Mumbai: The World Trade Organisation (WTO) ministerial meeting in Cancun, an idyllic tourist spot jutting into the Gulf of Mexico, will begin on 10 September 2003. Has India done its homework? Whose homework? Well, Arun Jaitley has to do the homework; as by default, he must represent India in this tourist attraction as commerce and industry minister. Or will he have a Ceviche dinner, listen to a Mariachi band and return with nothing much except loads of shopping for family and friends?

So, what are the issues? How can India open up its trade and tariff barriers without hurting the issues that are close to its heart? That, for one, is a moot question. Another is, has India even made notes so that it can cram up the facts into the wee hours of the morning of 10 September? If it hasn't, it will find itself in deep trouble post-2005, when it has to implement the WTO regime.

The whole objective of the WTO parley is to liberalise global trade so as to enhance gains for developing countries. Most countries, while they are vocal on the rhetoric of multilateral reduction in tariff, in actuality slyly compromise on tariffs with preferred nations. Jairam Ramesh, a member of the delegation to the Seattle WTO meeting in 1999 tells, domain-b: "Most countries make a big noise about multilateralism and world trade, while at the same time surreptitiously negotiate bilateral avenues of trade with preferred countries."

Textiles
Take textiles as an example. The European Union (EU) and the US have been placing import restrictions on Indian textiles under the multi-fibre agreement (MFA) for a number of years, though it constituted a deviation from the General Agreement on Tariffs and Trade (GATT). As of now only 20 per cent of the quota restrictions covered under the MFA have been lifted so far, leaving the remaining quotas to be eliminated by the time the agreement itself will cease to exist by 31 December 2004.

Says a textile consultant: "Right now the importing country gives an exporting country a quota to export so many items of a particular type of textile [Indian mainstays are cotton, knit-shirts, woven trousers, bed-linen…]. The commerce ministry divides this quota among exporters on the basis of their past export performance and on a first-come-first-serve basis. This is what is called the MFA. This whole system of allocating quotas will be phased out by 31 December 2004. Thereafter, market forces will prevail and pricing may clinch export orders."

The integration or removal of the quotas is to be achieved in three stages. The first stage will integrate products comprising around 16 per cent of the total volume of imports. The second stage requires integration of a further 17 per cent, and the third stage demands yet another 18 per cent of imports to be integrated under the GATT rules, thus adding up to 51 per cent.

Each importing country is free to choose the products that it wants to integrate at each stage. Therein lies the rub. The only condition is that they shall encompass products from each of the four groupings, namely, tops and yarn, fabrics, made-up textile products and clothing. As on 1 January 1995, the EU had 219 quotas. In the first stage no quota was integrated. In the second stage, from 1 January 1998, only 14 quotas were integrated and in the third stage, from 1 January 2002, 38 quotas were integrated.

Yet, what is disappointing is that none of these quotas relates to major items of export from India such as cotton yarn, woven cotton fabrics, knit-shirts, woven trousers and bed linen. In other words, the EU has shrewdly sidelined India from its quota integration by not choosing its products for integration. Therefore, India hasn't benefited much from the lifting of tariffs on textiles - a major item of Indian exports.

Pharmaceuticals and agricultural chemicals
First and foremost, India must remember that the WTO is an appellate body. Browsing through the contents of an appeal filed in December 1997 by the US against India makes interesting reading (www.sice.oas.org/DISPUTE/wto/tripab.asp). Anyone who has the patience to go through this laborious and lengthy document will clearly see that both the US and the EU (which joined the appeal against India as a third participant) have singled out India for attack.

India was literally forced on the back foot, to defend its wicket from being smashed. The US and the EU brought to the appellate body the full force of their lobbying prowess and power politics while India was reduced to just a babe in the woods; and that too, defensively groping for answers.

India's arguments were defensive throughout the appeal. In other words, India was put on the mat by two heavyweight Sumo wrestlers and couldn't wriggle out of their grip as the appeal went against India. Whatever India said in its defence about there being a mailbox system that will consider and approve patent applications after the 2005 deadline didn't cut ice with the WTO panel. Following is the verdict the appellate body of the WTO:

"On the basis of the findings set out above, the Panel concludes that India has not complied with its obligations under Article 70.8(a) and, in the alternative, paragraphs 1 and 2 of Article 63 of the TRIPS Agreement, because it has failed to establish a mechanism that adequately preserves novelty and priority in respect of applications for product patents in respect of pharmaceutical and agricultural chemical inventions during the transitional period to which it is entitled under Article 65 of the Agreement, and to publish and notify adequately information about such a mechanism; and that India has not complied with its obligations under Article 70.9 of the TRIPS Agreement, because it has failed to establish a system for the grant of exclusive marketing rights."

Further the panel notes: "The Panel recommends that the Dispute Settlement Body request India to bring its transitional regime for patent protection of pharmaceutical and agricultural chemical products into conformity with its obligations under the TRIPS Agreement."

The WTO panel is in no mood to mince words or pad words in diplomatic "politese." It may offend one's jingoistic feelings, but that's the way it is. After this severe indictment India amended its patent act twice, which is nothing short of meekly offering its upper limb for some serious twisting. The first amendment recognised exclusive marketing rights and the mailbox system for filing of product patents, which will then be granted once WTO regime is implemented in 2005.

The third amendment is expected shortly and a host of issues waiting to be resolved like the maintaining of data exclusivity, which advanced nations claim is not being adhered by India. Says a professional working with a pharmaceutical multinational: "Article 39.3 of the Trade Related Intellectual Property Rights states that data exclusivity should be maintained when data is submitted to the government for approval of drugs patents. This is an important aspect of our demand as we find that very often when we submit data about our products to the government, data exclusivity is not maintained. Hopefully, the third amendment to the Patent Bill will cover this aspect also."

The latest development in the pharmaceutical patents field as of 29 August 2003 is that the issue of "compulsory licences" have been approved by the WTO. This means, poor countries with no drug manufacturing facilities of their own can override patent rules and order generic drugs from countries like India, which has a basketful of such drugs to offer. This is applicable only when a poor country is facing health emergencies like HIV/AIDS and the recent SARS outbreak.

This concession can be seen as a major victory for India and developing countries as they have been negotiating for it since the Doha meet. But the developed countries are apprehensive that these generic drugs will be smuggled into their countries. Another positive outcome for poor countries is that advanced countries may slash prices of patented drugs to compete with generic drugs offered by India.

Plants and agriculture
In the second amendment India seems to have conceded further sops to multinational biotechnology corporations. One such is the Bt cotton issue (), which had raised a lot of heat, dust and storm in recent times. Acres of newsprint must have been consumed by what is know as the 'Bt cotton controversy' when a multinational biotechnology company wanted the burning of 11,000 hectares of cotton crop in Gujarat because it was planted with cotton seeds of which it was the genetic owner. Let's look at the controversy and its genesis.

Initially, methods of agriculture and plant genetics were excluded from patentability in the Indian Patent Act to ensure that seed, the first link in the food chain, was held as a common property resource. Farmers had the inalienable right to save, exchange and improve seeds and the Indian Patent Act, quite rightly, ensured that it was not violated.

The first and second amendments incorporated two changes in the definition of what is not an invention that have consequently opened the floodgates of patenting of genetically engineered seeds in India.

According to Section 3 (i) of the second amendment, the following is not an invention: "Any process for the medical, surgical, creative, prophylactic or other treatment of human beings or any process for a similar treatment of animals or plants to render them free of disease or to increase their economic value or that of their products." Simply put, any change in a living organism to make it immune to disease is not an invention; and since it is not an invention it cannot be patented.

The Second Amendment has also added a new section - 3 (j). This section allows production or propagation of genetically engineered plants to be counted as an invention, and hence patentable. This new section seeks to define genetic alteration of plants and animals as not being biological, rather, as business or industrial in nature. Without a clear definition that all modifications of plants and animals are essentially biological, 3 (j) allows patents on genetically modified organisms.

This has opened the floodgate for patenting transgenic (an organism whose genome has been altered by the transfer of a gene from another species or breed) plants. Which means, the language of Section 3 (j) contrasts directly with Section 3 (i) of the Patent Act and is nothing but the provisions of Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) stumbling into Indian law.

Section 3 (j) implies that a modification of a plant can now be counted as an invention and can hence be patented. Thus the method of producing Bt cotton by introducing genes of a bacterium Bacillus thuringiensis (Bt) in cotton to produce toxins to kill bollworms can now be patented in India. In the early eighties, Monsanto scientists discovered a way to introduce the Bt gene in the cotton plant, thus the name Bt cotton.

In other words, Monsanto can and have patented Bt cotton in India. Read carefully what James Enyart of Monsanto has to say below about how they got the patent for Bt cotton passed in the Intellectual Property Committee (IPC) of GATT:

"Once created, the first task of the IPC was to repeat the missionary work we did in the US in the early days, this time with the industrial associations of Europe and Japan to convince them that a code was possible….

"We consulted many interest groups during the whole process. It was not an easy task but our Trilateral Group [US, EU and Japan] was able to distil from the laws of the more advanced countries the fundamental principles for protecting all forms of intellectual property… Besides selling our concepts at home, we went to Geneva where [we] presented [our] document to the staff of the GATT Secretariat. We also took the opportunity to present it to the Geneva based representatives of a large number of countries….

"What I have described to you is absolutely unprecedented in GATT. Industry has identified a major problem for international trade. It crafted a solution, reduced it to a concrete proposal and sold it to our own and other governments… The industries and traders of world commerce have played simultaneously the role of patients, the diagnosticians and the prescribing physicians."

Certainly, Enyart cannot hide his glee and unholy joy at having played patient, diagnostician and prescribing physician for a non-existent malady that has been thrust on many an unsuspecting subsistence farmer in developing countries. That is what exactly is going to happen if developing countries are not vigilant enough. Enyart-types are going to walk into the Intellectual Property Committee of the GATT, present their cases with full force, diagnose their own case and have their own potions prescribed under duress for the innocent peasants of the world.

In 2001, Monsanto was successful in getting a clearance for commercial planting of Bt cotton through the Genetic Engineering Approval Committee (GEAC). In the same year, Monsanto had used the same GEAC to order the burning and destruction of 11,000 hectares of cotton planted in Gujarat planted with the Navbharat 151 variety of cotton seed, which was found to have the Bt cotton gene.

However, a conflagration of such massive scales that it would have dwarfed the Amazonian forest fires did not happen. What has happened is that illegal seeds obtained from the harvest of Navbharat seeds have flooded the market at one-tenth or one-half the legal prices of Bt cotton seeds.

The GEAC had endorsed the burning of the standing cotton crop on the ground of its potential to "cause an irreversible change in the environment structure of the soil," danger to "environment and human health and to obviate any possibility of cross pollination," as well as the fact that, "the precautionary principles would require that no product, the effect of which is unknown be put into the market stream." How can this be possible with the product they themselves have cleared? There are no answers.

Patenting life forms
As a result of sustained public pressure after TRIPS came into force in 1995, many third world countries made recommendations for changes in Article 27.3 (b) to prevent bio-piracy. India in its discussion paper submitted to the TRIPS Council stated:

"Patenting of life forms may have at least two dimensions. Firstly, there is the ethical question of the extent of private ownership that could be extended to life forms. The second dimension relates to the use of IPR [intellectual property right] concept as understood in the industrialised world and its appropriateness in the face of the larger dimension of rights on knowledge, their ownership, use, transfer and dissemination."

There is, of course, a need to re-examine the need to grant patents on life forms anywhere in the world. But India should persuade the WTO and member countries about the advisability of the following:

• Exclude patents on all life forms as India had originally intended.
• If the above is not possible then exclude patents based on traditional or indigenous knowledge and essentially derived products and processes from such knowledge. This will include traditional Indian ayurvedic and unani medicines and medical products.
• Or at least insist on the disclosure by the country of origin of the biological source and associated knowledge of the genetically modified organism, and obtain the consent of the country providing the resource and knowledge, to ensure an equitable sharing of benefits.
• A global movement of the Council for Responsible Genetics is calling for a ban on patents on life and recovering the genetic basis of life as something which cannot be owned and privatised (). They believe that the plants, animals and microorganisms comprising life on earth are part of the natural world into which we are all born. They maintain that the conversion of these species, their molecules or parts into corporate property through patent monopolies is against the interests of the peoples of the world.

The other issue facing India is agricultural subsidies. Says Jairam Ramesh: "We must take a fresh look at agricultural subsidies even though the WTO is not coercing us to do so. Agriculture is being deprived of public investment as most of government's finance goes into subsidies." But will the pampered India farm lobby be open to this suggestion? "Despite the fact that there is no pressure from the WTO, we have to examine whether the Rs 28,000 crore we spend on food security is achieving its goal."

Information technology What can India achieve at the WTO in the IT field? After all it is a key area in which it has proven its skill and has demonstrated its expertise. While the Indian delegation has fought defensively, supine on the mat, on many issues mentioned above, this is one area about which it can be gung-ho.

Admittedly, the advanced nations need our code-writing skills. India has the analytical and technical skills, the patience and perseverance, and the aptitude required to execute complex software projects. The Chinese, Malays and Filipinos are nowhere near us in English language skills. But they are making fast progress and could catch up if India doesn't put some distance between itself and its Oriental neighbours.

However, of late, we have been losing our IT advantages because of protectionist sentiment and visa restrictions in developed nations. But India can negotiate bilateral agreements with both the US and the EU for preferential treatment for its software developers. If there is tarrying in this, soon it will find its programmers hounded out of advanced countries and hordes of smart Chinese and Filipinos writing 'Olacle' applications in salubrious western countries.

The big rush
Least developed countries are making a beeline to join the WTO. At least 10 of the 49 countries classified by the UN as least developed could be joining the WTO over the next two years, with four of them expected to join the multilateral body this year. Talks are in an advanced stage for the accession of Bhutan, Cape Verde, Laos, Sudan and Yemen. Initial negotiations are on in the case of Ethiopia. Given the proximity of Nepal and Bhutan to India and also the fact that both are land-locked countries, their accession to the WTO could be good news for New Delhi, according to trade experts.

Overall, when one looks at all the homework Arun Jaitley has to do, one can only despair about the mountains of notes he has to wade through. Or has he made any notes at all? Would he be caught unawares like a truant student facing the most important examination of his life?

In an interview to financial newspaper, Jaitley said: "The agriculture sector provides livelihood for hundreds of millions of people in India and we cannot accept a situation which places our rural poor at risk." One can only hope that he has been briefed thoroughly about the Bt cotton controversy.

How much expertise does India have when dealing with the WTO? Ramesh says: "The WTO is as much about trade law as it is about trade in general. We have not yet built up considerable expertise in WTO-related issues. Domestic legislation should also be enacted, which will take full advantage of the WTO. The Chinese are using the WTO to spearhead fundamental internal reforms. Conversely, many in India still look upon the WTO as something evil and diabolic. Greater exports from India are not the result of external blocks but are triggered by our own internal policies, be it in agriculture, textiles or manufacturing. China's exports grew six times but so also did its imports. This is important because India still adheres to the obsolete rule that fair trade means more exports and little or no imports."

That, probably, summarises the situation.