Insights into Editorial: Talking fair trade in Delhi

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Insights into Editorial: Talking fair trade in Delhi


         

Context:

India will host the second mini-ministerial meet of the World Trade Organisation (WTO). It is a kind of preparatory meeting to set a common agenda at the 12th Ministerial Conference, scheduled for June 2020 at Astana, Kazakhstan.

About 25 developing countries will be participating in a meeting to be held in the national capital from May 13-14 to discuss various issues related to the World Trade Organisation (WTO).

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 commerce ministry has already received approval from the Election Commission to hold this mini-ministerial meet. EC’s nod is necessary since the model code of conduct is in place.

 

Previous 11th Ministerial Conference (Buenos Aires, December 2017) collapsed:

The U.S. has refused a reduction in subsidies and also pulled back on its commitment to find a perennial solution to public stockholding which is an issue central to developing and less developed countries.

Developed nations created alliances to prepare the ground to push nascent issues such as investment facilitation, rules for e-commerce, gender equality and subsidy on fisheries, while most developing nations were unable to fulfil or implement rudimentary dictums.

In fact, the deadlock left many trade analysts wondering whether this was the beginning of the end for the WTO.

 

Second mini-ministerial meet Targets:

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.

US had accused that developing countries like India and China benefit from exemptions meant for the poorer nations.

Negotiations on issue of subsidies and public stockholding – issues central to developing and less developed countries.

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

The expectation is that the meeting may lead to policy guidance on issues such as global norms to protect traditional knowledge from patenting by corporates, protection through subsidies, e-commerce, food security and continuation of special and differential treatment to poor economies.

Therefore, this meet acts as a preparatory meeting to set a common agenda at the 12th Ministerial Conference which will be held next year.

 

Issues in Agreement on Agriculture (AoA):

The AoA seeks to put a limit on the subsidies given by developing and developed countries to their farmers.

However, according to the recent OECD report, the developed countries have been giving higher number of subsidies to their farmers as compared to developing countries.

Countries such as USA have refused to reduce their farm subsidies, adversely impacting the farmer sector in developing and poor economies.

India has been demanding a permanent solution on Public stockholding in order to implement National Food Security Act

At the Bali ministerial conference in December 2013, India secured a “peace clause”.

Under it, if India breaches the 10% limit, other member countries will not take legal action under the WTO dispute settlement mechanism.

Further, in 2014, India forced developed countries to clarify that the peace clause will continue indefinitely until a permanent solution is found.

 

Stringent non-tariff measures (NTMs):

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. 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.

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

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.

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.

 

E-commerce has been a key agenda:

It was agreed to ‘establish a work programme to examine global e-commerce, with a focus on the relationship between e-commerce and existing agreements.

The developed countries led by USA have been pushing forward for a comprehensive agreement on E-Commerce under the ambit of WTO.

As part of this agreement, the developed countries have put forward a number of proposals which include tackling barriers that prevent cross-border sales.

Addressing forced data localization requirements and permanently banning customs duties on electronic transmissions, among others. India has clearly stated that it is against any binding rules in e-commerce.

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

 

Conclusion:

Now the world has changed and multilateral institutions now have to embed these changes.

Today’s WTO crisis might well be the last-ditch battle to retain control over a Western-centric organisation.

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.

The WTO needs to be sustained as countries need an international platform to formulate trade rules and bring convergence on divergent matters.

The time has come for the emerging economies and the developing world to have a greater say in how to shape multilateralism and its institutions.