Yet another WTO Ministerial Conference has ended with the 164 members of the organisation failing to agree on how to take the agenda of the organisation forward.
Yet another WTO Ministerial Conference has ended with the 164 members of the organisation failing to agree on how to take the agenda of the organisation forward. At the end of the 11th Ministerial Conference (MC11), there should be no doubt that the WTO has lost its way. Trade ministers have failed to deliver a work programme for the WTO for the second time in a row—a first for this 22-year-old organisation. In the past, failures of the Seattle Ministerial (1999) and the Cancun Ministerial (2003) were quickly put behind with members agreeing to work together. Like in Seattle and Cancun, MC11 ended without a Ministerial Declaration. Thus, while the Declaration at the Nairobi Ministerial (2015) showed deep divisions among the members, the absence of one at MC11 can only be interpreted as widening differences. An obvious reason why MC11 failed was the refusal of the US to engage. The largest economy being absent at the negotiating table was a strong reason, but this doesn’t explain the failure in its entirety; other processes, like climate-change negotiations and the TPP have found ways of continuing without the US.
Should it then be argued that, unlike these processes, none of the WTO members are interested in steering it away from choppy waters? The members should introspect, both individually and collectively, and provide an answer. If no answer is forthcoming, they should not hesitate to close shop in Geneva. But, before closing shop, which may be on the agenda of other leaders besides US president Donald Trump, members must indicate how the rules for global trade will be developed and implemented. FTAs don’t seem to be particularly favoured—plenty of questions have been, and are being, asked about their outcomes, including by our own political parties. Therefore, governments must take the responsibility of informing all stakeholders as to how they intend to prevent the global economy from lapsing into the dangerous days of the inter-war years, when, in the absence of agreed-to trade rules, the world experienced its worst economic depression.
Those following the run-up to MC11 knew weeks earlier that it was headed for failure. A bunch of countries, barely a fifth of the total WTO membership, had forced discussions on divisive issues like e-commerce and investment facilitation. There was a hypocritical element in the way these countries introduced the issues; they argued that these have a strong development dimension since MSMEs would benefit by developing WTO rules. These countries therefore spoke of eliminating tariffs on e-commerce and removing restrictions on foreign investors. Elimination of tariff on e-commerce would result in complete trade liberalisation of goods (both agriculture and industry), something that most developing countries aren’t willing to do at present. It may be pointed out that one of the reasons for the current stalemate is developing countries resisting the pressures of the larger economies to even reduce tariffs, let alone eliminate them. These countries have argued that their small farmers and MSMEs would find it difficult to compete with the transnational corporations, and as a result, livelihoods would be lost and domestic food security would be under threat in their economies.
Despite these arguments being on record, the so-called “Friends of E-commerce for Development” (FED) argued that small farmers and businesses would benefit. These countries didn’t want to recognise the fact that in most developing countries, poor digital infrastructure would not allow the professed benefits to be secured. Also, promotion of e-commerce would result in free-flow of personal data, concerns about which have been expressed in many countries like India. The good news is that the MC11 could not make any headway on this issue. Investment facilitation was a divisive issue since the WTO members had rejected extending rules of the organisation to cover investment. Of late, investment rules for investor-protection have become very contentious in many developing countries, including India, because investors have initiated a slew of cases against host governments by invoking the investor-state dispute settlement (ISDS) mechanism. India’s present government had reworked the rules for investor protection in 2015 in response to these cases, to limit the use of ISDS. At the end, the inevitable happened in Buenos Aires—there was no decision on this issue.
It seems India’s only interest was protecting its interests in agriculture, especially finding a “permanent solution” to the vexed issue of public stockholding (PSH) for food security purposes. The WTO’S agriculture subsidies’ regime makes it difficult for India to implement the Food Security Act. At the Bali Ministerial Conference (2013), India was able to negotiate a “peace clause”, which said that even if it violated the rules on subsidies, no dispute in the WTO will be initiated until a “permanent solution” was found. But, while pushing its interests in PSH, India found itself on a tricky wicket during MC11. The pressures from a number of countries resulted in a draft text on permanent solution on PSH, which India could not have accepted under any circumstances. Finally, there was no decision on this issue, too.One factor that must be mentioned is the last minute intervention by India to push its offensive agenda. India brought a proposal to link grant of patents based on biological material to the protection of biological diversity.
‘This is an absolute “no” for major transnational corporations who want to free-ride on the genetic material available in developing countries, without compensating the provider countries. While the Indian delegation needs to be commended for taking this offensive stance, it should also draw a lesson from this experience—without an offensive agenda, the country’s core interests cannot be protected. This is the biggest takeaway for India from MC11.