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The WTO must unite on core issues

The WTO must unite on core issues

Context:

India is hosting an informal WTO ministerial meeting in New Delhi on March 19-20. Trade ministers, senior government and WTO officials from Africa, Asean, the EU, the US, China, Japan, Korea, Brazil, and many other countries will brainstorm over crucial global trade issues in an informal setting.

The basic issues

Agriculture:  An annual subsidy of over $260 billion by developed countries enables their farmers to export at a low price. Developed countries want poor countries to lower import duties, so that they can export more subsidised produce while poor countries say cut subsidy first. For the rich, the issue is trade; for the poor, it is survival.

The Minimum support price (MSP) provided by the Indian government for achieving the food security is generally higher than the prevailing market price. MSP does not meet all conditions of the WTO rules. Seeking a permanent solution to the issue of food security is India’s foremost concern. It appears as though the WTO deals with trade in a cold, heartless manner with no respect for basic human needs.

Digital Business:

 Most online business is owned by the likes of Google, Amazon, or Facebook. Developed countries want rules that ensure a free run to these companies across the world. But many countries feel that the digital business is still evolving. Today there is no consensus even on the definition of e-commerce or digital product.

Fisheries Subsidy:

The countries led by the EU, the US and Japan provide the most subsidy — 65 per cent of the total annual $35-billion fisheries subsidy. But as these subsidies are largely non-specific or Green Box, they are in the clear. Poor countries mostly give direct subsidy which the WTO considers bad.

Services:

The sector contributes to 70 per cent of the world GDP, but only 20 per cent of world trade. Country-specific domestic regulations (DR) act as the primary barriers to services trade. In the same way, high tariffs hinder goods trade. Developed countries have a clear lead over others as they have a robustly implemented DR set-up. Now they want others to use these. India and other developing countries must rush to create their own DRs.

Investment:

The inclusion of investment as a subject in the WTO was rejected in 1996 because the WTO makes rules for trade. Most countries feel this is only a small part of the investment regime and hence should be left as it is.

Trojan Horses:

 At MC11, joint declarations were adopted on promoting the participation of MSMEs and women in trade. But African countries, India, and many others stayed away apprehending that these could lead to a discussion on market access issues which are already being discussed in other negotiating groups.

Institutional Crisis:

President Donald Trump’s use of the ‘threat to national security’ provision of the WTO for imposing tariffs reveals his disdain for the WTO process. This clause empowers a country to take any action to counter a threat to its national security. It is like pressing the nuke button, which is the last resort, and hence rarely used. The entire WTO membership must confront and oppose Trump before it is too late.

The final objective

Improving the standard of living of people and ensuring full employment are two of the important stated objectives of the WTO. Many countries need to reconcile their negotiating positions with these. It is hoped the WTO Delhi 2018 event will create goodwill, and lead to the development of a common position on important trade issues.

 

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