Why India still defends its “developing country” status at the WTO? Explain this dichotomy in India’s development status. (15 Marks)

Mentors Comments:

  • https://www.thehindu.com/opinion/op-ed/still-a-developing-country/article29834940.ece
  • The article highlights that India might face challenges in the future to its status as a developing country in the multilateral forum of the World Trade Organization (WTO).
  • Explain that India is one of the fastest-growing economies in the world. It has made giant strides in recent times in various fields. However, India prefers to be labelled as a developing country.
  • In a brief introduction, explain how and why countries are labelled developing or developed by the WTO.
  • In the main body, explain why India prefers ‘developing country status’? – countries self-designate themselves as ‘developing country’ to take advantage of
  • Provisions like Article XVIII of GATT and other special and differential treatment (S&DT) provisions in the WTO agreements.
  • Discuss the recent developments.
  • Highlight the Principles proposed by the USA on what does not constitute a developing country.
  • Conclude with the way forward.

Answer:

A group of 45 nations including India and China has insisted that countries must be allowed to make their own assessments regarding their developing country status. South Korea has said that it will no longer seek special treatment reserved for developing countries by the World Trade Organization in future negotiations given its enhanced global economic status.

There are no WTO definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries. However, other members can challenge the decision of a member to make use of provisions available to developing countries.

While on the one hand, the official narrative in India is that of a country making rapid developmental strides since 2014, on the other, when it comes to developmental status at the World Trade Organisation (WTO), India is trying hard to prove that it is a poor country.

Developing country status:

  • The “developing country” status allows a member of the WTO to seek temporary exception from the commitments under various multilateral trade agreements ratified by the organisation.
  • Countries self-designate themselves as ‘developing country’ to take advantage of provisions like Article XVIII of GATT.
  • It was introduced during the initial days of the WTO as a mechanism to offer some respite to poor countries while they try to adjust to a new global trade order marked by lower barriers to trade.
  • Developing country status ensures special and differential treatment (S&DT) or provisions which allow them more time to implement agreements and commitments,
  • It includes measures to increase trading opportunities, safeguard their trade interests, and support to build capacity to handle disputes and implement technical standards.
  • These provisions are aimed at ensuring longer transitional periods to comply with WTO obligations and affording technical assistance to countries, among other things.
  • Countries such as India and China, while seeking exception from various WTO agreements, have argued that their economic backwardness should be considered when it comes to the timeline of implementation of these agreements.
  • The issue of farm subsidies, for instance, is one over which rich and poor countries have had major disagreements.
  • The WTO, however, does not formally classify any of its members as a developing country.
  • Individual countries are allowed to unilaterally classify themselves as developing economies.
  • So, as many as two-thirds of the 164 members of the WTO have classified themselves as developing countries.

India still defends its “developing country” status at the WTO:

  • India is a member of the G20 and its share in world exports is around 1.7% as of early 2019. So, as per these criteria, India will not qualify as a developing country.
  • While graduating to a ‘developed country’ status would have been a matter of joy, the ground reality is very different. India rightly countered the U.S.’s argument.
  • In a paper submitted to the WTO, it gave several numbers to show that it is still a poor country and thus requires S&DT provisions.
  • For example, the paper showed that India’s GDP per capita is very low; India has 364 million people living in multidimensional poverty; the domestic subsidies provided to per farmer is a meagre $227; and India has a very low research and development capacity.

Demands by developed countries:

  • For some time now, developed countries, mainly the US, have been asking the WTO to end the benefits being given to developing countries.
  • Nearly two-thirds of the members of the World Trade Organization(WTO) have been able to avail themselves of special treatment and to take on weaker commitments under the WTO framework by designating themselves as developing countries.

Any unilateral action by the U.S. would be a violation of international law and yet another onslaught on trade multilateralism. At the same time, the Indian political leadership also needs to refrain from being on a publicity overdrive about India’s development. At times, its own rhetoric can come back to bite India.

 

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