The Lok Sabha debate on GATT and the Dunkel Draft was marked by lamentable ignorance of what sovereignty is about. Speaker after speaker complained that GATT would erode the sovereignty of India. In fact, membership of any international group binds India to group rules, and to that extent limits its sovereign right to do whatever it likes. This is as true of membership of the United Nations, G-15 or SAARC as of GATT.
It is as true of individuals as of nations. When I become a member of the Press Club or a housing co-operative, or even a citizen of India, I bind myself to the rules of those institutions, eroding my freedom to do whatever I like. Yet only an ass would say I was bartering away my freedom.
Why do nations bind themselves to group rules? The answer is that when all members of a group limit their rights, they are in fact pooling their sovereign just surrendering it. Each member seeks to gain from such pooling, and so sign accords where the gains from pooling outweigh the losses.
If a country wants to be completely sovereign, it has to cut itself off from all groups and agreements. Such a nation has complete freedom. The problem is that it has no international rights either. It can be kicked around and discriminated against by any other country, and has none of the protection that international agreements bestow.It will be a pariah.
BURMA’S EXAMPLE: Burma is the only developing country to have become a self-appointed pariah, and the misery this has inflicted on the Burmese people has been sustained only by the autocracy of military rule. No democracy would tolerate such misery in the name of sovereignty.
There can be many views on the desirability of GATT. But those who argue that we should leave simply on the ground that it erodes our sovereignty are guilty of advocating that we become pariahs in international trade.
The issue is not whether membership of any group erodes our sovereignty-it unquestionably does-but whether the benefits of pooled sovereignty outweigh the losses. In GATT, the key advantage is that every member get most-favoured-nation (MFN) treatment in trade from all other members. The USA cannot, for instance, give Japan more favourable terms than it gives India.
INDIA AND GATT: If India leaves GATT, it will by definition be entitled to less than most-favoured-nation treatment. Some simpletons actually believe that after getting out of GATT, India can negotiate superior bilateral trade agreements with all countries. Do they really think the developed countries are stupid enough to give better than MFN treatment to a pariah? When the US does its best to impose its views on patents on GATT, will it not do so in even greater measure in bilateral agreements? Within GATT India is pan of the pack, giving it some collective defences. By contrast, a pariah is easy prey.
Take a look at the plight of China, which is not in GATT. Every year it has to beg the US to renew most-favoured-nation treatment and pay a political price for renewal. Initially China joined hands with India in opposing US views on patents. But in order to get MFN status from the US China in 1992 signed a bilateral patents accord with the US, far more stringent than the one in the Dunkel draft. China is now under pressure to change its political system and laws under the rubric of human rights. It is under pressure to buy American planes and wheat. All these are erosions of China’s freedom even while being outside GATT. So it is stupid indeed for anyone to believe that leaving GATT will ensure freedom from pressures for India. It will merely ensures pariahdom.
CHINA’S POSITION: China desperately wants to get into GATT, Dunkel Draft and all, rather than suffer pariahdom. It has grave differences with many rich countries. But it sees that international trade is a powerful route to prosperity, and that it needs to become a member of the global trading club, GATT. It has tried fighting its battles outside GATT and found itself at a grave disadvantage. So China prefers to join GATT and fight its battles within that international club. That will enable it to build alliances with different countries on different issues, improve its bargaining power, and enjoy the automatic privileges of club membership instead of having to petition the US to renew such privileges every year.
Right now, the advantages of GATT membership unquestionably outweigh its disadvantages. I have argued this at length earlier and have no desire to repeat my arguments. But let us suppose that in the future, the GATT regime becomes disadvantageous, say because of penalties imposed in the name of human rights. Should India leave GATT unilaterally?
No, it should instead try and forge an alliance with other countries in the same plight. Even if the global system becomes disadvantageous, India will need allies to fight that disadvantage. It can form alliances within the club. If it finds enough like-minded countries willing to split away and form a separate, viable club, (keeping in mind that Comecon was not viable), it should do so. It on the other hand it cannot find allies among the 117 member countries, this will be the best proof that staying in GATT is a better alternative.