Feb 15, 1993

CLINTON'S MOVES ALARMS SOUTH ASIA.

NEW DELHI, FEBRUARY 11 (IPS/RANJAN ROY) The sting of United States trade policy under Bill Clinton will be first felt by South Asian economies sooner dm expected, officials and trade specialists say.

The first moves by the new administration in Washington have set off ripples of unease in the Indian capital. Few South Asians had expected Clinton to have a soft trade policy, but many had hoped for a clearer statement before the first strikes.

Trade specialists here warn a protectionist U.S. could hurt efforts underway particularly in India, Pakistan and Sri Lanka to reinvigorate economies by boosting exports.

"United States seems bent upon perverting the anti-dumping system with protectionist intent", says a senior official in the Commerce Ministry here.

India, Pakistan, Sri Lanka and Bangladesh send the bulk of their exports to the U.S. market. However, India, as the region's industrial powerhouse, is the most vulnerable to Washington's threats to get tough on trade.

Dhaka's garments and jute exports and Pakistan's carpet exports may not immediately attract attention.

Trade analysts here worry the anti-dumping axe will first fall on Indian pharmaceutical.

In his second week as U.S. Trade representative, Mickey Kantor threatened to keep out European bidders from federal-government contracts, imposed tariffs on steel imports, and filed anti- dumping cases.

These moves coupled with talk in U.S. Congress of reintroducing the super 301 legislation which allows Washington to impose unilateral sanctions to prise open markets, have already panicked Japan. Foreign Minister Michio Watanabe rushed to Washington this week to talk things over with Clinton.

India can expect anti-dumping retaliation if it tries to raise the volume of pharmaceutical exports to the U.S., warns M. C. Verma an international trade specialist here.

Ethyl corporation, a U.S. drugs giant recently accused India of dumping ibu-brufane, a well-known pain killer.

Though dumping is strictly an act which affects only domestic industry, "U.S. is insisting on finding dumping in every case and injury in every case", says the Commerce Ministry official.

The feeling in official quarters here is that a new North-South polarisation may be emerging with Kantor's office showing scant respect for multilateral trading systems.

In the case of British Gas, which pulled out of Ecuador in 1991, drilling was carried out in an area that measured just 300 square metres.

One environmentally friendly method being adopted is the use of cluster drilling of several directional and horizontal wells from a singe pad.

Others include the reinjection of all produced water; botanical and archaeological monitoring during construction and reforestation projects. Companies also claim to discourage colonisation by limiting the construction of road and bridge links with equipment brought in by helicopter.

Oil companies are also adopting a "hearts and minds" strategy to win approval of local populations by paying for schools and medical facilities in their areas of operation. They are also helping to fund and supply basic tools, food, medicine, clothing, petrol and supplies to local community.

Oil executives with a company active in Colombia are particularly concerned about the employment of nationals and the development of closer links with the local community and environment groups.

"We make sure that the locals are fully acquainted with what we are doing and keep in close touch with environmental organisations and institutions. We also employ a local environmentalist who has good connections with these groups", said a British oil company active in Colombia.

However, environmental groups remain unimpressed. "The story being told by oil companies is very different from the one being told by indigenous populations", says British Friends of the Earth spokesperson, Simon Counsell. "The lists of complaints is endless", he said.

Counsell points in particular to the experience of Ecuador's oil-rich Orient region, citing oil spillages, the abuse of traditional land rights and large scale colonisation of areas opened up as a result of exploration activity.

"Oil companies are getting away with the lowest possible operating standards. Even basic safeguards and principles of environmental protection are ignored or flouted in obscene ways".

"In general the requirements that oil companies need to meet in their country of origin are simply not met in developing countries", said Counsell.

Whatever the truth concerning the environmental record of oil countries, the growing political clout of the environmental lobby and pressure to tighten still further environmental regulations is likely to complicate moves by Latin America to attract large scale in-flows of foreign oil investment.

The environmental issue may not in itself be the deciding factor on whether to invest in Latin America but it will have a relevant impact on investment decisions. Not only will more stringent environmental regulations raise company costs but they could also delay operational programmes.

As oil companies are only too aware the open door policy being adopted in the former Soviet Union, South East Asia and the Far East has left them with far more attractive exploration opportunities than they could possibly use.