global economy. He says the Doha round is not dead and there are conscious attempts to salvage those part of the negotiations in which consensus had been reached. Singh says that while the rate of growth of India’s economy may have fallen, it was  higher than many countries. Excerpts from an interview with Hardnews. 


The global economy is in serious trouble aggravated by the crisis in Eurozone. Do you see an early end to this crisis? 

I think the European leaders are trying to grapple with the relevant issues and will work together to build a support scheme which will be credible and oriented towards retaining the vision of a larger European economic and political entity. It is not an easy task but the objectives they seek to preserve and achieve are very important.  Perhaps, in the process, the emphasis given to regenerating growth and sustaining employment increase will get more political focus than imposition of much greater disciplines. Given the nature of the issues involved, I see a relatively faster effort at building a cohesive and credible mechanism for sustaining the Eurozone; a definitive end to this crisis is likely to take some time.


During the 2008 economic meltdown there was clarity among the leadership about how the crisis had to be tackled. Besides resorting to Keynesian methods to raise aggregate demand by infusing huge stimulus, increased world trade was also seen as a way out of this unprecedented crisis. What is happening now? 

The G-20 leadership has tried to address global concerns through a number of initiatives in several areas. As we can see from the ‘G-20 Leaders Declaration’ at Los Cabos, Mexico, the Keynesian stimulus policies are only part of a much larger framework. Increased world trade remains an important part of the overall framework to generate economic production and employment generation. The leaders have emphasised a comprehensive framework including fiscal and monetary policies to generate growth and maintain price stability, combined with policies to reduce risks, address financial market tensions, foster job creation and promote social objectives, stability and integrity of the euro area. They have also stressed on support to infrastructure investment, promote policies to generate positive development effects and reduce poverty, implement structural and regulatory reforms to promote medium-term growth prospects, promote green growth, and re-adjust domestic demand to address large macro imbalances. They have agreed to an Accountability Assessment Framework that accompanies their Growth and Jobs Action Plan. This framework establishes the procedures to report on progress in implementing their policy commitments.

Regarding the importance of international trade, the leaders emphasised that: “We are firmly committed to open trade and investment, expanding markets and resisting protectionism in all its forms, which are necessary conditions for sustained global economic recovery, jobs and development. We underline the importance of an open, predictable, rules-based, transparent multilateral trading system and are committed to ensure the centrality of the World Trade Organization (WTO). …Recognizing the importance of investment for boosting economic growth, we commit to maintain a supportive business environment for investors.”


We hear that countries have begun to resort to protectionist policies to save employment. How are these policies playing out and how are they impacting the global economy? 

The best way to answer this situation would be to reflect a key message from the recent report of WTO Director General, Pascal Lamy, including a table which shows how trade restrictive measures have been used in the period since mid-October 2010. 

DG Lamy raised serious concerns. He said: “The new measures restricting or potentially restricting trade that were implemented over the past seven months are adding to the trade restrictions put in place in previous periods. The accumulation of trade restrictions is becoming a matter of concern. This has to be considered in a broader perspective where the stock of trade restrictions and distortions that existed before the global crisis struck, such as in agriculture, are still in place …The more recent wave of trade restrictions seems no longer to be aimed at combating the temporary effects of the global crisis, but rather at trying to stimulate recovery through national industrial planning, which is an altogether longer-term affair.” 

Even if we look at only border measures, the numbers are high.  The estimated trade value covered by the new trade restrictive measures is about Rs 7 lakh crore. As emphasised by  the DG, these measures have a cumulative impact because virtually all of them stay in place for quite some time after being imposed. Thus, the continued increase in their numbers is additionally worrying because they adversely affect more and more of international trade, incrementally closing down economic opportunities and delaying economic recovery. They provide a basis for vested interest groups in different nations to seek further restrictions. Though every such effort is focused on achieving narrow short-term objectives, they introduce significant inefficiencies in the system and reduce the economic efficiency of nations. In a world of growing supply chains where competitiveness is achieved by combining cost-effective services and goods from different sources, such trade restrictions are basically instruments that reduce the scope for productive initiatives, investment and employment generation.  Furthermore, they contribute to raising regional and global tensions, and start dividing us as nations and people. 

This is a wrong response at this crucial time, when most of our pressing problems, including achieving important social and economic objectives, require nations to stay connected and work in a mutually supportive way to achieve sustainable and expanding economic opportunities. Thus, trade restrictions limit economic opportunities, delay recovery, introduce inefficiencies and generate economic tensions at a time when nations should work together to keep markets and investment opportunities open and buoyant. For these reasons, their total negative impact on global economic performance is far larger than the sum of their individual parts.        

After the collapse of the Doha round of talks, in which direction are the trade talks moving? What attempts are being made to salvage the gains?

The Doha round has not collapsed. There are a number of areas where members have made significant progress.  However, since some key areas of the negotiations still remain unresolved and are unlikely to be satisfactorily addressed in the near future, WTO members have decided to focus on reaping parts of the overall package as and when they are able to conclude them. There is a focus on trade facilitation, which increases the efficiency of economic operations and augments effective application of enhanced capacities to promote growth and development. The issues of interest to Least-Developed Countries (LDCs) in goods and services are being emphasised by many. Some additional efforts are being made to increase the scope of agreement on trade in services among several significant members of the organization. Earlier, at the WTO Ministerial Conference held in December 2011, ministers adopted the waiver to permit preferential treatment for LDC service suppliers, together with a number of other decisions. At present, the WTO members are focusing on how to take forward some other areas within the negotiations. There remain difficulties in this context, and nations will have to come together to enable the system to effectively further supplement the major benefits which have been provided through the predictable, stable and reliable trade and growth framework established by the WTO. 

Though not strictly within the Doha negotiations, but with possible positive effects, there are a few other recent initiatives. One example is the recent success in getting an agreement on guidelines for accession of LDCs to the WTO which will facilitate the accession process for LDCs. Another is the successful conclusion of the improved Government Procurement Agreement last December. 


Indian economy seems to be in serious trouble with falling rupee and plummeting growth rate. Do you think India’s problems are due to the disturbed external environment or on account of the government’s inability to tackle many of the infirmities that exist in our economy?

The economic performance in India is affected by both external and internal factors. The Indian growth rate is lower than previously anticipated, but it still remains relatively high in comparison to most other nations.  This rate would be boosted and I am sure that the government is positively focused on this. Important aspects would include creating an investment friendly policy environment, addressing infrastructure constraints in a timely manner, and increasing the efficiency of social programmes.


In 2008, the locus of the world, it was said, had shifted from West to East and future global growth was to be driven by this region. With growth in China slowing down, India losing its way and the Eurozone bleeding, where is the world heading?

The present economic environment is indeed a difficult one, and special, concerted efforts by nations are needed individually and together to create sustained opportunities. This is an important reason why I emphasise on keeping markets open, being alert to reverse the increasing number of market restrictions being put in place by various economies, and for a greater need than ever before for nations to work together in multilateral fora.

The economic importance of Asia has increased immensely and this trend will continue. Over time, we will have a number of developing countries achieving high economic performance. Subsequent to the BRICS, several countries have been identified as part of a new group of Next-11 countries, which are expected to become prominent economies in the world.  A large proportion of these are from Asia.  

An important point, which we often overlook when considering individual countries and their growth prospects, is that our global economic activities are inter-linked and interdependent, and these links are not limited to Asia. If we take the projected growth of the middle class, most of it will be in Asia. To enable this growth and meet the demands arising from that growth, we will need resources from all over, a lot of them from Africa. If we do not keep positively developing trade and growth relations with African economies and the global community does not work towards enhancing their capacities to benefit from global economic systems, the sustainability of the overall economic momentum in Asia may become difficult. Likewise, the economies of large developed countries will remain significant drivers of growth, including for Asian countries, and we cannot reduce our positive focus from them merely because the relative importance of Asia is increasing. Today, they face economic difficulties, but they will be emerging out of them in the next few years and their economic impact will remain significant. 

Thus, we all need to move in a mutually supportive way, sensitive to the constraints and demands of each. In difficult economic times, this is the one lesson which becomes difficult to implement because each nation tends to become much more self-oriented. This leads to pressures for fragmenting established efficient systems that enable growth opportunities. Wisdom lies in keeping such systems intact and to improve them and make them relevant for evolving situations. 

The WTO provides such a useful and efficient system. It promotes international trade and investment opportunities which have contributed importantly to the rapid growth achieved by a number of developing economies. In this background, given the structural adjustments required in the present difficult times, we need a combination of safety nets and sustained economic activity while keeping market opportunities open. This will prepare the grounds for better addressing the existing largemacro-imbalances.  

If we are unable to follow such a path then we will face difficult times, with greater tensions, likely disputes and major lost opportunities. Alternatively, if we are together able to take constructive and co-operative steps, then we will all emerge stronger in a world with improved domestic and international mechanisms to address economic concerns. This would also help us effectively sustain ourgrowth and better achieve our socio-economic objectives.   



This story is from print issue of HardNews