Globalisation is a Sell-Out, Mr Shourie

By Sitaram Yechuri
Indian Express
September 12, 2003

In his three-part series (August 15-17), Arun Shourie has sung paeans to the current model of globalisation, which is inseparable from the WTO regime. Coming three weeks before the Cancun inter-ministerial negotiations, it raises suspicions that this PR exercise for WTO and globalisation is a prelude to a sell-out.

Why on earth would a senior minister otherwise undermine the official position of the government of India and the consensus in the country that the WTO regime has benefited advanced countries far more than developing ones?

The discomfort level grows when one sees Shourie's examples. He has given us reams of statistics from his friends in the CII and the FICCI to show how sections of Indian big business have made lots of money in the international market. But we wait in vain for him to trot out similar statistics for the peasantry, landless labourers, the workers, small industries. Is this a deliberate omission, as the impact of globalisation on big business is quite different from that on the vast majority of Indians?

Before going into the details of Shourie's arguments, some basic confusion needs to be cleared. Few critics have criticised globalisation per se. Instead they have been critical of the current model of globalisation, in which large global corporations, backed by the governments of the US, EU, and Japan, are opening the developing world's economies while protecting their own.

The WTO negotiations are not about globalisation: they are about imperialist globalisation. Obviously, it is not just a few global corporations that benefit.

The beneficiaries include some of the third world's corporations and a global over-class including a yuppie section of the Indian middle class. But it also creates a huge global underclass sinking into joblessness and abject poverty.

The hardest hit around the world are those who were already marginal. In India, this means landless labourers, poor peasants, unorganised workers, artisans and the tribal population. The alarming rise of reports of starvation deaths and distress suicides attest this.

Globalisation is not just about integrating the global economy but also about the terms under which this integration is taking place. And this is what the earlier GATT and the current WTO negotiations are all about.

Let us look at what the rich countries promised the developing world during the Uruguay round of GATT negotiations. They promised that the developing countries if they opened their markets and accepted the patent regime that the rich countries wanted would be allowed access to the markets of advanced countries for agricultural goods and in areas such as textiles.

This was the basis on which the Uruguay round was completed and the WTO formed in 1995. Today, we find the subsidy given by the rich countries to their farmers has risen from $180 billion to $300 billion.

Sugar is one example: just the subsidy given by the rich countries is more than the entire export of the developing countries. This makes it virtually impossible for the poor countries to enter the market of the advanced countries for agricultural products.

Moreover, they also face ruin in their own markets, since rich countries dump their heavily subsidised products here.

The case of textiles is particularly important for India. The Multi-Fibre Agreement had fixed export quotas for countries such as India for the US and EU markets. The US and the EU admitted that their domestic industries were not competitive and wanted this protection to continue, scaling it down to zero in 10 years.

Unfortunately, the West has refused to honour this commitment. It is using various measures to continue to protect its textile industry while asking others to give up protection of their domestic economies in other areas.

This is the reality of trade negotiations: "You open up your economy while we protect ours." The Cancun negotiations, as in Doha, have to address a central issue: why should developing countries open their markets further when the advanced countries still continue to protect theirs?

By talking about globalisation in general, Shourie obfuscates the real content of current globalisation. Globalisation should be a matter of give and take. But the rich countries are doing all the taking while the poorer ones do all the giving!

Without inflicting a barrage of statistics, let us set the record straight. We did not oppose the new patent regime because the global pharmaceutical MNCs would "finish the Indian drug companies" but because it would make life-saving and essential drugs prohibitively expensive. The anti-retroviral treatment required by an AIDS patient in India costs Rs 10,000-15,000 a year. If India had introduced the pa-tent laws that WTO has forced on us from 2005, this would have cost 20-30 times as much.

Let us not forget the US fought a bitter two-year-long battle to prevent access to the poorest of African countries to cheap drugs they could import from generic manufacturers. Even today, there are so many conditions involved that even though these countries can theoretically import such life-saving drugs at low costs, for example from India, in practice they will find it difficult.

Shourie's list of industries that have made good in spite of the current skewed terms of globalisation makes interesting reading. The list is full of industries that received protection under the license-permit raj Shourie and company love to hate.

In computers, India was one of the few countries that decided to develop both hardware and software indigenously. It kicked out IBM. Shourie's colleague, the erstwhile socialist George Fernandes, can perhaps enlighten him on this.

The result was that when the US market required software skills on UNIX in a hurry, only India could provide such skills. And this is what gave India the initial boost. Without the policy of protection of its nascent computer industry, Indians, like others, would have been users of IBM machines, not developers of software.

The pharmaceutical case is even more illustrative. The multinational drug companies were charging exorbitant prices for antibiotics and other essential drugs. This was revealed in a US Senate committee (Kefauver Committee) investigation in the mid-1950s.

Shourie claims the MNCs' share of the pharmaceutical market coming down from 75 per cent in 1971 to 35 per cent today is a great victory for globalisation. But he neglects to tell us how this was achieved.

The framing of the Indian Patent Act took place in 1970. The new Act allowed only processes to be patented. Without this protection of the Patent Act, the Indian pharmaceutical industry would never have got off the ground.

And let us not forgot the role of the Council for Scientific and Industrial Research. Without CSIR laboratories in developing innovative pro-cesses for drug manufacture, Indian drug companies would have found it very difficult.

Divestment as a sweetheart deal

It is tedious to examine all the so-called facts Arun Shourie has produced (in his three-part series in this newspaper, August 15-17) to argue for globalisation. We will take up just a few of them. The government godowns are overflowing with stocks not because of high support prices but high prices of PDS rations, which the poor cannot afford. It is a national shame that while our godowns are overflowing, people are going hungry and the per capita intake of calories is going down.

Shourie also forgets to mention the opposition to disinvestment was also because public assets were given away at rock bottom prices, and, the general public suspects, to friends and relations.

What else can explain the selling of the Centaur Hotel at Rs 83 crore to the Batras who sold it at a profit of Rs 32 crore within six months? Or selling cash-rich VSNL to the Tatas, who immediately decided to siphon Rs 1,200 crore for their telecom ventures?

Or creating a monopoly in polymers by selling parts of IPCL to Reliance, a course that even the leaders of free market economics, the US, would not have allowed? No wonder the wags are talking of India's policy of self-reliance now as one of "self" and "Reliance".

However, let us move on to the big picture. India and China, according to Shourie, are the new kids on the block and will outperform the rest of the world because they have whole-heartedly absorbed the new mantra of globalisation.

Shourie's argument might be convincing except for the fact that these are the two countries that sheltered their domestic economies and built up a large indigenous industrial and skill base at a time that most other developing countries had opened up their economies.

The Nehruvian model had a lot of problems. It sheltered inefficient monopolies at the expense of the people. It did not pursue land reforms, thus failing to create a large rural market.

But let us give the devil its due. India developed a domestic industry that was truly wide-ranging. It developed the IITs, engineering colleges, and medical colleges, and expanded its higher education, particularly in the sciences. Today, we have both the skills set and the industrial base to compete with the best.

Shourie fails to recognise from where India draws its strength, just as he fails to understand the true nature of the global economy. In a world of fair trade, Indian industry would be globally competitive. It is the unfair nature of global trade, promoted by the WTO, that needs to be fought.

Finally, we come to the most disturbing part of Shourie's argument. He has found, like many others of the neo-liberal orthodoxy, a disjunction between rapid development and democracy. Ram unemployment, starvation and pesticide-laden colas down people's throats and all will be hunky dory. This is the message with which Shourie ends.

In other words, a police state, perhaps with Narendra Modi at its head, where protests are stilled, while massacres and MNCs are welcome. Could this be be the new Ram Rajya?

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