SOCIO-ECONOMIC VOICES

-Siddhartha Roy,Former Economic Advisor, Tata Group
WTO Meet-Is it Much Ado About Nothing
The twelfth ministerial of WTO is going to be held between November 30th and December 3rd of 2021. For a change, the participants don’t seem to have high hopes

The twelfth ministerial of WTO is going to be held between November 30th and December 3rd of 2021. For a change, the participants don't seem to have high hopes. In recent years, the multilateral trading system and its dispute resolution Appellate Body both have been reasonably ineffective. During the Covid pandemic, WTO which is supposed to be a provider of public good did not take any proactive measure to prevent the sharp decline in trade and income nor did it provide any pandemic security architecture. The vaccine raw material supply chain was kept open through bilateral discussions, India-USA collaboration is a case in point. In the TRIPS Council meeting held on 15-16 October 2020, India and South Africa jointly suggested a temporary “waiver of certain provisions of the TRIPS Agreement” in order to ensure access to vaccines and anti-covid therapeutics. The revised proposal has been submitted by Oct 2021 to the general council meeting. However, this is still hanging fire, there isn’t much confidence that the issue will get sorted out during the ministerial. According to an UNCTAD report, developing countries are likely to lose $2.3 trillion of income due to delayed vaccination. In fact, by 2025 these countries are likely to be $8 trillion poorer on account of Covid.

There is no doubt about the vantage position that WTO occupies even today, it is the ultimate trade negotiation related rule-making platform. So countries have to participate in it or else they will be left out. Its consensus approach has led to inordinate delay in decision making, which in its turn could have forced countries to look for quicker alternatives like bilateral trade arrangements and regional trade arrangements. However, these did not clash with the basic philosophy and workings of WTO.

What is more worrying at this juncture is-within WTO a new narrative in the form of Joint Statement Initiatives has started raising its head. These Joint Statement Initiatives are basically plurilateral negotiating strategies used by a group of WTO members. Like-minded countries start negotiations on issues important to them while keeping other members of WTO out of it. Had it been open and transparent it would have been less of a problem, in many cases, it is “exclusive” in nature. Two such issues which are of importance to India are e-commerce and investment facilitation. Exclusive plurilaterals are becoming a springboard for introducing new issues which were not there in the agenda earlier. In fact, India and several other developing countries have always questioned the legality of such moves as per WTO rules. At this stage, it needs to be mentioned that the tariff moratorium on e-commerce items need to be discussed amongst all members. The developing countries should have sufficient policy space in this area.

While new issues are becoming the focus areas for developed countries, the developing countries' interests as articulated in the Doha Development Agenda seems to have been put on the back-burner. The less than optimal peace clause or marginal tinkering with the food security and minimum support price issue, cannot correct the historical asymmetry and inequality in the Agreement on Agriculture (AOA). Bulk of the developing countries' subsidies have got into the Amber list whereas bulk of developed country subsidies are in the Green box.

Our food security programme and MSP escalation come under the de-minimus clause. It cannot exceed 10% of the value of the output. Ironically, a study by WTO centre IIFT shows that the subsidy per farmer in India was $282 in 2018, for some of the agriculturally advanced countries like USA it was $ 61,286, for Canada $13,010, for EU $8,588 in 2016. In other words, the subsidies in the developed countries are substantially more. The entire AOA needs a revisit, possibly a restructuring from the point of view of developing countries, otherwise, the asymmetry in subsidy and the inequity in AOA would continue. Procurement for food security programme should be excluded from “Aggregate Measure of Support”, provided it is not diverted for exports.

Transparency is indeed an integral part of the WTO process. This transparency obligation is dependent on the notifications issued by the country concerned. It seems that by 2025, developing countries are about to be shamed through direct mention and fined for delay in notification issuance a proposal to this effect is being discussed by developed countries. Against this background, it may be worthwhile to mention that several developed countries themselves have refused to disclose aggregate measures of support for two years when the time limit is 120 days.

It appears that fisheries subsidy is one area in which Director-General Ngozi Okonjo-Iweala wants conclusive results. The revised draft text that is likely to come up for negotiations is totally biased in favour of large scale commercial fishing countries, like China, USA, EU, Japan, South Korea and Taiwan. They have exploited marine resources to the hilt, which are a part of the global commons. The overfishing and excess capacity in this industry is due to subsidies provided to commercial fishing. The draft text in its present form is totally imbalanced. India has made several suggestions these include countries engaged in fishing beyond their exclusive coastal area should stop giving subsidies for areas beyond the exclusive coastal zone. The large fishing fleets are unlikely to agree as they have been enjoying these privileges for 25 years. On the other hand, developing countries need 25 years to improve their fishing capability and subsidy should be allowed. It should not be a special and differential subsidy issue for developing countries subject to a time limit.

Finally, multilateral negotiations cannot be one-sided or asymmetric. It is indeed reassuring to find that India and developing nations aligning to preserve the essence of balanced negotiations by raising subsidy issues in agriculture and fishing. The lack of resources in the dispute resolution system hopefully will get sorted out. The TRIPS Waiver related issues in the context of Covid would enhance the level of trust amongst members. Lastly, new issues cannot be decided through exclusive plurilaterals.

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