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Insights into Editorial: Charting a trade route after the MC12

 

 

Context:

The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) is being convened in Geneva, Switzerland at the end of this month, a year-and-a-half after it was scheduled to be held in Kazakhstan.

The MC12 is being held at an important juncture when the global trade scenario is quite upbeat.

 

About World Trade Organization (WTO):

  1. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
  2. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
  3. The WTO’s goal is to help producers of goods and services, exporters, and importers conduct their business.
  4. The WTO Ministerial Conference is the highest decision-making body of the World Trade Organization.
  5. This conference is attended by the Trade Ministers and other officials from the organization’s 164 members. So far from 1996, there have been 11 ministerial conferences.
  6. WTO is a consensus-based, members-driven organization. The main advantage of this approach is that the decision taken is acceptable to all members.
  7. Under the Marrakesh Agreement Establishing the WTO, the Ministerial Conference is to meet at least once every two years.

 

The outlook:

  1. Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend.
  2. The buoyancy in trade volumes has played an important role in supporting growth in economies such as India where domestic demand has not yet picked up sufficiently.
  3. Therefore, these favourable tidings provide an ideal setting for the Trade Ministers from the WTO member-states to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.
  4. But above all, the MC12 needs to consider how in these good times for trade, the economically weaker countries “can secure a share in the growth in international trade commensurate with the needs of their economic development’, an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.

 

Demands of technologies necessary: IPRs and vaccine issue:

  1. From the very outset of the COVID-19 pandemic it had become clear that IPRs protected using the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are formidable barriers to ensuring equitable access to vaccines.
  2. Pharmaceutical companies controlling the global markets have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how, thus undermining the possibility of production of vaccines in these countries.
  3. The involvement of developing countries in vaccine production could have increased supplies of affordable vaccines to the low-income countries.
  4. Availability of vaccines remains a critical problem in these countries even after a year since the first dose of COVID-19 vaccine was administered.
  5. Recent statistics show that until now, a mere 4.1% of the population in low-income countries have received at least one dose of the vaccine.

 

  1. To remedy this situation, India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on “health products and technologies including diagnostics, therapeutics, vaccines, medical devices and their methods and means of manufacture” useful for COVID-19 treatment.
  2. By doing so, barriers created by IPRs to timely access to affordable medical products could be removed.
  3. This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates.

 

Fisheries, e-commerce:

Although discussions on fisheries subsidies have been hanging fire for a long time, there is considerable push for an early conclusion of an agreement to rein in these subsidies.

However, the current drafts on this issue are completely unbalanced as they do not provide the wherewithal to rein in large-scale commercial fishing that are depleting fish stocks the world over, and at the same time, are threatening the livelihoods of small fishermen in countries such as India.

In recent months, the proposal by the members of the Organisation for Economic Co-operation and Development and the G-20 members to introduce global minimum taxes on digital companies has made headlines.

But in the WTO, most of these countries have been investing their negotiating capital to facilitate the expansion of e-commerce firms. Discussions on e-commerce are being held in the WTO since 1998, after the adoption of the Ministerial Declaration on Global Electronic Commerce wherein WTO members agreed to “continue their practice of not imposing customs duties on electronic transmissions”.

Fast forward to the discussions in 2021, and a key focus of the 1998 e-commerce work programme, namely “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations.

On the negotiating table are issues relating to the liberalisation of the goods and services trade, and of course guarantee for free flow of data across international boundaries, all aimed at facilitating expansion of businesses of e-commerce firms.

 

Divisions over investment:

Complementing the current focus of the WTO to promote the global interests of oligopolies is the initiative for the adoption of an investment facilitation agreement.

Inclusion of substantive provisions on investment in the WTO has been one of the more divisive issues.

In 2001, the Doha Ministerial Declaration had included a work programme on investment, but it was soon taken off the table as developing countries were opposed to its continuation because the discussions were geared to expanding the rights of foreign investors through a multilateral agreement on investment.

An investment facilitation has reintroduced the old agenda of concluding such an investment agreement.

The proponents have been careful not to load the agenda by seeking substantial commitments from the Government to promote the interests of foreign investors, but it should be clear even to the uninitiated that the ultimate objective is to bind host governments into a multilaterally agreed commitment to comprehensively protect investor interests.

 

One-sided negotiations:

Besides the bias in favour of global oligopolies, the current negotiating processes in the WTO are fundamentally flawed.

The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner that are also consistent with the objectives of the WTO.

Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO. This will then be offered to the rest of the membership on a “take-it-or-leave-it” basis.

This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”, as India and South Africa have forcefully argued in a submission against the JSIs early this year.

 

Conclusion:

In response to this the WTO may say that free trade has been an important engine of growth for developing countries in Asia. Although there may be some short-term pain, it is worth it in the long run.

Also, the WTO has sought to give exemptions for developing countries; enabling in principle the idea developing countries should be allowed to limit imports more than developed countries.