At a time when West Asia is facing unprecedented destruction, 166 members of the World Trade Organization are set to meet in Yaounde, Cameroon, during March 26-29 for the 14th Ministerial Conference of the WTO (MC14). The director general of the WTO is reported to have declared that this would be a “turning point” meeting. Why is MC14 not being postponed despite the ongoing war, what is at stake at the meeting, and what could be the likely outcomes? Let us consider these questions.
With the attention of world leaders rivetted on containing the economic consequences of the war in West Asia, the MC14 is likely to be an undesirable distraction for most countries. The prudent course would have been to postpone the meeting by at least a few months till peace and stability returns to the region. However, this could have somewhat eroded the negotiating power which the US presently enjoys on account of the success of its bilateral economic coercion and the failure of the larger developing countries to collectively confront the US. The US and its allies hope to carry over this advantage to MC14.
What are some of the key issues being pushed for outcomes at MC14? First, under the garb of reforming the WTO, the US, European Union (EU), and the UK are determined to initiate a work programme to rewrite the foundational principles of the organisation and skew the rules further in their favour. They are attempting to jettison the core non-discriminatory treatment enshrined in the “most-favoured nation” principle; doing away with the practice of decision-making by consensus; and obliterating special and differential treatment provisions in favour of developing countries.
The US and the EU have openly declared their intention to convert the WTO from a multilateral rulemaking body, where all its members are involved in negotiating new rules, into an institution where a handful of countries would negotiate and subscribe to plurilateral rules in the future. On issues of interest to the developing countries, such as reduction in farm subsidies by developed countries, the latter could simply opt out of the negotiating club. As a result, the plurilateral mode of international rulemaking would further dilute the already weak negotiating power of most developing countries at the WTO.
Second, realising that their goal of changing rules for converting WTO into an organisation mainly for negotiating plurilateral agreements would be met with resistance from some developing countries, the developed countries have adopted an alternative strategy. Shooting from the shoulders of many developing countries, they are pushing for adoption of the Investment Facilitation for Development (IFD) Agreement as a plurilateral pact at MC14. If this attempt succeeds, it will create a precedent for plurilateral agreements in future, even if those were to flout the fundamental rules of the WTO.
India, which is the sole influential country left opposing the inclusion of IFD as a plurilateral agreement, is likely to come under intense pressure at MC14 to change its stand on the issue. How India responds to this challenge will determine whether the developed countries succeed in altering the institutional architecture of the WTO to their advantage even without changing its rules.
If the developed countries have their way on plurilateral agreements and WTO reform at MC14, then the institution would be profoundly transformed. A work programme would be set in motion for replacing the rules-based system with a power-based regime. In addition, the leverage of developing countries to influence future negotiations would be considerably diminished under a “reformed” WTO, thereby further marginalising them.
Third, another issue of particular interest to the US is likely to be the moratorium on customs duties on electronic transmissions. At MC14, the US would seek to convert the temporary moratorium into a permanent outcome and also expand its scope to include digital content transmitted electronically. A permanent moratorium would not only deprive developing countries of an important source of revenue but also prevent them from using taxation measures to regulate digitally delivered services.
Some trade experts in India have argued that a permanent moratorium would promote India’s export of IT services. However, this ignores the reality that on account of the existing commitments of the developed countries on cross-border delivery of services, even without a permanent moratorium they cannot impose customs duties on India’s IT services exports. Thus, a permanent moratorium will only entail costs for India but not result in any tangible gains.
Fourth, MC14 is expected to witness tough negotiations on agriculture—a subject in which some export powerhouses are seeking a mandate to relaunch negotiations with new approaches. For India, going back to the drawing board would have far-reaching and damaging implications. The country would have to start its battle on food security afresh. It would also be hard put to defend its minimum support price scheme for rice, wheat, pulses, etc.
Further, new approaches to agriculture subsidy reduction could erode India’s flexibility to provide subsidised power, fertiliser, and irrigation to its farmers, while allowing the developed countries to continue with their high farm subsidies. Finally, global agri-businesses in the US, the EU, and a few other countries would seek to pry open India’s agriculture market by getting it to lower its bound tariffs. This would open the floodgates for cheap imports, jeopardising the livelihoods of hundreds of millions of India’s resource-poor subsistence farmers. It would deal a severe blow to food security, and consequently economic security, of the country.
If India and some of the larger developing countries do not remain resolute in defence of their interests, then MC14 would certainly be a turning point to their disadvantage. The onus is on India to stand firm and create alliances with other like-minded countries, if it wants to prevent the WTO from being deformed into an institution that exclusively serves the interests of the rich and powerful countries.
The author is an international trade expert.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.