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Onus on developing nations to ensure credible outcomes at WTO meet

LiveMint logoLiveMint 01-08-2017 D. Ravi Kanth

Before proceeding for summer break last week, trade envoys squabbled over several issues at the World Trade Organization (WTO). Some of them who can be identified as the wretched of the earth from Africa and elsewhere remained angry with the director general for not properly conducting negotiations as per the agreed practices. Some others known as the Friends of the System praised the same director general for his excellent work. And, the US, which ranks first among the equals at the trade body, spoke selectively on what it wanted while turning a deaf ear to the unresolved issues raised by the large majority of members.

Indeed, a tale of two contrasting messages emerged ahead of the 11th ministerial conference. That meeting will take place in less than four-and-half months in Buenos Aires, Argentina. The continued dislocations in the international trading system following the Brexit and America First trade policies by the Trump administration are well known. “No two countries are doing more to strain the fabric of modern trade than America and Britain,” says The Economist in its leader on “Trade deals—A special relationship with reality” on 29 July. It has suggested that “Britain and America suffer from similar delusions when it comes to trade.”

Therefore, the burden of ensuring credible outcomes at Buenos Aires remains a major challenge. More so, when the champions of free trade are now crying hoarse over the system of forced and violent extractions they had forced over the colonies under the banner of free trade during the past two centuries. Now that they are blatantly embracing nationalist and insular trade policies, the burden of mobilizing forces for accomplishing developmental outcomes depends squarely on big developing countries. China and India along with other developing and poorest countries have to play a major role in ensuring that the trade majors of the Atlantic West lived up to the promises/commitments they made over 16 years ago.

The Asian giants have now joined forces in demanding the elimination of what is called the Aggregate Measurement of Support (AMS) for the most trade-distorting farm subsidies. That the AMS to the tune of $160 billion—provided by the US, the European Union (EU), Japan, Norway and Switzerland among others —remains at the heart of continued distortions in global farm trade is graphically showed by China and India in their proposal. Without the elimination of the AMS, which was built into the existing Uruguay Round deal on Agriculture, there cannot be any fair international trade in farm products.

Of course, as a counter to the demand for the elimination of AMS, the US points a finger at the alleged distortions caused by India and China under Article 6.2 of the Agreement on Agriculture. Under this provision, the developing countries are allowed to provide investment subsidies to agriculture as well as input subsidies for low income or resource poor farmers without any exemption.

The US and the rest of the Atlantic West are not prepared to treat public stockholding programs for food security under what is called the green box which is exempted from any reduction commitments. Significantly, the US and the EU provide more than $200 billion of farm subsidies through the green box which are found to be trade-distorting.

Against this backdrop, two women trade ministers from India and Argentina spoke on how to salvage the multilateral trading system. India’s trade minister Nirmala Sitharaman and Argentina’s minister Susana Malcorra, who is going to chair the WTO’s 11th ministerial meeting in Buenos Aires from 10 December, offered their respective ideas during two separate meetings in Geneva.

In her first visit to Geneva as the trade minister of more than 1.2 billion people, Sitharaman called for credible outcomes at the 11th ministerial conference. She delivered a key note address on “Reclaiming Multilateralism” at Geneva’s Graduate Institute. The only way to rebuild the multilateral system is by concluding the unfinished Doha Development Agenda trade negotiations, Sitharaman suggested. She said the industrialized countries managed to secure the maximum beneficial outcomes for them and it is now their turn to agree to credible outcomes based on the Doha work programme that was launched in 2001. 

Otherwise, the asymmetries in the global trading system will not only continue but will further aggravate the frictions. She challenged the narratives advanced by the industrialized countries and their developing country allies for burying the Doha Round while embracing new issues. “These narratives make a mockery of what we agreed to at Doha,” she said.

“While some countries are pushing for initiating negotiations on the new issues, we cannot ignore many of the legacy issues of the Doha Round. Let the WTO members decide by consensus that the Round has been concluded,” Sitharaman said. She rejected the new issues—rules for electronic commerce, disciplines for small and medium enterprises, and investment facilitation—that are not part of the Doha mandate. “All compromise[s] is based on give and take but there can be no give and take on fundamentals,” she said, quoting Mahatma Gandhi. “Any compromise on mere fundamentals is a surrender. For it is all give and no take.”

Clearly, the emphatic statement from the Indian ministers seemed at setting right the wrongs that were committed at the last ministerial meeting in Nairobi in December 2015. “The first step in this direction has to be building confidence and establishing mutual trust among WTO membership, which unfortunately seems to have been eroded over the years and dealt a body blow by the developments at the Nairobi ministerial conference,” she said.

In contrast, Argentina’s Susana Malcorra praised the Nairobi outcomes. Shockingly, she did not even mention the Doha Round in her address to members at the WTO. She said “there are new issues of the 21st century that require attention”. In short, battle lines are drawn. It remains to be seen whether Sitharaman will prevail or Malcorra will score the goal at Buenos Aires.

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