WTO meet: Striking a fair deal

It is time that all these countries came together to pursue outcomes that are in the best interests of an overwhelming majority of the WTO members.

On 15 December, when ministers from the 162 members of the World Trade Organization (WTO) meet in Nairobi (Kenya) for the tenth ministerial conference and the first to be convened in Africa, they will not have any document before them which would be waiting for their endorsement. This piquant situation has risen as the WTO members have been unable to find common ground necessary to put together a draft ministerial declaration that would have underlined the substantive work programme for organization.

This extraordinary situation opens the door for at least three possible scenarios. The first, and the most optimistic scenario, would be the one in which WTO members can get back on track the stuttering Doha Round negotiations. 

In this scenario, the discussions could pick up the strings of the negotiations on agriculture and non-agricultural market access (NAMA), two issues that had seen considerable progress until the negotiations broke down in 2008. This could pave the way for activating discussions for bringing a better balance to the multilateral trading system.

A second scenario could see the developed countries push for the inclusion of a bouquet of issues in the agenda for the ministerial conference to further their interests. The third scenario—the least desirable—would be developed nations’ push for abandoning the Doha Round, and to bring in its place elements from the mega-regional trade agreements, like the Trans Pacific Partnership (TPP).

There should be little doubt that developing country interests would be best served by adopting the first scenario. For instance, agriculture negotiations in the Doha Round were focused on re-balancing the WTO Agreement on Agriculture (AoA). This was proposed by reining in agricultural subsidies by the developed countries, and by introducing specific instruments to meet the core concerns of most developing countries, namely, maintaining food security and rural livelihoods.

There are at least two reasons why the Doha Round discussions are relevant for the developing countries at the present juncture. In recent months, prices of agricultural commodities have declined in global markets, a phenomenon, which, in the past, has been accompanied by increases in farm subsidies, granted by the developed countries, in particular, the US and the EU. In this context, it needs to be pointed out that the US is currently implementing its Agricultural Act of 2014, which promises higher subsidies to the country’s agricultural producers. 

In such a situation, developing countries need to insulate their farm sector using appropriate instruments to protect their food security and livelihood interests. In Doha negotiations, these countries argued in favour of two instruments, namely, Special Safeguards Mechanism (SSM) and Special Products (SPs). The former was to be used in response to import surges while the latter would have been used to maintain their import tariffs on commodities critical for food security and rural livelihoods. 

In recent months, the G-33 group of developing nations, of which India is an active member, has argued for the inclusion of SSM in the decisions to be made at Nairobi, but there has been no mention of the equally important instrument, SPs.

In the NAMA negotiations, developing nations argued tempering the reduction of tariffs, while the developed have pushed for early elimination of tariffs on industrial products. This issue has become more significant for India in view of its focus on revitalizing the manufacturing sector. 

In the past, India has seen its electronics industry getting wiped out, just as it was getting out of its cradle as the then government had agreed to eliminate tariffs on electronics products by acceding to the Information Technology Agreement (ITA).

A second scenario for Nairobi conference is that the more influential countries could get their agenda included as a part of the multilateral process. Over the past few years, three groups of countries, all led by the US and the EU, have been negotiating plurilateral agreements for liberalizing trade in services (The Trade in Services Agreement, or TISA), and eliminating tariffs on environmental goods and information technology products (an extension of the ITA, ITA-II). 

The issues could be pushed into the WTO, and be used as a lever to fast track the trade liberalization agenda within the multilateral trading system. The limitation of this process is that it is predicated on the aspirations of the advanced countries to gain larger market access and therefore does not account for the fact that developing countries need the space to build their manufacturing industries.

The third scenario, in which the Doha Round could be abandoned for a more ambitious market access-oriented process within the WTO, has been looming large for a while. These are the shadows of the mega-regionals, namely, TPP, the Trans Atlantic Trade and Investment Partnership (TTIP) and the Regional Comprehensive Economic Partnership (RCEP), all aiming at fast-track trade liberalization, without considering the plethora of distortions that exist in the global markets, including unacceptable levels of agricultural subsidies. The idea that trade is a handmaiden of development has been given a short shrift in all these mega-regionals.

While setting up the WTO, the founding members had agreed that trade would be conducted to raise standards of living, ensure full employment and contribute to enhancing real income and effective demand, besides meeting the objective of sustainable development. Over the past two decades, these development objectives of the WTO have been upstaged by the objectives of trade liberalization, expressly to the interests of the dominant players. 

India and other developing countries have spoken out against the erosion of the development objectives in the WTO. It is time that all these countries came together to pursue outcomes that are in the best interests of an overwhelming majority of the WTO members.

The author is a professor at Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University.

Biswajit Dhar

http://www.livemint.com/Opinion/WtFexMptCfPa12yZrhemsK/WTO-meet-striking-a-fair-deal.html

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