The WTO’s Leaky Boat May be our Best Hope in a Storm : Daily Current Affairs

Relevance: GS-2: Effect of policies and politics of developed and developing countries on India's interests.

Key Phrases: Global Food Crisis, Russia-Ukraine War, World Trade Organization, Civil Wars in Poverty-Stricken Nations, 12th WTO Ministerial Conference, Outdated Economic Orthodoxy, Energy Price Inflation, Pandemic, and Climate Change

Context:

  • Russia’s incursion into Ukraine’s sovereign territory has started a new phase in the present geo-economic and geopolitical order.
  • It is being debated that this new European war spells the end of a liberal regime that defined the world order since the fall of the Berlin Wall and the break-up of the Soviet Union.

Key Highlights:

  • The Russia-Ukraine conflict has reactivated many fault lines in the global economy.
  • Despite the many shortcomings that have weakened the institutions, these multilateral platforms like the World Trade Organization (WTO) hold the best chance of confronting these challenges in developing countries like India.
  • A food crisis tops the list of after effects emerging from the ravages of this war.
  • It will generate many second-order effects which could include:
    • Renewed contestation between the West and poor nations.
    • Civil wars in poverty-stricken nations.

World Trade Organization

  • It came into existence in 1995.
  • It is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War in 1948
  • The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade.
  • The WTO’s rules the agreements are the result of negotiations between the members.
  • The current set is largely the outcome of the 1986- 94 Uruguay Round negotiations, which included a major revision of the original GATT.
  • The WTO Secretariat is based in Geneva.

WTO Ministerial Conference

  • It is the WTO’s top decision-making body.
  • The WTO's founding agreement, the Marrakesh Agreement, mandates that the meeting be held every two years.
  • All members of the WTO are involved in the Ministerial Conference, and they can take decisions on all matters covered under any multilateral trade agreements.

What are the key takeaways from the 12th Ministerial Conference at WTO?

  1. Curtailment of harmful fishing subsidies: The WTO passed a multilateral agreement that would curb harmful subsidies on illegal, unreported, and unregulated fishing for the next 4 years to better protect global fish stocks.
  2. Global food security: Members agreed on a binding decision to exempt food purchased by the UN’s World Food Programme (WFP) for humanitarian purposes, from any export restrictions. However, countries would be allowed to restrict food supplies to ensure domestic food security needs.
  3. E-commerce transactions: Member countries agreed to extend the current moratorium on not imposing customs duties on electronic transmission (ET) until MC13 to maintain certainty and predictability for businesses and consumers.
  4. Covid-19 vaccine production: WTO members agreed to temporarily waive intellectual property patents on Covid-19 vaccines without the consent of the patent holder for 5 years.

Reasons for the Emerging Challenges:

  1. The notion of trade in the US and EU is still rooted in an outdated economic orthodoxy.
  2. The WTO’s role has, hence, become non-negotiable, given the severe food crisis confronting the planet.
  3. The pandemic and climate change have amplified the food crisis in 2020 and 2021.
  4. The problem is compounded when energy price inflation (which bleeds into fertilizer prices) and fractured supply chains add affordability to availability problems.

What are the issues being faced by India in WTO:

  1. Criticism of India’s Export Ban:
    • The Western media has been criticising India’s export ban, even though wheat exports during 2021-22 (before the ban was enforced) were only slightly over $2 billion, or a mere 0.5% of the country’s total exports.
    • India’s export bans at the trade body’s first agriculture meet after MC12 met with coordinated protests from seven WTO members including the US, Japan, the EU, and the UK.
    • The protests are sponsored by large grain traders who now fear that India’s ban may extend to even rice exports, which were worth about $10 billion during 2021-22.
    • The food emergency shifted the world’s attention towards India and 29 other countries which banned wheat exports soon after Russia’s war sent grain prices skyrocketing globally.
  2. Use of Outdated data for determining permissible limits of Subsidies:
    • The Western leadership’s stance at the WTO on agriculture has long undermined India’s attempts to ensure food security for its citizens through subsidies at both the production and consumption stages.
    • The formula being used to determine whether these subsidies are within permissible limits is based on outdated data.
    • All attempts by India and other developing countries to seek a permanent solution have met with repeated obstructions.
    • India has met with formal objections at the WTO against its trade-distorting agricultural policies.
  3. Primacy to private profit over public health:
    • The developed nations refused to relax intellectual property rights for global vaccine distribution at the height of the pandemic.
    • These advanced nations decided to put private profit ahead of public health in times of global crisis.

Conclusion:

  • India was compelled to impose an export ban on account of wheat production falling short of forecasts and a decrease in total foodgrain stocks.
  • However, solutions for the supply of grains to the WFP were actually found at the WTO’s 12th Ministerial Conference, or MC12 held recently in Geneva.
  • India and the others agreed to supply wheat to the WFP while being allowed to meet their domestic food security needs.
  • An old strategy seems to be re-emerging that India needs to continue which is displaying its leadership at plurilateral meetings and utilise diverse platforms, including the media in order to deal with recent geopolitical and geoeconomic challenges.
  • Also, India’s best option lies in creating a coalition of developing nations on multilateral platforms.

Source: Live-Mint

Mains Question:

Q. Despite the many shortcomings that have weakened the institutions, these multilateral platforms like the World Trade Organization (WTO) hold the best chance of confronting these challenges in developing countries like India. Elaborate. (250 words).