WTO and India

Global crisis and opportunities for India

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2-Challenges to the globalisation due to covid pandemic, apportunities for India

Multilateralism has been on the decline for some time now.  The corona pandemic has acted like a catalyst to heightene this crisis. China’s role in weaponising the interdependence of multilateralism would have far-reaching consequences to the world as we know it. Yet, the crisis presents India with some unique opportunities. What are these opportunities? How can we save multilateralism? or do we even need to? These questions and such other issues are discussed in the article.

The basic Idea

  • Multilateralism has its benefits like to reduce the further spread of the virus, to develop effective medical treatments, and to curtail the worst effects of the inevitable recession- cooperation among nations will be necessary.
  • But the very foundation of multilateralism is shaking today. Hence, the need of the hour is a meaningful fix.
  • The US faces multiple internal challenges like the divisive Presidential election in November and China is facing a global crisis of credibility.
  • Thus, India is uniquely positioned to help resuscitate multilateralism.
  • New Delhi can assume leadership in strengthening constructive transnational cooperation.
  • India may also help China: Through mediation to temper what is increasingly seen as Beijing’s unilateralist revisionism; revive the promise of the gradual socialisation of China into the international system; and its acceptance of the norms and rules that regulate the principal multilateral institutions.

So, when did the crisis of multilateralism start?

  • The malaise that afflicts multilateralism is not new.
  • 1) The paralysis of all three functions of the World Trade Organization (WTO) — negotiation, dispute settlement, and transparency — was one sign of that deep-rooted malaise.
  • 2) The severely dented credibility of the World Health Organization (WHO) is just another more recent indicator.
  • The pandemic has heightened the crisis of multilateralism, not created it.
  • Pandemic has highlighted the misuse of international institutions (like WHO) and multilateralism is incapable of dealing with it.

Weaponisation of the global supply chain by China

  • Post-war multilateral system was based on the idea of peace and prosperity.
  • It was expected that economic inter-mingling among various countries would lead to peace.
  • Most of the countries of were democratic and countries with a different system of governance were not part of this system.
  • Our multinational institutions were not designed to handle the situation in which one country starts misusing its dominant position in interdependence (ex. global supply chains).
  • The misuse of existing loopholes within the existing rules by China to gain an unfair advantage in trade relations was already attracting critique in the last years.
  • China has been accused of forced technology requirements, intellectual property rights violations, and subsidies.
  • But the pandemic has provided us with some even more alarming illustrations of how damaging the weaponisation of global supply chains can be.

Examples of China weaponising interdependence

  • When India complained that test kits imported from China were faulty, China slammed it for “irresponsible” behaviour.
  • When Australia indicated that it would conduct an independent investigation of China’s early handling of the epidemic, China threatened it with economic consequences.
  • Several actors, including the EU and India, were alarmed at the prospects of predatory takeovers of their companies by China.

Against this background, repeated calls by heads of governments and international organisations urging countries to remain committed to multilateralism ring hollow.

So, what are remedies to save multilateralism?

  • 1. Policies with renewed commitment
  • There is the need for reassurance and policies that reflect a renewed commitment to the raison d’étre of multilateralism.
  • A “retreating” United States must demonstrate that it remains committed to strengthening global supply chains.
  • Global supply chains must be based on the promise of ensuring global stability and the attendant promise of peace and prosperity.
  • 2. Strategic separation of value chains
  • There is an urgent need for some strategic decoupling, handled smartly in cooperation with other like-minded countries.
  • It will undoubtedly cause considerable disruption to existing global value chains.
  • We will be less prosperous. But we will also be more secure.
  • 3. Closer integration with some distancing from others
  • A multilateralism that recognises the need for decoupling will necessitate closer cooperation with some and distancing from others.
  • Membership of such renewed multilateral institutions would not be universal.
  • Rather, one would limit deep integration to countries with which one shares values — such as pluralism, democracy, liberalism, animal welfare rights, and more.

Opportunities for India

  • India is a country whose pluralism, democracy and liberalism have often been underestimated by the West.
  • As some constituencies in the West seek a gradual decoupling from China, they would be well served to look toward India.
  • To make use of the opportunities, for itself and for the provision of certain global public goods, India’s cooperation with like-minded actors will be key.
  • India could work closely with the Alliance for Multilateralism, an initiative launched by Germany and France, to shape both the alliance itself and the reform agenda at large.
  • Working together with a group of countries from the developed and developing countries could further amplify India’s voice.
  • China may recover faster than most economically, and its military might remains intact, its image as a reliable partner has suffered a huge dent.
  • India could lead a coalition to bridge the deficit of trust between China and the rest of the world.

Consider the following question “Covid pandemic has been acting as a catalyst in precipitating the fall of global order and multilateralism. At the same time, we are well aware of the utility of the multilateralism. Examine the opportunities that falling global order provides for India in restoring it in the new form.”

Conclusion

The disruption in the global order provides India with a unique opportunity. One the one hand it has to steer the gradual decoupling with China and on the other hand, it has the opportunity to lead the coalition to bridge trust deficit with China. India should not squander these opportunities.

 

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