Will WTO rise from an ‘institutional zombie’?
Will the World Trade Organization (WTO) end up as what some call an “institutional zombie” given the rise of mega plurilateral trading arrangements? Or will it be able to resurrect itself in the face of the risk of irrelevance? A lot will depend on the outcome of the WTO ministerial meeting in Geneva. Several contentious issues are on the table and the jury is still out on whether just and equitable tangible outcomes will be achieved.
First, developing countries such as India have been demanding a review of the 1998 WTO decision to adopt a temporary moratorium on customs duties on electronic transmissions for quite some time. What was agreed upon as a temporary measure in 1998 has been made quasi-permanent with the developed world leading the campaign for the last 24 years to periodically increase the moratorium.
However, the world has changed considerably since 1998. The exponential growth of digital markets and the arrival of additive manufacturing made possible by 3D printing is upending traditional global trade characterised by the movement of goods across borders. Several products can be digitised and delivered through electronic transmissions than through physical trade. This, in turn, is eroding the policy space of countries such as India, and is resulting in a huge revenue loss. Further, the products of big-tech companies remain outside the purview of customs authorities. Therefore, a review of the extant moratorium on customs duties on electronic transmissions is called for. But, the news trickling in from Geneva is that this temporary moratorium may get a fresh lease of life of another two years.
Second, WTO has left the issue of finding a permanent solution to the public stockholding for food security, which has been hanging for a long time. This is of paramount concern for India, which uses minimum support price (Msp)-backed mechanisms to procure food grain. According to the extant WTO rules, if food procurement is done at an administered price such as MSP, which is higher than the external reference price (bizarrely fixed at the rate of 1986-88 prices), then the budgetary support provided shall be considered tradedistorting and subject to an overall cap.
With rising prices and the need for higher procurements to support farmers and provide food to the poor at subsidised prices, India’s subsidy bill will breach the cap. Although countries have agreed that legal suits will not be brought if countries breach the cap, a permanent solution such as not counting Mspprovided budgetary support as trade distorting continues to evade WTO. The ministerial needs to deliver on this front.
Third, one of the biggest letdowns in the current WTO negotiations has been the manner in which the negotiations for waiving the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement for Covid-19related medical products (the TRIPS waiver) have progressed. The high hopes of a comprehensive TRIPS waiver where all IP rights should have been waived for all Covid-19 medical products have been dashed. What we now have on the table is a proposal that is restricted to waiving patent rights (not all IP rights) and only on Covid-19 vaccines (not therapeutics and diagnostics). This limited waiver is a classic case of too little, too late.
Fourth, countries have been negotiating a deal on regulating irrational subsidies provided for fishing that has led to the overexploitation of marine resources. However, this agreement should balance the conservation of ocean resources with the livelihood concerns of millions of small and marginal fishermen.
Thus, an effective special and differential treatment (S&DT) provision that accords adequate policy space is imperative. In this regard, India has been demanding that it be exempted from overfishing subsidy prohibitions for 25 years. However, the proposal is to limit the transition period to seven years, which does not meet the S&DT requirement.
WTO is an important multilateral organisation and an ideal antidote to mounting unilateralism and economic nationalism. It has played a critical role in the last 27 years, including in depoliticising and settling trade disputes amicably. Therefore, its foundational principles need to be preserved. Also, WTO needs an inclusive global trade agenda that responds to the systemic imbalances of extant globalisation where big businesses seem to earn supernormal profits at the cost of ordinary people. If WTO negotiators fail in Geneva, it will not only be a blow to the institution itself but also to trade multilateralism.