FROZEN TRADE
The New Delhi WTO mini- ministerial fails to come up with any solution to the global trade wars.
UPON LANDING at the New Delhi’s Indira Gandhi International Airport, Roberto Azevedo, Director General of the World Trade Organization (WTO), got the first shock of his trip. The airline misplaced his bags. Azevedo, who had come from Geneva to attend an informal meeting of the WTO on March 19-20, had to buy some clothes before getting on to the discussions among WTO members at a time when the US and China are erecting newer trade barriers and free trade is under siege from countries preferring to go solo or in small groups rather than follow the rule-based global trading system that the WTO represents. The ominous background of the talks — a global trade war triggered by the US move to slap tariffs on at least $50 billion Chinese imports, its warning to both India and China on high tariffs and China's retaliation with reciprocal tariffs on $3 billion of imports from the US — was not the best start to a meeting whose aim was informal talks to break the years of logjam at the WTO and open up world trade further. The outcome was predictable. Azevedo arrived literally empty handed and returned with little hope of revival of WTO talks.
Does the WTO, where countries have hardly agreed on anything for years, and which is being further undermined by separate trade deals among countries, have a future? After all, in the last few months, Azevedo and the body he heads have been under regular fire from US President Donald Trump and his establishment, who are pushing for changes to suit US interests, especially vis a vis China. The protectionist turn of the world’s biggest trading country cannot be good news for either the WTO or the countries it referees, including India.
THE DIVIDE
One of the biggest divides in the WTO concerns US demand for change in China’s status as a market economy. This will help it counter challenges to its latest move to impose tariffs on Chinese imports at the WTO. The second is its demand that dispute resolution rulings be made nonbinding. This hits at the heart of the rule-based system that the WTO is expected to enforce. The third is that the top five countries according to GDP size should stop getting special and differential treatment, and this includes both India and China.
As Commerce Minister Suresh Prabhu put it, the biggest threat the WTO is facing is existence of the WTO itself. This at a time when India needs fair trade more than ever to grow its exports to 40 per cent of GDP for it to reach its target of becoming a $5-trillion economy in the next five-six years. For India, this mini-ministerial to break the logjam that had set in at the Buenos Aires ministerial in December (it was for the second time in WTO history that a ministerial had ended without a declaration) was important.