Talking fair trade in Delhi

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Talking fair trade in Delhi


At the WTO mini-ministerial meet, developing countries must make a case for stable and transparent multilateral trade

 Why in news?

·         India will host the second mini-ministerial meet of the World Trade Organisation (WTO), on May 13-14, 2019.

·         This will be the second mini-ministerial meet to be organised by India. In March last year, over 50 nations participated in a meeting here to explore options for resolving various issues and re-invigorating the WTO.

·         Commerce Minister Suresh Prabhu will chair the meeting of trade ministers and ambassadors to the WTO on May 13-14 and a ‘Delhi Declaration’ showing the way ahead will be drafted at the end of the meeting.

The agenda

·         Overall, it could be a preparatory meeting to set a common agenda at the 12th Ministerial Conference, scheduled for June 2020 at Astana, Kazakhstan.

·         To discuss the interests of developing and least developed countries in global trade, this informal meet will also focus on the accusation by the U.S. that these economies benefit from exemptions meant for the poorer nations.

·         The meeting assumes significance as several countries are raising questions over the relevance of the Geneva-based global trade body. Many countries are also taking protectionist measures, impacting global trade.

·         Recently, the WTO cautioned that the global trade will continue to face strong headwinds this year and in 2020 after growing slower-than-expected in 2018 due to rising trade tensions and increased economic uncertainty.

·         Member countries could deliberate upon issues such as reforming the WTO.

o   India has time and again stressed the importance and relevance of the WTO for promoting global trade.

o   India wants WTO reforms to continue to be seen through a development lens, and is eager for the support of like-minded countries

·         India had appealed to the WTO members to identify common ground for strengthening the multilateral trade body amid challenges being faced by it following the deadlock at the Buenos Aires ministerial meet in December 2017.

The problem at the WTO

·         Despite the earlier outcomes of the ministerial meetings, the Delhi meet has created some hope of it being a platform to resuscitate the WTO.

·         The issues under discussion will relate to protectionist measures, digital trade, fisheries, subsidies, environmental goods, standardisation and implementation of sanitary and phytosanitary measures, and other matters ripe for negotiation and agreement, mainly investment facilitation.

·         From a plurilateral approach toward multilateralism, members may also ensure the sanctity and ‘drivability’ of the WTO.

·         It is, therefore, indispensable to bring mutual accord, mainly on the timelines, to implement policies as an outcome of talks.

Bridging the gaps

·         It may be useful to recollect that the WTO replaced the General Agreement on Tariffs and Trade (GATT) as an international organisation mainly to overcome tussles over trade interests.

o   The economies of the developing and less developed world (with little bargaining power) were unable to gain market access in most of the developed economies (which were influential in negotiations), especially when it came to agricultural commodities.

o   The deadlock on the issue of agricultural trade negotiations, first in the late 1980s and then in 2017, was no surprise.

o   The disagreements between developed countries (the European Union and the U.S.) and developing countries (Malaysia, Brazil and India) to discipline the farm regime in their favour continue, thereby threatening the WTO’s comprehensive development agenda.

·         Rich nations including the US and the EU are questioning the special and differential treatment (S&D) at the WTO for poorer countries — which larger developing countries such as India, China and South Africa are also eligible for — and have argued that they should not have special carve-outs in terms of commitments and implementation timelines.

o   For instance, in the ongoing negotiations on checking fisheries subsidies, the rich countries are unwilling to extend S&D to China and India.

o   New Delhi has been stressing that S&D is one of the essentials of the WTO, and that India has a huge poor population that has to be protected from indiscriminate liberalisation.

·         Another point of concern is that developed countries design and implement stringent non-tariff measures (NTMs) which exacerbate the problems faced by poor countries that are willing to export. NTMs significantly add to the cost of trading.

o   However, the costs of acquiescence with many NTMs are asymmetrical across exporters because compliance depends on production facilities, technical know-how and infrastructure — factors that are usually inadequate in developing economies.

o   These countries are, therefore, unable to compete in international markets and hardly gain from sectors with comparative advantage such as agriculture, textiles and apparels.

·         The ongoing plurilateral talks on e-commerce at the WTO is another key topic.

o   India is not in favour of plurilateral talks at the multilateral forum. It also believes that e-commerce is at too nascent a stage to require multilateral rules.

·         Developing countries are willing to break the deadlock on these issues and are preparing a common ground to jolt the mandate of the global trade body.

o   India, in particular, seeks amendment of laws on unilateral action by members on trade issues and a resolution of the WTO’s dispute settlement system.

Breaking the deadlock

·         Importantly, if the interests of developing and less developed countries are not addressed, ceteris paribus, jargon, convoluted negotiations and dictums will become trivial now and in the future.

o   For example, the 10th Ministerial Conference (Nairobi, December 2015) laid emphasis on agriculture trade. But it was a setback to most agrarian economies, including India and in Africa, when developed countries directly challenged their models of food security designed for the poor.

o   The outcome eloquently showed the constraints of a ‘multilateral negotiation system where the need for agreement and not compromise prevails and allows any member, no matter how small, to block any progress on all issues.

o   In what has become an increasingly politicised environment, members with wide and divergent interests have simply halted the process and refused to negotiate in good faith across a spectrum of issues’.

·         The Delhi meeting can be a breakthrough if members negotiate these issues in a convergent manner. The time is opportune for developing countries to voice their concerns and push for a stable and transparent environment for multilateral trade. India must do its homework to focus on the unresolved issues and address the newer ones which are of interest to developed nations, mainly investment facilitation. The WTO needs to be sustained as countries need an international platform to formulate trade rules and bring convergence on divergent matters.

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