India should support WTO to ensure global rules-based trading system

The outlook is changing after the pandemic which has seen many rich countries focus on vaccine nationalism, while others have been left without any vaccine supplies at all. The WTO can play a key role to fix this inequity. In this backdrop the multilateral approach now increasingly appears to be the right path to achieve the good of the largest number on the plane

As yet another ministerial conference of the World Trade Organisation (WTO) looms ahead, it is clear that the multilateral trade body is facing many challenges. The main hurdle to decision-making in the institution has always been the battle between the countries of the North and the South. The friction between the haves and have-nots of the global economy has been continuing ever since it was founded 26 years ago. Despite the tensions between the two sides, it was possible in the early years to hammer out a consensus in many areas. This was largely owing to the commitment of all stakeholders to ensure that a rule-based trading system was in place which would be to everyone's benefit in the long run. In recent times, however, there has been a stalemate on many key issues especially agriculture.

The first ever visit of the WTO Director-General, Ngozi Okonjo Iweala has highlighted these fissures between developed and developing countries. Though her talks with the government here are reported to have been cordial, this country's viewpoint on the issue of fisheries subsidies was discussed at length. Prior to departure, Okonjo-Iweala commented that these views would certainly be heard at the trade body, but may not be addressed ultimately. She was clearly hinting that developed countries which carry out fishing on an industrial scale would oppose India's proposals.

The aim of the negotiations on fisheries subsidies are to ensure sustainable fishing and eliminate illegal, unreported and unregulated fishing subsidies which could contribute to overcapacity and overfishing. The Indian proposal envisages that countries engaged in distant water fishing, that is, beyond their exclusive economic zone of the sea, should not provide subsidies for 25 years. It points out that such activities lead to depletion of global fish stocks.

The proposal is bound be contested by developed countries which carry out industrial level of fishing in all the world's oceans. On the other hand, developing economies feel that sufficient support is not being allowed for their vastly smaller fishing industries.

The question of fisheries subsidies will be taken up at the forthcoming ministerial conference at the end of November along with long-pending agricultural issues that have defied resolution for many years. The need to make the "peace clause" permanent will surely be taken up by India but will also surely face a roadblock by large agricultural producers like the US and the European Union. This particular provision was introduced after tough negotiations in the 2013 Bali ministerial conference in order to protect India's public stockholding of foodgrains procured on the basis of the minimum support price. It ensures that action cannot be taken by WTO member countries in case the ten per cent subsidy ceiling is breached by any member.

It had to be invoked by India for only the second time earlier this year as subsidies on rice breached the ten per cent ceiling. The clause was introduced on a temporary basis to protect livelihoods of Indian farmers but has not been made permanent despite many years having elapsed since it was introduced. It is high time now for the issue of public stockholding limits to be made a priority given that it involves the livelihoods of millions of Indian farmers.

Indian negotiators have pointed out that the public stockholding is not trade-distorting in any fashion it is used only for food security purposes and not for exports. These stocks ensure equitable distribution of foodgrains to the vulnerable and marginalized segments of society throughout the year.

Even so, the clause has yet to be made a permanent provision while rich countries continue to give huge subsidies to protect their own farmers. The farm subsidy issue which was part of the long pending agenda of the Doha round of negotiations has thus not been concluded in a satisfactory manner. Yet there is now a push for new items to be brought to the negotiating table including investment facilitation, e-commerce and rules for MSMEs (micro, small and medium enterprises). These are areas where developed countries feel the multilateral route can help ensure better market access.

Ultimately, however, it is possible that the Geneva ministerial which was delayed owing to the pandemic, may be dominated by discussions over the proposal for an intellectual property rights waiver for all technologies for the detection, prevention and treatment of Covid 19. The TRIPs waiver, as it is called, envisages a suspension of some provisions of the Trade Related aspects of the Intellectual Property Rights Agreement of the WTO. It will enable all countries to share the various technologies developed to fight the virus rather than seeking waivers on an individual basis. The proposal mooted by India and South Africa has even managed to get limited support from the US which has, however, confined it only to vaccines rather than the entire spectrum of pharmaceutical technologies.

Despite these ongoing tussles at the WTO, it is imperative for India to support an institution which will ensure a global rules-based trading system. It is in the interest of the North and the South that the trade body should remain effective as much progress can be made through the multilateral route despite the increasing reliance nowadays on regional trade pacts. In fact, the glacial pace of decision-making in this institution had in recent years made many countries focus more on either regional or bilateral trade agreements to overcome the growing global protectionist trends. This outlook is changing after the pandemic which has seen many rich countries focus on vaccine nationalism, while others have been left without any vaccine supplies at all. The WTO can play a key role to fix this inequity. In this backdrop the multilateral approach now increasingly appears to be the right path to achieve the good of the largest number on the planet.