WTO and India

WTO & Related issues

Note4Students

From UPSC perspective, the following things are important :

Prelims level : WTO

Mains level : Paper 3- Challenges facing WTO

Context

Created in 1995, during the heyday of neoliberalism, the World Trade Organization (WTO) became a shining example of triumphant free-market capitalism. Now, the WTO is facing a serious existential crisis.

Challenges facing WTO

1) Disfunctional appellate body

  • The United States, which played a pivotal role in establishing the WTO, seems to have lost interest in it.
  • The feeling in the US is that the WTO hasn’t served the American national interest by failing to stem China’s rise and regularly indicting the U.S. in several trade disputes.
  • The continuation of the U.S. policy on the WTO is most evident in the sustained crippling of the Appellate Body (AB).
  • Three out of seven AB members serve on any one case.
  • However, since December 2019, the AB has stopped functioning due to rising vacancies.
  • Countries now have an easy option not to comply with the WTO panel decisions by appealing into the void.
  • If no solution is found soon, the WTO’s rules-based order will start crumbling.

2) Public stockholding for food security purposes

  • No solution has been found to the public stockholding for food security purposes despite a clear mandate to do so in the 2015 Nairobi ministerial meeting.
  • This is of paramount concern for countries like India that use Minimum Support Price (MSP)-backed mechanisms to procure foodgrains.
  • With rising prices and the need to do higher procurement to support farmers and provide food to the poor at subsidised prices, India might breach the cap.
  •  Although countries have agreed that legal suits will not be brought if countries breach the cap (the so-called ‘peace clause’), it is imperative to find a permanent solution such as not counting MSP-provided budgetary support as trade-distorting.

3) Disagreement on TRIPS waiver for Covid-19

  • The WTO member countries continue to disagree on the need of waiving the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 related medical products.
  • It was exactly a year back when India and South Africa proposed a TRIPS waiver to overcome intellectual property (IP)-related obstacles in increasing accessibility of COVID-19 medical products, including vaccines.

4)  Regulating irrational subsidies provided for fishing

  • Irrational subsidies provided for fishing that has led to the overexploitation of marine resources by countries like China, which is the largest catcher and exporter of fish.
  • The WTO is close to signing a deal on regulating irrational subsidies
  • This agreement should strike a balance between conserving ocean resources and the livelihood concerns of millions of small and marginal fishermen in countries like India.

5) Fragmentation of global governance due to plurilateral trade agreements

  • The gridlock at the WTO has led to the emergence of mega plurilateral trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP) agreement.
  • These mega plurilateral agreements not only fragment the global governance on international trade but also push the multilateral order to the margin, converting the WTO to what some call an “institutional zombie”.

Conclusion

Notwithstanding its flaws, the WTO is the only forum where developing countries like India, not party to any mega plurilateral trade agreements, can push for evolving an inclusive global trading order that responds to the systemic imbalances of extant globalisation. What is at stake is the future of trade multilateralism and not just an institution, in which India has a huge interest.

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