WTO’s changing landscape and India

As with a tenuously crafted outcome, there was some amount of give and take at the 12th Ministerial; but there are also important pathways to ensure fair rules in a rapidly evolving global economic landscape.

WTO’s changing landscape and India
The previous two ministerial conferences (Nairobi in 2015 and Buenos Aires in 2017) had demonstrated growing fissures between WTO members. (Reuters)

By RV Anuradha

A total of 164 member countries of the WTO forged a nail-biting finish to the 12th Ministerial Conference (MC-12) in the wee hours of June 17. The previous two ministerial conferences (Nairobi in 2015 and Buenos Aires in 2017) had demonstrated growing fissures between WTO members. The dispute settlement system has also been dysfunctional since 2019, owing to the United States’ blocking of members to the WTO’s appellate body, and this only exacerbated concerns about its relevance. MC-12, therefore, was a breath of fresh air and a crucial reaffirmation for the WTO.

As with a tenuously crafted outcome, there was some amount of give and take; but there are also important pathways for effective intervention to ensure fair and equitable rules in a rapidly evolving global economic landscape, where the mantra of “free trade” is increasingly qualified with resilience, security, and domestic capacity. A few key ones are discussed below:

(i) MC12’s “Outcome Document” emphasises the need for WTO’s reform, including reviving its dispute settlement function. It also notes the interlinkages of environment and sustainable development with the multilateral trading system. India will need to forge alliances with other developing countries to ensure that these discussions account for “sustainability” for all, with due regard for the balance of rights and obligations under multilateral environment agreements. This is particularly relevant in the context of the EU’s carbon border adjustment measures which mandate imported products to meet the same level of emission norms that the EU implements. UK and Canada may follow suit. Such measures disregard multilaterally agreed rules of different emission norms based on the state of development and aim at protecting the competitiveness of the importing country’s domestic industry—these need to be effectively addressed in the WTO’s rules on trade and sustainability.

In a recent submission to the General Council, India, with several other developing countries, pointed out that “WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances”, and that any reform must be premised on principles of inclusivity and development. This is particularly relevant for the design of trade rules governing subsidies which have traditionally allowed substantial policy space for developed countries’ industrialisation and agriculture, but constrained that of developing countries.

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(ii) The TRIPs waiver decision was perhaps MC12’s most anticipated and most contentious one. While the decision’s limited intellectual property (IP) waiver for Covid-19 vaccines was a compromise over India and South Africa’s original proposal, it includes the commitment that members will decide on the waiver’s extension to Covid-19 diagnostics and therapeutics by December 2022. This is an opportunity that needs to be tenaciously pursued. Another MC-12 declaration, focusing on response to Covid-19 and other future pandemics, highlights the need for building on lessons learned and ensuring preparedness for any future pandemics, including on intellectual property and technology transfer. Working with like-minded countries to ensure a meaningful way forward to implement this would be critical for any real preparedness.

(iii) A permanent solution for public stockholding (PSH) for food security purposes has eluded India and other developing countries since 2015. Nevertheless, the limited protection offered by the Bali Peace clause of 2013 continues to protect our PSH programmes. In the run-up to MC-12, more than 80 developing countries agreed on a proposal for a permanent solution; it is important to carry that forward to make it a reality.

(iv) On food security, MC-12 saw a decision on the supply of foodstuffs to the UN’s World Food Programme for humanitarian purposes, but not on government-to-government (G-to-G) arrangements for export of foodstuffs from PSH stocks to respond to a food security crisis. However, an MC-12 declaration on emergency responses to food insecurity mandating accessibility and affordability of food for those who need it presents a window of opportunity to work towards the latter.

(v) WTO members have, since 1998, maintained a moratorium on customs duties on electronic transmissions. India and South Africa have raised concerns about the resulting revenue loss. A 2019 UNCTAD study highlighted that developing countries, as the net importers of digitalised products, are losing tariff revenues (~$10 billion in 2017) due to the moratorium. The OECD has, however, argued that the moratorium is important for growing consumer welfare and export competitiveness. While the moratorium was extended for two years, it is important to marshal data on the pros and cons of any further extensions.

(vi) A historic new agreement to address fisheries subsidies for illegal, unreported, and unregulated fishing activities, demonstrated the ability of WTO to address environment and sustainability issues. Several elements relating to subsidies that contribute to overfishing/overcapacity have been left open for a later date. Work is therefore needed on two fronts: a clear domestic strategy for fisheries management while ensuring adequate protection for traditional livelihood fisheries, and preparing for equitable rules at the WTO for overfishing and overcapacity, while safeguarding our interests as a developing nation.

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(vii) India also needs a coherent strategy to harmonise its stand under its bilateral FTAs and the WTO, so that one does not undermine the other. Our FTAs with the UK, EU, and others, will venture into areas such as labour and environment. These would need to ensure that the crucial balance achieved in multilateral environmental agreements (e.g., the UNFCCC) or the ILO conventions are not compromised.

The writer is Partner, Clarus Law Associates, New Delhi.

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