GS 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests; Important International institutions;
GS 3: Effects of liberalization on the economy; Issues related to direct and indirect farm subsidies and minimum support prices
Key Phrases: World Trade Organization, Reforming WTO, sustainable and effective multilateral trading system, plurilateral agreements, special and differential treatment, fisheries subsidy, Appellate mechanism, Patent Waiver
Why in News?
12th ministerial of the World Trade Organization (WTO), scheduled to start from November 30, gets deferred indefinitely due to emerging Covid situations. Due to it fate of several critical issues relevant to WTO reforms hangs in balance.
World Trade Organization (WTO)
It is the only global international organization dealing with the rules of trade between nations. The primary purpose of the WTO is to open trade for the benefit of all.
Headquarters: Geneva, Switzerland
- Founded: 1 January 1995
- The WTO has over 160 members representing 98 per cent of world trade. Over 20 countries are seeking to join the WTO.
- Roles:
- it operates a global system of trade rules,
- it acts as a forum for negotiating trade agreements,
- it settles trade disputes between its members and
- it supports the needs of developing countries.
- Organization chart
- The WTO's top decision-making body is the Ministerial Conference. Below this is the General Council and various other councils and committees.
- Ministerial conferences usually take place every two years.
- The General Council is the top day-to-day decision-making body. It meets a number of times a year in Geneva.
Key Points: Reforms proposed by developed countries:
Two detailed documents of the European Union that are in public domain
- Concept paper on WTO modernization (2018)
- Reforming the WTO: Towards a sustainable and effective multilateral trading system’ (2021)
provide indicators what the developed countries would come out with on this issue.
What the Reforms can be ?
1. For revitalising the negotiating function of the WTO, EU has identified WTO’s tradition of decision making by consensus as a huge challenge in negotiations among 164 members.
- It is also pushing for creating a flexible approach whereby agreements reached among a limited number of WTO members — technically called plurilateral agreements — can be integrated into the rulebook even without the endorsement of the entire membership.
2. The EU aims to make fundamental changes to the mandate and functioning of WTO committees, supposedly for improving their effectiveness.
- It also attempts to allow the committees to have a “deliberating function”, which would permit issues outside the WTO rulebook to be discussed, even without a mandate from the entire membership.
- Further, it is of the view that some committees should be downsized and resources diverted to other committees.
3. The EU desires to change the member-driven character of the WTO.
- Its objective is to expand the role of the WTO Secretariat in different aspects and making it a more active player, including in negotiations.
- In addition, it appears to be creating the ground for providing a formal role for businesses and private sector in WTO processes, through a consultative or advisory committee.
- Finally, the EU wishes to deepen cooperation with other international organisations, even without any mandate from the membership.
4. With the objective of promoting transparency, the EU has proposed sanctions for wilful and repeated non-compliance with notification obligations.
- Punitive actions for violation of notification obligations include naming and shaming of the defaulting country and limiting rights of the defaulting member to participate in WTO proceedings.
5. The EU proposes a new approach to special and differential treatment of developing countries.
The EU has proposed that countries that meet any of the following criteria should take full commitments:
- OECD membership,
- Country classified as ‘high income’, and
- Countries with a sufficiently high share of global exports.
Special and differential treatment is a fundamental principle of the multilateral trading system, whereby developed countries do not expect full reciprocity in trade negotiations from developing countries.
- S&DT allows developing and poor (less developed) countries to enjoy certain benefits, including taking longer time periods for implementing agreements and binding commitments, and measures to increase trading opportunities for them.
- Currently, any WTO member can designate itself as a developing country and avail these benefits.
- There has been persistent attack by the US on countries, including China and India, for “self-designating” themselves as developing nations at the WTO to enjoy special and differential trade benefits.
Issues:
- In the name of institutional reform, the developed countries are seeking to acquire almost absolute rights to decide the issues on which to initiate negotiations and conclude final deals, thereby further marginalising the voice and role of developing countries.
- In the absence of decision-making by consensus, developing countries would find it near impossible to pursue issues of their interest in the negotiations.
India’s key demands at WTO includes:
- A permanent solution to its public procurement programmes for
food security,
- It is the foremost among the demands by India and the rest of the so called G-33 (a coalition of developing nations)
- India’s key procurement programmes are protected from penal provisions under a peace clause secured at the WTO’s Bali ministerial in 2013 (its permanent status was affirmed in late 2014).
- But some countries started making fresh demands on safeguards and transparency obligations after New Delhi invoked the peace clause for its rice procurement in 2018-19 and 2019-20.
- India has been seeking a lasting solution at the WTO so that this protection under the permanent peace clause gets further bolstered
- India also seek a special safeguard mechanism for developing
nations, along the lines of the one available to the developed ones,
to protect their farmers from any irrational spike in imports.
- A patent waiver to manufacture Covid-19 vaccines,
- It is to put pressure on developed economies like the EU for an intellectual property rights waiver for Covid-19 vaccines and supplies to better fight the pandemic across the globe.
- The proposal–floated jointed by India and South Africa a year ago–has faced stiff resistance mainly from the EU, the UK and Switzerland, although the US, after initial reluctance, endorsed the waiver.
- No immediate end to fishery subsidy for most developing
countries,
- India favours a 25-year exemption from over-fishing subsidy prohibition for developing countries that are not engaged in distant-water fishing.
- At the same time, it suggests big subsidisers abolish their dole-outs within these 25 years, taking greater responsibilities, setting the stage for most developing nations to follow suit.
- Massive subsidies, extended mostly by large fishing nations, have contributed to the overexploitation of the world’s fish stocks.
- An independent study suggested that fishery subsidy in India stood at only $227 million in 2018, way below $7.26 billion in China, $3.80 billion in the EU, $3.43 billion in the US, $3.19 billion in South Korea and $2.86 billion in Japan.
- India has rooted for a policy of voluntary forgoing of “status for self-designating” themselves as developing nations.
- New Delhi has also called for expeditious restoration of the almost
dysfunctional Appellate Body of the WTO for dispute resolution,
without diluting its core features.
- The US has blocked the appointment of judges, thus crippling the WTO’s appellate mechanism.
Further, negotiations in technical committees, without political inputs, run the risk of proposals of developing countries getting impeded by legal web that could be spun by the developed countries.
- Downsizing some of the committees could curtail the institutional
avenues available to developing countries for articulating issues of their
interest.
- Developing countries already grapple with formidable odds and power asymmetry at the WTO. Active involvement of business interests of the developed countries in WTO processes and expanding the role of the WTO Secretariat would further deepen the power asymmetry between the developed and developing countries.
- At a time when countries such as India and Brazil are fighting hard to reform the UN Security Council to make it more legitimate, effective and representative, attempts are being made by the developed countries to take another international institution — the WTO — in the opposite direction.
Overall, the vision of the developed countries would make the WTO an instrument for unabashedly promoting their commercial interests, without any meaningful concern for the interests of the developing countries, who constitute the large majority of its membership.
Conclusion:
Such an outcome would not bode well for survival of the multilateral trading regime. The process of WTO reform must keep development at its core, promote inclusive growth, and fully take into account the interests and concerns of developing countries.
Source: The Hindu
Prelims:
Q. Consider the following Statements regarding WTO:
- It is the only global organization dealing with the rules of trade between nations.
- Its top decision-making body is the General Council.
- All the UNGA members automatically becomes member of WTO
Which of the statement/s given above is/are Correct?
a. 1 only
b. 2 and 3 only
c. 3 only
d. None of the above
Answer: a
Mains:
Q. In light of setback to global economic activities due to Covid-19 pandemic, examine the role of WTO in restoring Global Trade.
