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Business News/ Opinion / Buenos Aires meet could be WTO’s most challenging yet

Buenos Aires meet could be WTO’s most challenging yet

It seems probable that WTO would be left without an effective work programme, possibly renewing questions about the future of the organization

Trade minister Suresh Prabhu. Photo: Priyanka Parashar/MintPremium
Trade minister Suresh Prabhu. Photo: Priyanka Parashar/Mint

From all accounts, the 11th Ministerial Conference of the World Trade Organization (WTO) in Buenos Aires would be the most challenging for the organization. At this juncture, it seems highly probable that the multilateral trading system would be left without an effective work programme.

Should this happen for the second consecutive time—after the Nairobi Ministerial Conference in 2015 also failed to deliver a concrete work plan—renewed questions are bound to be asked about the future of the organization.

Over the past two years, the WTO has faced a serious existential crisis. In Nairobi, the organization presented itself as a completely divided house when the Declaration adopted by the ministers announced there was no unanimity over the future work programme.

The disagreement arose over continuation of the Doha Round, which has been the basis of WTO’s work since it began in 2002.

Since the start of the year, the Trump administration dealt yet another blow to the organization by virtually abandoning the pre-Buenos Aires engagement, backed by the rhetoric that the organization has not been protecting US interests.

With the Doha Round on the back-burner, a small set of countries have brought onto the table an agenda including issues which, in the past, were either discussed only peripherally or are entirely new.

These issues are electronic commerce (e-commerce), investment facilitation, and an agenda for the micro small and medium enterprises (MSMEs).

If there is one common element that joins the three issues mentioned above, it is the agenda of deepening trade and investment liberalization at the multilateral level.

E-commerce has received considerable traction in the run-up to Buenos Aires. Technically, the issue is not new to the WTO, having been introduced in 1998. Not clear about what this platform was capable of, when the internet was in its infancy, members of the WTO agreed not to impose import duties on “electronic transmissions", which was then understood as e-commerce.

The moratorium on imposing import duties continues till date. But, over the past year, a group of countries, both developing and developed, have proposed that the 1998 decision of not imposing import duties on “electronic transmissions" should become a “permanent moratorium", to be extended to e-commerce in general. These countries have argued that by so doing, MSMEs in developing countries would easily get access to international markets.

This, no doubt is an attractive proposition, until one considers the state of digital infrastructure, especially in the lower income and lower middle income countries, which form the largest chunk of the developing world.

In these countries, while the use of internet is spreading slowly, access to broadband connectivity and secure internet servers is well below global averages. Strangely, the discussions in the run-up to Buenos Aires made no reference to this serious digital infrastructure deficit in developing countries.

This implies that unlike in the case of the Trade Facilitation Agreement, where the infrastructure deficit was recognized as an impediment for implementing the Agreement and hence an enabling environment was provided—an agreement on e-commerce, if agreed, will leave a majority of WTO members without the necessary wherewithal to use this platform for improving their presence globally.

While the new agenda has been at the centre for much of the pre-Buenos Aires process, at least four issues concerning disciplines on agriculture are also on the table. The first of these is public stockholding for food security (PSH), an issue of deep concern to India since existing WTO rules on subsidies can force India to roll back its National Food Security Act.

The second issue, namely, special safeguard mechanism, is a long-standing demand of G-33 (a grouping that includes India) for isolating the small-holder dominated agriculture in developing countries from uncertainties in the international market.

The third concerns proposals to amend provisions relating to production-related subsidies in agriculture or domestic support, which India and China have jointly opposed.

India has taken a strangely subdued position in the run-up to the Buenos Aires Ministerial Conference.

Other than issues in agriculture, it has formally registered only a tacit opposition to the proposals for a “permanent moratorium" on import duties concerning e-commerce. On the issue of PSH, India faces an uphill task in protecting its interests in the face of serious opposition from a number of countries. These countries are willing to allow India to feed its poor through a public distribution system only after the government meets a number of conditions.

Additionally, on the issue of domestic support, the subsidies that India provides to the small and marginal farmers, which are completely consistent with WTO’s Agreement on Agriculture, are being questioned by several members.

The government of India can ill-afford questioning of its food and farm policies in the WTO and, therefore, the expectation would be that in Buenos Aires, Suresh Prabhu is able to secure the country’s key interests.

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

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Updated: 13 Dec 2017, 12:05 AM IST
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