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Geneva:India could lose special and differential flexibilities, including the consensus principle for making new rules, at the World Trade Organization (WTO), if the European Union (EU) and a group of countries, have their way in steamrolling reforms in the global trading system, said trade envoys familiar with the development.

On Tuesday (18 September), the EU issued a concept paper called “WTO modernization" largely parroting US President Donald Trump’s criticism of the global trade body, particularly the manner in which it helped China since 2001.

Senior trade officials from eleven countries, including Japan, Canada, Norway, Switzerland, Australia, New Zealand, Singapore, Korea, Mexico, Chile, and Brazil, besides the EU, will discuss the EU’s concept paper at a meeting on Thursday. The US, China and India are not invited to the meeting.

For addressing the concerns raised by the US President and trade representative ambassador Robert Lighthizer, the EU calls for abandoning the Marrakesh Agreement that established the WTO in 1995, so as to launch plurilateral (more than two countries) negotiations. In the area of rule-making and development, the EU has argued that “divergent interests, the extreme difficulty in arriving at consensus decisions by all 164 members, and the current approach on development" caused numerous roadblocks. Brussels wants to enhance the role of the WTO Secretariat in ways that would severely undermine the member-driven principles.

Without mentioning the country, that is, the US, which is responsible for global trade wars, the EU said the current “deepest crisis" in the global trading system can only be addressed by jettisoning the Uruguay Round commitments and the creation of the WTO based on the Marrakesh Agreement. “It is clear that 23 years after the creation of the organization (based on the Marrakesh Agreement) and the conclusion of the Uruguay Round (commitments), the multilateral system is in need of a change," it argued.

The WTO’s negotiating function based on the consensus principle “has not been able to deliver any significant improvements in the trade rule book apart from the agreements reached on Trade Facilitation and Export Competition", the EU pointed out. It did not, however, mention that both the Trade Facilitation Agreement and Export Competition are parts of the unfinished Doha work programme.

The WTO system, according to the EU, “remains blocked by an antiquated approach to flexibilities, which allow over 2/3 of the membership, including the world’s largest and most dynamic economies (China, India, Brazil, South Africa, and Indonesia) to claim special (and differential) treatment." The EU’s proposal also called for reform of the dispute settlement body, beginning with procedural changes in filling vacancies in the Appellate Body and then more substantive issues.

Without naming the US, Brussels said the crisis in the multilateral trading system “is set to deepen further in the coming months, as more unilateral measures are threatened and imposed, leading in some cases to countermeasures or to mercantilist deals". The EU’s proposal call for new rules in the area of subsidies and state-owned enterprises for targeting China. “The EU’s paper lacks credibility since it shifts the focus away from well-vented US protectionist actions and towards more stringent rules on developing countries," said one developing country envoy, who asked not to be quoted.

“The proposals are dead on arrival because Brussels is not sincere as it seeks changes merely to appease the US," the envoy added. Where are the guarantees that the US will adhere to any new change dome out of any reform three years hence when another US President takes office, he asked.

Some other developing-country members asked what they will get in return to agreeing to the reforms and what payment the EU is asking to address developmental concerns. A least-developed country envoy argued that the paper will “take things backwards" instead of coming to grips with the real problems at the WTO. Members must address issues concerning inclusivity and the development-deficit at the WTO, he said.

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