72nd ANNUAL GENERAL MEETING
January 31, 2003

Presidential Address of Mr M K Sanghi, President, Icc India

It is indeed a great pleasure for me to welcome you all to the 72nd Annual General Meeting of ICC India. ICC India, the national chapter of International Chamber of Commerce (ICC), was set up in 1929. One of the most active chapters of ICC, ICC India has been contributing significantly to espousing the cause of developing countries in general and India in particular at the world fora. The involvement of Indian business leaders from ICC India at the ICC has increased over the years contributing significantly to the global policy matrix. On a day-to-day basis, ICC India has contributed in guiding bankers, trading community and Indian businesses on issues of international trade facilitation including documentary credits, arbitration, commercial practices, intellectual property, preventing trade frauds and the like.

We are extremely privileged to have Shri Digvijay Singh, Hon'ble Minister of State for External Affairs, with us today to inaugurate 72nd Annual General Meeting of ICC India. Under his dynamic leadership, India's economic interests are coming to the fore in our foreign policy. The Minister has himself led many delegations to foster India's economic diplomacy, which we feel will go a long way in promoting our commercial relationships with rest of the world. All of us are keenly waiting to listen to your views on this important topic today. Thank you very much, Sir, for acceding to our request.

Before I move any further, let me introduce ICC to you. The International Chamber of Commerce was founded in 1919 with an overriding aim to serve world business by promoting trade and investment, open markets for goods and services, and the free flow of capital. A year after the creation of the United Nations, ICC was granted the highest level consultative status with the UN and its specialized agencies. Ever since, it has ensured that the international business view receives due weightage within the UN system and before intergovernmental bodies and meetings such as the G8 where decisions affecting the conduct of business are made. Since its formation, ICC has expanded to become a world business organization with thousands of member companies and associations in around 140 countries. Members include many of the world's most influential companies and represent every major industrial and services sector. ICC has unrivalled authority as a rule making body for businesses the world over. It works through its various commissions on areas of international importance - banking, finance & insurance, commercial practices, competition, trade & investment, e-business & IT - to name just a few. ICC's reach - and the complexity of its work - has kept pace with the globalization of business and technology.

The theme of this year's Annual Meeting "Multilateral Trade Negotiations: The Unfolding Scenario" is very topical and significant from the view point of the developing countries in view of the ongoing negotiations amongst member countries of WTO after the Doha Ministerial.

The Doha Ministerial was undoubtedly a significant event in the success of World Trading Organisation. The launch of trade negotiations gave a timely boost to the multilateral trading system. The success at Doha reflected the commitment of member countries to lower trade barriers and advance the process of global integration. Most importantly, it was against the background of a slowing world economy that governments came forward to start trade negotiations, which boosted business confidence across the globe.

The Doha Ministerial also marked the coming-of-age of the developing countries, which constitute three-quarters of the WTO membership, albeit account for just about 15% of the volume of trade. The views of developing countries were well represented and generally upheld throughout the negotiations. In this connection, the Indian government must be congratulated for championing the cause of developing countries and succeeding in placing development issues firmly and explicitly at the core of the Doha Development Agenda especially with respect to the implementation issues. It is now time that we need to take the Doha Development Agenda towards a successful conclusion that would benefit all.

The Doha Work Programme is the most ambitious and wide-ranging ever undertaken. It includes negotiations on agriculture, services, market access for non-agricultural goods, WTO rules, regional trade agreements and possible new framework agreements on the relationship between trade and investment, environment, competition, transparency in government procurement and trade facilitation or the so called "Singapore Issues". Indeed we have little time on our hands to pursue this ambitious agenda vigourously.

Surely, Multilateral Trade Negotiations (MTNs) have become an integral part of WTO philosophy and practices. For developing countries, like India, they offer the best possible mechanism in the smooth pursuit of their aspirations for globalisation.

Having said this, what does the system of Multilateral Trade Negotiations entail in practice? Multilateral Trade Negotiations invite hard bargaining and highest standards of diplomacy. The system is built on the principle of quid pro quo; there is inevitability of a "give and take" approach; and there is no status for "nay sayers". In susbtance, there is no "free lunch" in the quest for a positive sum game. India must be proactive with its position, now that the Doha Ministerial declaration has been with us for more than a year. It is possible to work out a set of integrated package of alternatives, well in advance, of the actual negotiations.

It is imperative that the Indian Government takes business, industry and all concerned stakeholders in confidence in the ultimate outcome of Multilateral Trade Negotiations. Securing maximum benefit at minimum cost (or sacrifice) must be our strategy in the Multilateral Trade Negotiations. No doubt, this is easily said than done. But let us neither refuse to negotiate proactively nor succumb to pressures reluctantly.

Before concluding, I must also make three key observations.

1. First, the Indian government must raise the issue about the growing spectre of deflation across the world. Indeed, persistently for many years Japan has been experiencing it and for the last two years both Europe and America are in the midst of growth stagnation. The situation has not been mitigated despite sharply falling interest rates. The world is awash with excess capacity and prices of manufactured products are under severe restraints - witnessing falling prices of steel, cars, telecom and also of services like banking and airlines. How to regenerate growth momentum is a major challenge that the process of Multilateral Trade Negotiations cannot afford to ignore.

2. Second, I must also highlight some major areas of concern for Indian industry. Multilateral Trade Negotiations offer both challenges and opportunities for the Indian industry. Obviously, challenges are far more serious and striking given the lack of competitive strength of Indian industries. Already, India has experienced more than a decade of market oriented reforms and many serious problems have come to the surface. These are problems of high cost (both manufacturing and transaction costs); of technology gaps and difficulties in securing technology transfers from developed countries; of infrastructure bottlenecks and the consequent constraints on global benchmarking; of hard core reforms (e.g. exit policy, privatisation, etc.) which are still politically difficult for implementation; of "neo-protectionism" in various forms (tariff and non-tariff barriers); and of India's weak bargaining strength given it's meagre share of world exports at 0.7%.

Obviously, most of these problems are of our own making and will have to be resolved by our own internal efforts. At the WTO negotiations table, we can only raise issues applicable to global trade, which do not comply with its given provisions and conditionalities. While effective negotiations are a must, we can neither procrastinate the day of reckoning nor reverse the imperatives of WTO driven globalisation of the Indian economy.

3 Third, regional trade agreements have tended to be stumbling blocs in multilateral trading systems. The negotiations on improving WTO disciplines on regional trade agreements are an imperative in the face of 162 regional trade agreements in force and possibility of increasing of 200 additional such agreements by 2005. ICC has singled out the proliferation of preferential rules of origin under such agreements, which tended to raise costs and stifle technological developments, the formulation of business networks and joint manufacturing. There should be a time bound mechanism to integrate such agreements in the multilateral trading system and moreover, the tariff differential between the MFN rates & rates applied for intra trade should be minimum.

Various stages of multilateral trade negotiations surely represent a set of complex political processes and issues in the overall negotiations. The Doha Development Agenda is a big challenge to all member countries as we have a big stake in the negotiations. In such a broad and complex negotiations, it is the responsibility of all stakeholders to fully participate and make the Doha Development Agenda a success. The WTO needs the support of business in arguing that poverty could not be stopped without trade and economic growth. The success of Doha Round should be measured on whether it was good for business, business being the main customer of WTO. We in the business community are committed to engage in continuous awareness raising and educational activities with the government and the WTO through chambers, such as ICC, to explain business activities and ramifications of the negotiations on specific issues. ICC India has been actively engaged in the ICC Commission on Trade & Investment to project our view point in the ICC statements on this significant area.

I have endeavoured to put in some of the critical issues of multilateral trade negotiations against the backdrop of Doha Development Agenda. A short while from now, I will be laying down office of the President of ICC India. Before I request the Hon'ble Minister, Mr. Digvijay Singh to address this Annual Meeting, I would like to express my sincere thanks to my Vice President Mr. O S Kanwar, who lent me unstinted support and cooperation during my tenure and Past Presidents of ICC India for their guidance and support. My thanks are also due to the Secretary General Dr. Amit Mitra for his cooperation and assistance during my term in office. I would also like to thank the Executive Director Mr Ashok Ummat and ICC India Secretariat for their support.

May I now request the Hon'ble Minister of State for External Affairs, Mr. Digvijay Singh, to address this gathering.

Thank you !