WTO is hanging on to life, but just barely
13th Ministerial Conference was unable to lift the air of pessimism around the future of the multilateral trading system
The 13th Ministerial Conference (MC13) of the World Trade Organization (WTO) held in Abu Dhabi ended with the 166-member organisation adopting a declaration which was so thin on substance that it has not even provided it with a meaningful work programme as ministerial conferences usually do. This leads to the question: Was the Abu Dhabi Ministerial Declaration adopted merely to ensure that this first ministerial conference on Arab shores in two decades did not add to the list of failed WTO ministerial conferences? Given the WTO’s myriad troubles at this juncture, a failed ministerial conference would surely have caused an existential crisis for the organisation.
The extent of troubles that WTO faces can be gauged from the fact that if MC13 had “delivered” on some of the contentious issues on which decisions were expected, the problems facing the regime would have become worse. The agenda for the ministerial conference had two proposed plurilateral agreements being negotiated on new issues, namely, investment facilitation and e-commerce. These negotiations do not include the entire membership of the organisation, but subsets of members who act as “clubs of the willing”.
Since the Buenos Aires Ministerial Conference in 2017, several plurilateral agreements were initiated, ignoring the convention that WTO decisions can only be on the basis of consensus. In other words, new issues are included only if the entire membership is on board. Though the rules of WTO allow for voting, this option has not been used. But despite there being no consensus, negotiations for concluding plurilateral agreements were initiated merely based on joint statements issued by groups of countries.
These so-called “joint statement initiatives” (JSIs) are also against the rules of the Marrakesh Agreement establishing WTO: India and South Africa have made repeated submissions in this regard. On the other hand, proponents of JSIs, especially the one on investment facilitation that was being pushed by China, have argued that they would bring tremendous benefits to developing countries. However, no objective assessment of these proposed agreements has been conducted. In fact, the entire set of negotiations for concluding plurilateral agreements was conducted in a non-transparent manner.
One aspect of these proposed plurilateral agreements is quite clear: They would impose significant administrative burdens on developing countries. For instance, the proposed agreement on investment facilitation would require the host countries to “improve” their regulatory standards given the interests of foreign investors. Most developing countries, and the 35 least developed country members of WTO in particular, would need additional financial resources to upgrade their institutional capacities for this.
Proponents of the proposed plurilateral agreements have argued that developing countries would be provided additional financial assistance, including through WTO’s Aid-for-Trade initiative. However, what they do not consider is that a large number of low-income countries are reeling under debt, and are in no position to increase their liabilities. Yet, the proponents showed undue haste for adopting these agreements.
In Abu Dhabi, ministers were subjected to considerable pressure to endorse these agreements. On the concluding day, India had to intervene yet again to emphasise the illegality of adopting the plurilateral agreement on investment facilitation. The gavel coming down for the ministerial without a single reference to the plurilateral agreements implies that the spirit of trade multilateralism has survived, at least for now.
That the plurilateral agreements were not adopted in Abu Dhabi, shows in good measure the influence that countries such as India and South Africa can have on WTO processes, and this augurs well for the future of multilateralism. However, India would be deeply disappointed that no decision was taken on public stockholding of food grains not being considered a violation of the Agreement on Agriculture (AoA), a key demand for the country since this is at the heart of its public distribution system (PDS). In fact, the 13th Ministerial Conference ended without the Ministerial Declaration taking note of this critical issue and reiterating that a permanent solution would be found in a time-bound manner to address the problems that the government could face in implementing its recent decision to provide free food to 810 million people until 2028.
The subsidies discipline under the AoA has a fallacious methodology for calculating the level of government support to agriculture, as per which India’s budgetary outlays for procuring food grains and the cost of distributing the stocked grains through the PDS exceed the AoA’s subsidy threshold. In 2013, the Bali Ministerial Conference had taken a decision that India would be given a temporary waiver for food security purposes until a permanent solution was found.
The Agreement on Fisheries Subsidies was adopted in 2022 to address the critical issue of sustaining fish stocks by restricting subsidies granted to the fishing industry. Negotiations for including additional provisions in the Agreement, in which India has remained deeply engaged primarily to protect the livelihoods of traditional fishermen, are currently under progress. This space will surely be watched with interest in the post-Abu Dhabi talks.
MC13 was unable to lift the air of pessimism around the future of the multilateral trading system also because no decision was taken to mend WTO’s broken dispute settlement mechanism (DSM). A well-functioning DSM is essential to ensure that WTO members implement their commitments fully. Unless members can fix the DSM, incentives to violate WTO rules will remain.
Biswajit Dhar is distinguished professor, Council for Social Development, and retired professor, Jawaharlal Nehru University. The views expressed are personal
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