WTO and India

MC12 over, it’s ‘gains’ for the developed world

Note4Students

From UPSC perspective, the following things are important :

Prelims level : TRIPS waiver

Mains level : Paper 3- WTO and India

Context

The 12th Ministerial Conference (MC12) of the World Trade Organization (WTO) was concluded recently. A cursory examination of the outcomes of the meeting leaves us in no doubt that the European Union (EU) and some other developed countries are the overwhelming winners, while India finds itself on the losing side.

Background of TRIPS waiver for Covid related  treatment

  • On October 2020, India and South Africa put forth a proposal seeking to temporarily suspend the protection of intellectual property rights such as patents, copyrights, industrial designs and trade secrets, so that the production of vaccines, therapeutics and diagnostics could be ramped up to help overcome the crisis and fight the COVID-19 pandemic.
  • The opponents of the proposal, i.e,. Germany, the United Kingdom, Japan, Switzerland and the United States, found themselves on the wrong side of the global opinion on this issue.
  • In June-July 2021, the U.S. gave its support to the proposal, but limited it to vaccines.
  • Pushed into a corner, the European Union (EU) made a counter-proposal to undermine the proposal made by India and South Africa.
  • This counter proposal provided a cosmetic simplification in certain procedural aspects of compulsory licensing in patent rules.
  • By March 2022, India and South Africa were corralled into accepting the EU’s proposal.
  • This formed the basis of the final outcome at the MC12.

Gain for EU at MC12

  • The ministerial outcome on the so-called TRIPS waiver represents the biggest gain for the EU.
  • The ministerial outcome adds very little to what already exists in the WTO rulebook.
  • The final outcome is almost unworkable; a big public relations victory for the EU.
  • Change in institutional architecture: In the name of WTO reform, the EU sought to make fundamental changes to the institutional architecture of the WTO.
  • It also sought to give a formal role to the private sector in WTO.
  • Environmental issues: The EU has also managed to create a window to pursue negotiations on issues related to trade and environment at the WTO, an issue of concern for many developing countries.

Disappointments for India

  • No solution to public stockholding issue: India, the issue of a permanent solution to public stockholding was identified by the Indian Minister of Commerce and Industry as being its top most priority.
  • Despite having the support of more than 80 developing countries, this issue has not found mention anywhere in the ministerial outcome.
  •  Instead, the WTO members have succeeded in diverting attention from India’s interest by agreeing that food security is multi-dimensional, requiring a comprehensive solution.
  • No taxing electronic transmission: India has also failed in many of its other objectives, such as securing the right to raise revenues by taxing electronic transmissions.
  • In the area of fisheries subsidies, it gets two years to have suitable regulatory mechanisms in place to monitor fish catch and reporting.
  •  Although it has secured a temporary reprieve to provide subsidies for enhancing its fishing fleets, it will have to fight an uphill battle on this issue in future negotiations.

Conclusion

Overall, the path ahead for India at the WTO is difficult. India’s negotiators need to undertake soul searching to learn lessons from the dynamics at the MC12, and make course corrections.

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Back2Basics: Public stockholding issue

  • Under the WTO’s Agreement on Agriculture, government procurement for public stockholding programs is exempt from discipline if stocks are procured at current market prices.
  • If procured at pre-announced administered prices, however, those outlays would potentially be counted toward a country’s overall limits on trade-distorting support.
  • Some developing countries are concerned that their procurement of food at fixed prices under these programs may push outlays to exceed allowed limits, thus depriving them of the necessary policy space to meet domestic food security requirements.
  • In this context, India and other members of the G33 developing country coalition have called for WTO members to agree to a “permanent solution,” following the 2013 Bali decision to exempt these programs from legal challenge under certain conditions.
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