The 13th Ministerial Conference of the WTO (MC13) ended with a whimper recently in Abu Dhabi, with trade ministers of the 166-member organisation barely stitching up a declaration to show for their efforts. In truth, not much was expected from MC13 for two related reasons.
First, the organisation is mired in crisis, with deep divisions among the membership regarding the way forward to keep it going. Second, the differences amongst them needed to be sorted out, and dominant countries needed to show sufficient political will to resolve their differences. These are tall asks even during normal years, but when the realities of 2024 are factored in—especially elections in most major economies and an impending slowdown of the global economy—the asks look even more daunting.
In today’s reality, when economic nationalism has become the mantra, there is little political support for trade. Project globalisation, fuelled by expanding production networks or global value chains, finds itself in choppy waters as the value chains have slowly but surely weakened. The pandemic dealt another telling blow. The final nail is the political turmoil between the Western alliance and China that turned the former countries inward-looking in an effort to decouple from the ‘factory of the world’. With trade losing ground in the political pecking order, there was hardly a chance the WTO could receive political backing in Abu Dhabi.
Over the past several years, serious differences arose between the members over the negotiating agenda of the organisation. The differences came to a head in 2017, when some countries decided to discontinue the negotiations on the Doha Development Agenda (DDA), which the members had adopted by consensus in 2001. These countries decided to commence negotiations on (foreign) investment facilitation, electronic commerce, and domestic regulation of services through the Joint Statement Initiatives (JSI).
Importantly, there was no consensus on commencing negotiations on the new issues. This dealt a crippling blow to the spirit of multilateralism in trade, in which decisions are to be taken by consensus. The Marrakesh Agreement, the legal instrument that established the WTO three decades back, stated it “shall continue the practice of decision-making by consensus”.
That the JSIs and the consequent decision to forge plurilateral agreements were not in accordance with the WTO’s legal instrument was pointed out by India and South Africa. But despite these interventions, the negotiations for forging these agreements proceeded nonetheless. The WTO members had, in 2004, decided not to include substantive issues regarding foreign investment, again by consensus. This implies the decision to talk of investment facilitation not only broke the “consensus rule” but also a past agreement.
At MC13, there was considerable pressure to include the Agreement on Trade Facilitation for Development as a plurilateral agreement. Among the major protagonists was China, with the US uncharacteristically keeping itself out of the negotiating process. India’s intervention against the inclusion of this agreement helped in keeping investment facilitation out of the WTO. But more significantly, India’s intervention prevented the setting of the damaging precedence of breaking the “consensus rule”, thus threatening the very integrity of multilateralism in trade.
MC13 should have been utilised start remedying the systemic problems faced by the WTO, especially for rebuilding its broken dispute settlement mechanism (DSM). Considered the ‘jewel in the crown’ of the organisation, the DSM is vitally important for ensuring members implement their commitments. Unfortunately, it has been in disarray since President Donald Trump decided to paralyse its appellate body by refusing to appoint new members.
Equally important was the need to resurrect the developmental issues and concerns being addressed through the DDA. This is an undesirable augury given that the WTO has a crucial role to play in moving towards the realisation of Sustainable Development Goals.
The short shrift given to development concerns needs no better example than the refusal by the US and other countries to find a permanent solution for India’s public stockholding for food security purposes. The legality of public stockholding and the provisioning of food subsidies has been questioned by the Agreement on Agriculture, raising doubts over the future of the government’s decision to provide subsidised foodgrains to over 810 million poor citizens until the end of 2028.
The subsidies discipline of the AoA militates against the interests of developing nations, since the methodology for estimating the level of subsidies is bereft of any economic logic. The market price support given by India is compared with the level of international prices prevailing during 1986-88. Unfortunately, decisions on agriculture are overwhelmingly influenced by global agri-business companies for whom the advanced countries act as proxies. And, since these companies have shut down India’s agricultural subsidies, the issue of public stockholding did not find even a mention in Abu Dhabi.
Unsurprisingly, trade protectionism is gaining strength as the global economy is slipping towards a recession. An effective rules-based WTO was designed as an antidote to trade protectionism, a role it is unable to play in its current state.
Biswajit Dhar | Former professor, Jawaharlal Nehru University and Vice President, Council for Social Development
(Views are personal)
(bisjit@gmail.com)