1. Home
2. Columnist

Icy road ahead for 11th WTO ministerial at Buenos Aires

By G. Srinivasan. Dated: 11/21/2017 10:19:52 AM

India needs to safeguard domestic interests

In less than a month from now, members of the World Trade Organization (WTO) numbering 164 would gather for the biannual ministerial to take stock of how far and fair the liberal trade regime of the post-war era has been shaping up. The 11th WTO Ministerial Conference, scheduled to be held at Buenos Aires (Argentina) in the second week of December, has already evoked winter woes among trade envoys as the WTO was not able to gather its scattered wits since the collapse of its ministerial in Cancun (Mexico) way back in 2003. This is particularly so as the much-vaunted Doha Development Round launched in the Qatari capital in 2001 remained broken and bruised with no substantive agreements of the genre achieved in the Uruguay Round of multilateral trade negotiations under the umbrella of the General Agreement on Tariffs and Trade (GATT) in the late 1980s to early 1990s that resulted in the genesis of the WTO in 1995.
Down more than two decades since the advent of the WTO and given the gargantuan task of getting consensus among 164 signatories with the Doha Round remaining in abeyance for want of agreement among the major trading players, WTO members are increasingly turning to parochial plurilateral trade agreements and mega regional trading blocs to keep one another's commercial interests safe and profitable. In most of the years of the erstwhile GATT and in the WTO, the American leadership coalesced with the western nations commercial calculations so smoothly and seamlessly to maintain a robust semblance of free trade in goods. No doubt, the liberalization of trade in merchandise goods led to lifting of all boats with literally more than a billion people in China and India alone having been delivered from the crushing constraint of poverty with a visible export-led growth.
According to celebrated economist Dani Rodrik, countries that leveraged globalization such as China and Vietnam deployed a mixed strategy of export promotion and a variety of policies that contravened extant trade rules. Subsidies, domestic-content requirements, investment regulations and import barriers were critical to the creation of new, higher-value industries. But countries that depend on free trade alone, such as Mexico, have languished. That is the reason why trade agreements that tighten the rules, such as Trans-Pacific Partnership (TPP) would have done, are in fact mixed blessings for developing nations. Rodrik argued that China would not have been able to pursue its phenomenally successful industrialization strategy if the country had been constrained by WTO-type rules during the 1980s and 1990s. With the TPP, Vietnam would have had some assurance of continued access to the US market but in return would have had to submit to restrictions on subsidies, patent rules and investment regulations.
So countries like India, which do not boast of being part of any mega trading bloc other than forging bilateral free trade agreement (FTAs), had left domestic industries in fury over cheaper imported goods quelling them (Thailand and Sri Lanka, for instance). Still, for India the WTO remains a strong institutional body to get its trade-related problems redressed. But of late, the WTO too has evolved a sort of strict rules of one-size fits all problems, the implementation of which poses domestic difficulties to members. It is against this bleak backdrop that Rodrik in his forthcoming tome titled "Straight Talk on Trade" posed the pertinent question as to how much globalization should we seek in trade and finance? He further contended that "we need a pluralist world economy where nation-states retain sufficient autonomy to fashion their own social contracts and develop their own economic strategies".
This is a weighty suggestion worthy of pondering over by serious-minded nations with a massive population like ours, where domestic interests of farmers, fisher folks and small traders should not be endangered by the type of agreements our trade envoys sign on dotted lines ignoring the livelihood security of millions. Even if one does not take a serious note of the fusillades and broadsides launched by the RSS affiliate Swadeshi Jagran Manch (SJM) or the Left parties that New Delhi should not let the WTO take a call on rules shaping cardinal domestic policies that have a bearing on our agriculture, health and finance and small traders, the run-up to the 11th Ministerial of the WTO appears to converge on these issues only.
For the Union Commerce and Industry Minister Suresh Prabhu, a trained auditor by profession and an able administrator in his capacity to assist Prime Minister Narendra Modi as his Sherpa during the G-20 conclave in the past, the multilateral trade negotiations are not a big deal, provided he does not succumb to pressures, both from within and without, that were brought to bear on him to undertake commitments that would be arduous and callous for legions. To boot, the issues that might crop up during the ministerial include a permanent solution to public procurement for food security, lowering subsidies on fisheries on grounds of overfishing and to save marine lives, special safeguard mechanisms permitting poor countries to augment tariffs temporarily to deal with import surges if they threaten to kill domestic growers' interests and trade facilitation in services. There is also likely to be concerted bids by developed countries to push for an agreement on e-commerce rules.
To cite one case, developed countries contend that fisheries subsidies, estimated to be in tens of billions of dollars annually, foster marked distortions in global fish markets and are leading to overfishing and overcapacity and the depletion of marine resources. As such, any transparency about WTO members' fisheries subsidies as demanded by developed countries is likely to be frowned upon by poor countries which insist on ensuring special and differential treatment to developing countries, letting them a longer stretch of time for compliance with protection for marginal farmers. However, at the Negotiating Group on Rules (NGR) in Geneva on October 31-November 3, members exchanged general views on what a Buenos Aires fisheries subsidies outcome should seem like. Interestingly, prohibitions on subsidies for illegal, unreported and unregulated (IUU) fishing and provisions for transparency were cited by a host of delegations as areas where a deal could be delivered at Buenos Aires. This is just the tip of the iceberg of the icy road ahead in trade negotiations, policy wonks wryly say.
—(IPA Service)