77 AGM of the ICC, India
March 11, 2008, New Delhi

Address by Shri Kamal Nath, Hon'ble Minister of Commerce and Industry

• The International Chamber of Commerce (ICC) promotes an open international trade and investment system and the market economy. ICC's conviction that trade is a powerful force for peace and prosperity led its founder members to call themselves "the merchants of peace".
• It gives me great pleasure to be with you today on the occasion of ICC, India's 77^th AGM. I have been asked to speak on the subject - "Global Economic Outlook : Impact on Asia"
• As per the World Bank's "Global Economic Prospects 2008", the world economic growth eased from 3.9% in 2006 to 3.6% in 2007 and is expected to moderate further in 2008, with the slowdown led by the high income countries. After four years of robust GDP and trade growth, volatility in international markets has increased.
• Among developing countries, growth remained firm at 7.4 percent in 2007, after an equally strong 7.5 percent in 2006, underpinned by continued strength in East and South Asia. If China and India are excluded, activity in low-and middle-income countries slipped by 0.2 percentage points to 5.7 percent in the year.
• The globalization of markets for goods and services is continuing at a brisk pace. Over the past seven years, world trade volumes have increased at an average rate of 6.7%, virtually the same as during the 1990s. Trade volumes are expanding more than twice as fast as industrial production (global GDP has grown 3% a year since 2000, up from 2.8% a year during the 1990s). While world trade has grown steadily for the last 15 years, developing country trade has accelerated in recent years. In 2006, import growth in developing countries registered 14.3 percent, compared with 7.9 percent in the high- income countries.
• Indian economy is increasingly getting integrated with the world economy. This is reflected in the increasing share of India's exports of goods and services in the total world export. India's share in the world exports has increased from 0.7% in 2001 to 1% in 2006. India's trade as a percentage of GDP has increased from 14.6% in 1990-91 to 21.2% in 2000-01 and 34.9% in 2006-07.
• Indian merchandise exports have witnessed a sustained high growth rate of more than 20% per annum during the Tenth Plan. Exports reached a level of US $ 126.3 billion in 2006-07 registering a growth rate of 22.5% over the previous year. Against the target of US $ 160 billion for the year 2007-08, exports reached a level of US $ 111.1 billion during April-December 2007. With the present trend growth, exports during the current year are expected to reach a level of US $ 152-155 billion.
• The high growth of Indian exports during the recent years has been possible due to concerted efforts made by the Government to reduce trade barriers, bring down transaction costs and facilitate trade accompanied by a favourable international environment. According to the World Bank publication "Doing Business 2008", India has been rated as the top reformer in the Trading Across Borders in 2006-07.
• The rupee has been appreciating against major convertible currencies particularly the US dollar since September 2006 adversely impacting Indian exports, particularly in products with low import intensity and high employment content like textiles, leather, handicrafts, marine products, etc.
• The developed countries have traditionally been the source and driving force of growth of world output and trade and have controlled both the direction and decision making process of globalization. Over the last few years, several irreversible changes have occurred - an important change being the much faster growth of developing economies vis-a-vis developed economies.
• Over the last decade, emerging markets and developing countries has emerged as the main drivers of growth. As per the projections, exports of the emerging markets and developing countries are expected to grow at about 9% in the next two years while the advanced economies are expected to grow at only about 4-5%. A paradigm shift has occurred in the generation of wealth and world trade with emerging economies like China, India, Russia, Brazil etc. taking their rightful place. The world at present is at a critical juncture in economic power sharing.
• Keeping the current international scenario in view, there is a need for a new architecture of international relations which should be based on trust and mutually beneficial integration. With economic power of the emerging markets accounting for a larger share of global GDP, China, India, Russia and other crucial players need to be brought to the table of international policymaking.
• It is quite clear that there is no one truth, no one single model that works for everyone. As the countries are different by geography, by the structure of their economies, their resource endowments and goals of developing, the policy prescriptions for structural adjustments, trade liberalization and other financial integration have to be adjusted to country specific requirements. The participating countries need to be provided adequate flexibility in this regard.
• The agenda for world trade negotiations need to be more receptive to the needs and sensibilities of the developing countries and LDCs. Since development issues lie at the heart of the current Round of Negotiations, the key to the negotiations, therefore, should be firstly to ensure that this Round delivers for development. Secondly, it should help developing countries to integrate into the world trading system and take advantage of opportunities since many developing countries also need assistance in building up their capacity to make use of multilateral trade liberalization.
• Agriculture should remain at the heart of the negotiations since the livelihood concerns of more than billion resource poor farmers depend on it. However, it is the manufacturing and the services sectors that would contribute to the bulk of GDP growth in the post liberalized economic order. Therefore there has to a delicate balance between the defensive agenda on agriculture and the relatively offensive agenda on Services and NAMA.
• Efforts to create more non-tariff barriers in the various forms need to be discouraged. Labour standards and environmental issues must take into account the degree of development and huge costs that the developing countries have to bear to achieve these.
• ICC, India with its interface with government, corporate sector and academics has been playing a critical role in facilitating flow of foreign investment into the country and in promoting international trade. I would like to conclude by thanking ICC, India for their proactive role in furthering India's growth story.

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