From UPSC perspective, the following things are important :
Prelims level : WTO
Mains level : Issues to be discussed in Delhi Mini Ministerial meeting
India will host the second mini-ministerial meet of the World Trade Organisation (WTO), on May 13-14, 2019. To discuss the interests of developing and least developed countries in global trade, this informal meet will also focus on the accusation by the U.S. that these economies benefit from exemptions meant for the poorer nations.
US’s Stern attitude
- The U.S. has refused a reduction in subsidies and also pulled back on its commitment to find a perennial solution to public stockholding
- In fact, the deadlock left many trade analysts wondering whether this was the beginning of the end for the WTO.
Issues Up for discussion
- The issues under discussion will relate to protectionist measures, digital trade, fisheries, subsidies, environmental goods, standardisation and implementation of sanitary and phytosanitary measures, and other matters ripe for negotiation and agreement, mainly investment facilitation.
- From a plurilateral approach toward multilateralism, members may also ensure the sanctity and ‘drivability’ of the WTO.
Issues of concerns
- Disagreement – The disagreements between developed countries (the European Union and the U.S.) and developing countries (Malaysia, Brazil and India) to discipline the farm regime in their favour continue, thereby threatening the WTO’s comprehensive development agenda.
- Support by developed countries to Farms – The expectations of developing countries from trade also get belied due to sizeable support by the developed nations to their farmers in a situation of market failure and other uncertainties.
- OECD’s estimate – The Organisation for Economic Cooperation and Development estimates the quantum of subsidies by developed nations to vary from $300 to $325 billion annually, which is much higher than that estimated for developing countries.
- This has become a bone of contention in trade talks as farm lobbies in the U.S., Europe and Japan have steadily exercised political clout to influence officials and lawmakers to continue giving subsidies to farmers.
Measure by developed countries – Another point of concern is that developed countries design and implement stringent non-tariff measures (NTMs) which exacerbate the problems faced by poor countries that are willing to export.
The high cost of trading – NTMs significantly add to the cost of trading.
Asymmetry among exporters – However, the costs of acquiescence with many NTMs are asymmetrical across exporters because compliance depends on production facilities, technical know-how and infrastructure — factors that are usually inadequate in developing economies.
No gain from comparative advantage – These countries are, therefore, unable to compete in international markets and hardly gain from sectors with comparative advantage such as agriculture, textiles and apparels.
The goal of developing countries
- India, in particular, seeks amendment of laws on unilateral action by members on trade issues and a resolution of the WTO’s dispute settlement system.
- The expectation is that the meeting may lead to policy guidance on issues such as global norms to protect traditional knowledge from patenting by corporates, protection through subsidies, e-commerce, food security and continuation of special and differential treatment to poor economies.
1. The 10th Ministerial Conference (Nairobi, December 2015)
- It laid emphasis on agriculture trade. But it was a setback to most agrarian economies, including India and in Africa, when developed countries directly challenged their models of food security designed for the poor.
- In what has become an increasingly politicised environment, members with wide and divergent interests have simply halted the process and refused to negotiate in good faith across a spectrum of issues’.
- Developed nations created alliances to prepare the ground to push nascent issues such as investment facilitation, rules for e-commerce, gender equality and subsidy on fisheries, while most developing nations were unable to fulfil or implement rudimentary dictums.
- It was agreed to ‘establish a work programme to examine global e-commerce, with a focus on the relationship between e-commerce and existing agreements.
- It generated a sizeable debate on the fringes of the conference as many accredited NGOs opposed it and raised concerns that it was a push by dominant global players.
Hopes from Delhi Meeting
- The time is opportune for developing countries to voice their concerns and push for a stable and transparent environment for multilateral trade.
- India must do its homework to focus on the unresolved issues and address the newer ones which are of interest to developed nations, mainly investment facilitation.
- The WTO needs to be sustained as countries need an international platform to formulate trade rules and bring convergence on divergent matters