The World in WTO: How India Can Lead Multilateralism at WTO

Why in News?

• The WTO reform has been the global agenda for a while including that of G20 and recently the G20 working group concluded a meeting on trade and investment focused on the important issue of WTO reform.
• However, any WTO reform should not lose sight of the larger global context.

 

WTO (World Trade Organisation)

• Created in 1995, it is an international institution that oversees the rules for global trade among nations.
• The WTO is based on agreements signed by most of the world’s trading nations.
• The main function of the organisation is to help producers of goods and services, as well as exporters and importers, protect and manage their businesses.
• WTO has 164 member countries [with Liberia and Afghanistan the most recent members, having joined in July 2016] and 25 observer countries and governments.
• The major functions of WTO are:
  • Administering WTO trade agreements.
  • Forum for trade negotiations.
  • Handling trade disputes.
  • Monitoring national trade policies.
  • Technical assistance and training for developing countries.
  • Cooperation with other international organisations. 

 

Founding Principles of WTO

• More than 50 years ago, Harvard professor Richard Cooper argued that “trade policy is foreign policy”.
• The world then valued economic interdependence with the belief that such interdependence would deter security confrontation.
• The WTO, created in that era, was aimed at legalising, and policing economic interdependence. 

 

Need for WTO Reform

• The Pursuit of Unilateralism by Developed Nations
  • Contrary to WTO founding principles, today’s world is dominated by geo-economic considerations and heightened securitisation of international economic relations.
  • The pursuit of unilateralism in international economic relations, especially by developed countries like the US, which goes against established WTO laws.
• Economic policies such as industrial subsidies and local content requirements have made a comeback.
• Deliberate Effort to Weaken Trade Multilateralism: There is a deliberate effort to weaken trade multilateralism in favour of external plurilateral alignments keeping the big power confrontation in mind.

 

G20’s Role in WTO Reform

• The G20 must become the platform to facilitate a consensus on reforming the WTO to better achieve global developmental objectives.
• With the major economies (with extensive geographic, economic, and social diversity) as its members, the G20 needs to be at the forefront of debates on trade and development.
• Consequently, the member countries can also influence their respective negotiating coalitions at the WTO.
• However, some economists believe that it is naïve to believe that the developed G20 countries are interested in reforming the WTO for the better. For example, a weak WTO perfectly suits the US as part of its foreign policy aimed at strategic rivalry with China.
• Against this background the push for WTO reforms must come from G20’s “middle powers” such as India, Indonesia, Brazil, and South Africa.

 

How Can India Lead Developing Nations in Reforming WTO under its G20 Presidency?

• Technical Assistance
  • Under India’s G20 presidency the G20 working groups could help provide technical assistance to WTO members, allowing them to engage more effectively in the WTO committees, including on trade and development.
  • This could cover inputs for negotiation, institutional reform, and dispute settlement, with development as the cross-cutting agenda.
• Increase Awareness and Engagement with Stakeholders
  • India’s G20 presidency could increase awareness and engagement with diverse stakeholders which is important for enhancing support and legitimacy for WTO reforms, especially among domestic constituencies that may be sceptical of trade liberalisation.
• Capacity Building: The G20 engagement groups (such as Think20, Business20, and Civil20) under India’s presidency could devise programmes for capacity building in the private sector, civil society organisations, and other non-governmental stakeholders.

 

What should be the Focus of Developing Nations during Deliberation on WTO Reforms?

• Presence of Special and Differential Treatment (SDT) Principle
  • This is one of the cardinal pillars of the international trading regime.
  • Given the varying levels of development of different WTO member countries, SDT provisions give special rights to developing countries and obligate developed countries to treat the developing nations more favourably.
  • However, only 21 per cent of the SDT provisions in various WTO agreements oblige developed countries to actually provide differential treatment to developing countries.
  • SDT provisions need to be given more teeth and efforts to weaken this treaty-embedded right in the name of WTO reform should be opposed vehemently.
• The appellate body
  • It is the second tier of the WTO’s two-tiered dispute settlement body which remains paralysed since 2019 because of the US’s continued indifference.
  • This is part of Washington’s overall game plan to dilute the policing part of the WTO, which, in turn, allows it to pursue trade unilateralism without many checks.
  • However, the remaining G20 countries need to either persuade the US to change its position or resurrect the appellate body without the US.
• The consensus-based decision-making
  • From 2017 onward, there has been a shift toward plurilateral discussions on select issues such as investment facilitation.
  • While the plurilateral approach is a welcome development for rule-making, there is a need to develop a multilateral governance framework for plurilateral agreements.
  • This governance framework should include key principles of non-discrimination, transparency, and inclusivity in incorporating the results of plurilateral negotiations in the WTO rulebook.
  • Forcing plurilateral agreements on non-willing members will increase the trust deficit between developed and developing countries.
• Address the transparency gap
  • It is imperative to address the transparency gap in the WTO, especially in terms of notification requirements.
  • Although WTO member countries are obliged to notify all their laws and regulations that affect trade, compliance with this obligation is poor.
  • This increases the cost of trade, especially for developing countries.

 

Conclusion

• Trade multilateralism might be out of fashion, but remains a critical component for developing countries like India.
• India’s G20 presidency offers an opportunity to drive reformatory interventions for a development-friendly WTO and enable further substantial benefits for developing nations.

 

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Q1) What is the WTO Ministerial Conference?

The 12th Ministerial Conference of the World Trade Organisation (MC12) gathered Ministers from the 164-member organisation in Geneva from 13 to 16 June, after almost 5 years from the previous meeting. The Conference took place against the backdrop of a particularly difficult global economic and geopolitical environment. 

 

Q2) What are the next steps on WTO reform?

The positive outcome of MC12 allows us to urgently work with our partners with a view to reaching substantive progress on reform by MC13. We aim to improve the WTO's role as a forum where negotiations can take place in a constructive and trust-based manner, and as a monitoring and deliberative body. In particular, we will work to restore fully functioning dispute settlement.

 

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Source: The Indian Express