India under Attack from G20 at Brisbane Meet

Prime Minister Modi is leading the Indian delegation to G20 meeting in Brisbane. It is a meeting of the Rich who control most of the world economy. India is a recent entrant to the club based on its credentials as an emerging market of the second largest population in the world.

The PM Modi will be under attack from the big powers led by US and backed by allies, specially Australia and the European Union. They are miffed with India over the derailing of the Doha Agenda and the Bali Agreement on Trade Facilitation. (India could respond with the claim that food security is a part of the G20 agenda. It expects support on its demand for a revision of the WTO Agro Subsidies agreement to align with today’s prices and not those prevailing in mid 1980s. Former Indian Ambassador to WTO says that lack of engagement and interest on the plea is not fair to food security concerns of the poverty stricken countries like India.)

It is a moot point whether Modi will be able to hold out to the G20 pressure. He has no experience of complex negotiations in international meetings, Brisbane is his first multilateral exposure to the Rich countries ganged up against him. Threats of isolation at WTO and Plurilateral arrangements to exclude India are being held out openly and in secret.

US senate and HOR have already moved USITC to investigate post Modi trade and investment policies. A special emissary from Commerce Ministry is in Geneva to try and hammer out a way out of the impasse.

The other issue of India’s concern is the G20 agenda of mutual sharing of tax information. India is concerned about the stashing of money in Swiss Bank accounts and other tax havens promoted/ tolerated by the Rich countries. In the past G20 meetings, India could get the Swiss government to cooperate with the Indian authorities in cases where specific information is sought. Even though Switzerland is only an invitee to G20 meetings, India could make the Swiss to relax its rules under G20 pressure. (The next step in this process is to get the Banks like UBS, HSBC which control Swiss accounts to cooperate in giving the balance sheets of tax dodgers and cheats for a “Sound Financial Architecture” in G20 language.. This is not an easy task since these institutions are more than powerful than Governments.)

Australia is troubled over transfer pricing. Big mining companies like BHP Billiton export profits to low tax haven. If India toes the Australian line and accepts uniform accounting standards, it will lose the opportunity to attract investment flows based on competitive tax rates.

India can expect some support in its stance from other BRICS countries and Indonesia. But it is unlikely that Developed Countries vis Developing Countries fight will emerge in Brisbane.

[We will report on the G20 Brisbane developments through our Daily Index of Changes and World Trade Scanner. – Arun Goyal,-Ed]