Get down to business

At a time when the WTO is facing a crisis on multiple fronts, the member countries should take steps to preserve & strengthen it

With the frenzy of activities and the glare of arc lights at the Informal World Trade Organisation (WTO) Ministerial Meeting held in New Delhi on March 19-20 being over, it is time to assess the outcome of the meeting. The meeting was primarily aimed at breaking the ice among the WTO members after the failed ministerial meeting in Buenos Aires held three months ago. Moreover, recent actions on the trade front by the US President Donald Trump, imparted additional salience to the New Delhi ministerial meeting. Based on the documents available in the public domain, eight key messages emerge from the meeting.

First, at a time when the WTO’s negotiating function and its dispute settlement mechanism are gradually being made dysfunctional, and the sanctity of its rules is being threatened by questionable actions of the US, more than 50 ministers and high-level officers participated in the New Delhi meeting. Clearly life is still left in multilateralism, despite many obituaries having been written on the WTO.

Second, the Delhi meeting was convened by the Commerce and Industry Minister Suresh Prabhu, with the intention of reinvigorating the WTO. This objective of the meeting should compel a re-think among countries, which perceive India as a nay-sayer and dealbreaker at the negotiating table.

Third, almost all the countries participating in the Delhi meeting appear to have spoken in one voice about the need to resolve the impasse in the appointment of the Appellate Body members expeditiously and immediately. It may be recalled that by blocking the nomination of new members to the Appellate Body, the US would render the dispute settlement mechanism of the WTO inutile. The strong message delivered by almost 50 countries should force the US to either agree to the nomination of new members, or to articulate its specific problems with the dispute settlement mechanism, thereby enabling a dialogue aimed at resolving the underlying issues.

Fourth, India and a few other countries were successful in establishing a link between the problems in the WTO’s dispute settlement pillar and the negotiating function of the WTO. While this link is extremely relevant and crucial, it was not clearly and forcefully articulated earlier. In its statement at the meeting, India raised an important question — What good is it to invest effort in the negotiation of rules if the existing rules cannot be effectively implemented and impartially enforced, because the Appellate Body is rendered dysfunctional? A few other countries appear to have echoed similar sentiments. This should provide an additional impetus to resolving the crisis confronting the Appellate Body.

Fifth, the countries participating in the Delhi meeting clearly recognised the serious threat posed to the credibility of the WTO rules and some of its cardinal principles, such as non-discrimination, by the vicious cycle of recent increase in tariffs on steel and aluminium by the US and the proposed counter-measures by some developed countries. Instead of each WTO member individually attempting to persuade the US to play by the rules of the game, at the Delhi meeting, the need for WTO members to take urgent and coordinated action to address the underlying issues was highlighted. Collective action by a large number of countries should prove to be more effective in getting the US back on the rule-based path, as was the case during 2000-2003 when the US had resorted to WTO inconsistent action for protecting its steel sector.

Sixth, with respect to initiating negotiations on some issues such as investment facilitation and electronic commerce, India stated that the following three conditions must be met: One, the issues should be trade-related; two, negotiating binding rules on the new issues would be beneficial for developing countries; and three, there must be certainty that special and differential treatment would be provided in the negotiations to all developing countries. India has now shifted the onus on the proponents of the new issues to persuade it on the three counts, before it can agree to initiating negotiations on these issues.

Seventh, it was evident at the Delhi meeting that the developed countries continue in their attempts to deprive India and many other developing countries of special and differential treatment in trade negotiations. These discussions, which started at the Buenos Aires ministerial meeting of the WTO, would undermine the long standing concept of less-than-full reciprocity in multilateral trade negotiations as enshrined in the General Agreement on Tariffs and Trade. This is not an encouraging development for India and the government must find ways of putting brakes on the discussions on this extremely divisive issue.

Eight, the meeting in Delhi suggests that the WTO members continue to have an interest in taking the negotiations on issues such as reforms in agriculture subsidies, fisheries subsidies and services, forward on the basis of pragmatism and flexibility. While similar sentiments were expressed on many earlier occasions, how exactly the WTO members should make progress on the contentious negotiating issues, does not appear to have been discussed in the meeting. Perhaps this was not the objective of the meeting.

When the WTO is facing a crisis on multiple fronts — trust deficit among its members, paralysed negotiating arm, increasingly dysfunctional dispute settlement mechanism and spiralling trade friction — the New Delhi Informal WTO Ministerial Meeting was timely. Deliberations at the meeting and its key messages would have reinforced the benefits of a rule-based multilateral trading system and the stark reality of a power-based trading system and anarchy that would be engendered, if the WTO collapses. This sobering reality should concentrate the minds of the member countries to take steps to preserve and strengthen the WTO. If this does happen, then to a large extent, credit would be given to the Delhi WTO meeting.