Is this the beginning of the end of WTO?
WTO Ministerial Conference fails to make progress on key issues like fisheries subsidies, reflecting serious divisions among 166 member countries.
Yet another WTO Ministerial Conference concluded in Abu Dhabi with little to show for it. After all, the main functions of WTO, i.e. the negotiating function and the dispute settlement function have been paralysed for some time now. Attempts to revive both came to nought in Abu Dhabi, reflecting the serious divisions that afflict the 166-strong membership of this troubled organisation.
Four main challenges confronted WTO members at the 13th Ministerial Conference (MC 13) in Abu Dhabi. One, how to conclude the elusive multilateral agreement on fisheries subsidies. Two, how to restore the appellate body so that the dispute settlement mechanism could regain its reputation as the jewel in the crown of WTO. Three, how to secure a permanent solution to the public stockholding (PSH) issue related to food security that India and several others have been demanding from WTO. And finally, how to ensure the extension of the moratorium on customs duty on electronic transmissions that the industry sought and some governments (such as India’s) disliked for the revenue loss that it entailed. There were some other issues, but these constituted the main negotiating agenda for MC 13.
The multilateral agreement on fisheries subsidies was concluded in part at the last ministerial conference and it was to be completed at this MC 13 so that it could enter into force. In the event, the negotiators could achieve neither. India put up a fight for equity and justice, causing the European Union (EU) negotiator to say that there was only one country (India) that withheld consent. Even if this were true, equating the subsidies granted by India for the livelihood of its fishermen with the huge subsidies given by the EU, Japan, China and Taiwan is absurd. India sought a time of 25 years, which seems a tad high, but in a federal structure such as ours, we can only make haste slowly! In an election year, the government could not have done anything else other than to vigorously protect the interests of fishermen.
The same goes for our farmers. WTO has reneged on a solemn commitment made to countries such as India to find a permanent solution to the PSH issue. The problem lay with the advanced countries and the CAIRNS Group which insisted on linking this to market access. PSH is a serious issue that must be linked to the sustainable development goal (SDG) of abolishing extreme poverty and hunger. To make it hostage to the issue of market access was unfair and unjust. Anyway, the bottom line is that MC 13 failed to make progress on this issue.
The story about the restoration of the appellate body was no different. There was only one WTO member, i.e. the United States, objecting to it and it would not budge. There is also the added uncertainty posed by the American elections. If Donald Trump does make it, all bets are off. It is not inconceivable that the US under Trump not only thwarts the restoration of the appellate body but goes as far as to withdraw from WTO altogether. One can only wait and watch.
Having failed at meeting the three main challenges, MC 13 barely managed to extend the moratorium on customs duty on electronic transmissions by two years. India, which was bent on preventing this from happening, clarified through its commerce minister that it only agreed at the last minute due to a personal request from the UAE trade minister.
The other major issue facing MC 13 was how to deal with plurilateral negotiating initiatives. One was particularly important: The China-led Investment Facilitation for Development (IFD) Agreement backed by over 100 countries. But because it did not secure the consensus of every WTO member, India and South Africa opposed it in principle. China would have taken note of this development, and it is fair to conclude that the era of close Sino-Indian cooperation in multilateral fora is drawing to a close. What implications this will have for the BRICS grouping remains to be seen.
All things considered therefore, the outcome at MC 13 was very modest. Some tentative conclusions may be drawn. One, WTO does not have a bright future as a purely multilateral organisation. So, will it turn plurilateral and if so, how does India approach it? Two, it appears unlikely that the US will agree to the restoration of the appellate body which will represent status quo ante. Instead, we may see a return to the bad old days of GATT with just the single-stage panel procedure. If that happens, how does India cope with that? Last, given the dismal prospects of resurrecting WTO, India should make haste with its key FTAs, particularly the ones with the EU, UK and the GCC. There is no time to waste and the new government in May should focus on this as a matter of priority.
There is also a bit of a disconnect between India’s strategic/foreign policy discourse and its trade policy discourse. The strategic discourse is based on the assumption that we will become a seven or ten trillion-dollar economy before long. The current trade policy discourse is arguably fit for a two trillion-dollar economy! This gap needs bridging. One of the ways to do this is for the new government in May to carry out the deep, structural reforms in agriculture, land, labour and logistics that will help catapult India into the big economic league.
Mohan Kumar is a former ambassador and an India negotiator at WTO in Geneva. The views expressed are personal