India reconsiders opposition to new trade issues at WTO

New Delhi: India is reconsidering its stance on new trade issues such as global value chain (GVC) and e-commerce at the World Trade Organization (WTO), sensing that it can’t keep on opposing such issues for too long.

“We have to take a call on new issues such as GVC and e-commerce. We have always said new issues should have a consensus building approach. A lot is happening in areas such as e-commerce. We can’t say we don’t want to engage. Whether you like it or not, there is discussion happening on such issues,” a government official said on condition of anonymity.

Multinational firms mostly based in developed countries use GVCs spread across the world for their production network through a chain of contract manufacturers, suppliers and logistics providers. Developing countries fear that in the garb of formulating GVC rules under WTO, developed countries will force them to bring down tariff rates, set new investment and labour standards, which could be detrimental to their interest.

After the ongoing recess at the WTO secretariat in Geneva, there could be louder demands to discuss these so-called 21st century issues at the multilateral forum, the official said.

India has so far maintained that member-countries must conclude the long-pending Doha Development Round of the WTO before taking up any new issues for negotiations.

However, at the Nairobi ministerial of WTO members in December, the multilateral body openly accepted the differences among members on the way forward on Doha issues; it was widely interpreted as the end of the road for Doha round talks.

In the G-20 trade ministers meeting on 9-10 July in Shanghai which was attended by Indian commerce minister Nirmala Sitharaman, ministers agreed to boost trade in services and promote e-commerce development, among other things.

“We also note that a range of issues, such as those addressed in various RTAs (regional trade agreements) and by the B20 (Business-20), may be of common interest and importance to today’s global economy and, thus, may be legitimate issues for discussions in the WTO, without prejudice to respective positions relating to possible negotiations in the future. Any decision to launch negotiations multilaterally on such issues would need to be agreed by all members,” a joint statement by the trade ministers said.

It also encouraged member-countries to join plurilateral agreements such as an expanded information technology agreement, trade in services agreement (TISA) and environmental goods agreement (EGA).

India has so far opposed the EGA, which seeks to eliminate tariffs on a broad range of environmental goods, fearing developed countries could use it as a new trade-restrictive measure. However, it has softened its opposition to TISA.

Under the Regional Comprehensive Economic Partnership (RCEP) agreement, which is under negotiation, India has accepted ratchet and most-favoured nation-forward (MFN-forward) clauses that it was opposed to under TISA. Ratchet implies that future domestic policy changes undertaken autonomously by India will automatically get committed under RCEP, while MFN-forward means any future concession given to a trading partner under a bilateral treaty will automatically get extended to RCEP members as well.

India has also proposed trade facilitation in services (TFS) under WTO, in line with the trade facilitation agreement (TFA) in goods which has already been agreed to by member-countries.

Many countries have expressed interest in the proposal and have asked India to make a formal presentation, which is under preparation.

India believes setting global standards on trade in services under WTO will help make visa regimes in developed countries become more transparent and less restrictive for its skilled professionals. India has threatened to drag the US to WTO over its higher and discriminatory visa fee regimes for Indian software professionals.

However, WTO members seem to be looking at a more comprehensive services agreement. The WTO, in a statement released on 4 July, said countries expressed willingness to resume negotiations on greater market access for services and services suppliers from other WTO members, developing new disciplines to render domestic regulations more objective and transparent, and to ensure that these are not unnecessarily burdensome and services aspects of e-commerce.

The US presented a three-page discussion paper on 1 July at the WTO for launching a work programme on e-commerce.

The so-called non-paper suggested several examples in the e-commerce work programme that members must consider for an outcome.

They include prohibiting digital customs duties, preventing localization barriers, barring force technology transfers, protecting critical source code, ensuring technology choice and authentication methods, safeguarding network competition, preserving market-driven standardization and global interoperability and ensuring faster, more transparent customs procedures.

Under the RCEP framework for negotiations, India has agreed only for information exchange, resisting demand from some members for enforcing binding commitments.

Jayant Dasgupta, executive partner at law firm Lakshmikumaran and Sridharan and former ambassador of India to WTO, said though India can’t shut its eyes to new issues, it should agree to negotiate on such issues only if it suits its national interests. “Some of the new issues are beneficial to us. We have to look at what will benefit us 5-10 years down the line,” he added.