Date: 30/08/2022

Relevance: GS-2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests; Important International institutions.

Key Phrases: World Trade Organization, Doha Development Agenda, General Council, International organization, Trade rules, Negotiating trade agreements, Trade disputes, Ministerial Conference, OECD countries, TRIPS, Marrakesh Agreement, Agriculture, the Subsidies Agreement, GATT articles, E-Commerce, Moratorium, WTO Dispute Settlement Understanding,.

Why in News?

• New Delhi is getting a bigger say in global issues but must not let rhetoric get the better of hard work. An arrow has already been shot across the bow of the World Trade Organization (WTO) which, if it travels the distance, could change the global trade grammar.

Background:

• India, along with 44 African countries, Cuba and Pakistan, submitted a note to the WTO during its June 2022 ministerial.
• The 11-page note seeks to correct historical imbalances that were embedded during the organization’s founding in 1995 and put the developing world at a disadvantage.
• India’s efforts at reforming global rules, including the WTO’s structural flaws, have continued across different governments in New Delhi, regardless of their political persuasion.
• For example, the Indian government’s struggle for trade equity at the WTO—particularly its steadfast pursuit of the Doha Development Agenda (DDA) since 2001—has been waged by various regimes, albeit inconsistently.
• The latest submission for reconfiguring the WTO will now be discussed in the General Council, the trade body’s important decision-making body.
• The emphasis will be on reviving some DDA commitments which advanced countries have stalled repeatedly.
• The note states: “WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances.”

Issues need to focus:

Three issues are in sharp focus:

• The first is correcting imbalances in a number of areas:
  • Lopsided agriculture trade rules which allow OECD countries to provide high subsidies and aggregate measures of support to farmers but deny the same to developing nations;
  • Rules for Trade-Related Intellectual Property Rights (TRIPS), which rich nations have converted into a competition thwarting instrument;
  • Disparity in subsidies for promoting industrialization, with advanced economies using them liberally during their industrial development phase but disallowing developing countries the same path to industrialization.
• The second issue is getting the WTO to agree that the world is made up of different countries with differing development challenges and priorities. Implicit in this is the understanding that, depending on the level of development, state intervention of varying degrees will be required to address market failures or achieve development objectives.
• The third issue is the disproportionate impact of covid on developing countries and the WTO’s need to foster international cooperation of a kind that ensures universal and timely access to medical products and a clear pathway to faster economic recovery.

Priorities of reform at WTO needed:

The priorities for reform at the WTO must include:

• The negotiating function of the WTO.
  • Strengthening the multilateral character of the WTO. Critically, this must include the preservation of consensus decision-making and respecting Art. X of the Marrakesh Agreement on Amendments with regards to new rules;
  • Addressing the unilateral and protectionist actions taken by some Members;
  • Reaffirming the principle of Special and differential treatment (S&D), which is a treaty-embedded, non-negotiable right for all developing countries in the WTO;
  • Promoting inclusive growth, widening spaces for states to pursue national development strategies in the broad framework and principles of a rules-based system;
  • Keeping development at its core through delivering on the long-promised development concerns, in particular the outstanding development issues of the DDA;
  • Address the asymmetries in WTO Agreements such as those in Agriculture, the Subsidies Agreement, TRIMS and the related GATT articles (Art. III(national treatment)and XI (general elimination of quantitative restrictions)), TRIPS and other areas;
  • Continuing with the on-going multilaterally mandated negotiations;
  • Reinvigorating the discussions in the 1998 E-Commerce Work Programme particularly looking at the E-Commerce Moratorium and the issues of digital divide.
• The dispute settlement function.
  • Restoring the Appellate Body and the two-tier WTO Dispute Settlement Understanding, and addressing challenges of access to the dispute settlement system by developing countries.
• The monitoring function of regular bodies.
  • Reaffirming existing commitments and not adding more obligations in the areas of transparency; specific trade concerns and the functioning of regular bodies. The WTO must also allow for different economic models rather than push for one form or another.
• COVID-19
  • Responding to the COVID-19 pandemic, including through introducing a Moratorium on trade measures and providing sufficient flexibilities on intellectual property disciplines for developing countries.
  • Such a Moratorium will be in place for the duration of the pandemic for governmental action taken to directly respond to the pandemic.
  • Unlike developed countries, developing countries without deep pockets must be more creative, including by using trade policy measures to provide medicines, diagnostics, health equipment, and to address the serious balance of payments crises many developing countries now find themselves in.
  • To address COVID-19, developing countries should not be asked to relinquish their required trade policy space such as through the permanent liberalization of tariffs or agreement to end the use of export restrictions.

Way forward:

• Covid’s aftermath and the Russia-Ukraine war now fortuitously situates, India in a unique negotiating position, with a slightly larger share of voice in the global governance framework.
• As it happens, India also assumes the G20 presidency this year. The stars seem aligned but will yield results only when hard work trumps rhetoric; currently, double-speak threatens to muddy India’s crusading cape.
• India’s leadership must decide whether it wants to seize this moment or only exploit its rhetorical prospects.

Source: Live-Mint

Mains Question:

Q. “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization.” To fulfilling these objective what reform currently needed in the WTO? (250 words).