Opinion | Must India pay for America’s trade war with China?
4 min read . Updated: 24 Oct 2018, 11:01 PM IST
PremiumTo address the trade war, reforms are being proposed by different countries
If the global trading system is under fire, what should its members do ? That is the question India posed to 163 members at the World Trade Organization (WTO) last week.
For the past two years, a sustained assault by the America First policies has caused a “systemic" tsunami in the multilateral trade order. “We reject the ideology of globalism and we embrace the doctrine of patriotism," US president Donald Trump had said during his address to the United Nations last month.
It is an open secret that globalism was nurtured and sustained by the US over the past 70 years. It forced countries to accord primacy to global trade rules as embodied in the General Agreement on Tariffs and Trade (GATT), later replaced by the WTO.
Undoubtedly, the US made tremendous gains using the globalist framework not just in trade, but in other areas, particularly security. Little wonder, it helped the US to become the global hegemon for policing the international rules in trade, human rights and security, among others, at warp speed.
Against this backdrop, the US now says existing rules it had created over the past 70 years are “rigged" because they help only one country—China. That Beijing is able to game the system of existing rules at the WTO by pursuing allegedly non-market economic policies, which in turn, contributed to its relentless growth since 2001, must now be stopped by any means, the American establishment argues almost in one voice day and night. However, it remains moot whether India and other developing and poorest countries at the WTO must pay a price for Washington’s trade war with Beijing. And to address that trade war, reforms are being proposed on a grand scale by different countries and global financial and trade institutions for modernizing the WTO.
The European Union, Canada and the WTO Secretariat-World Bank (WB)-International Monetary Fund (IMF) have proposed reforms. Shockingly, the WTO Secretariat has become a party to these reforms even though it is not permitted to have such a role.
The reforms include junking the “consensus" principle that is the hallmark of the functioning of the GATT /WTO since 1948. The EU (European Union), Canada and the WTO-WB-IMF have insisted that special and differential flexibilities, which provided “policy space" for China, India, Brazil and South Africa, among others, must be curtailed. The principle of non-discrimination in the conduct of commerce among countries must be set aside.
Worse still, there should be no credible and impartial and effective dispute settlement system overseen by the highest adjudicating body, or the Appellate Body, the US has maintained. For addressing the so-called 21st century issues, the WTO members must embark on a new round of plurilateral (two or more countries) trade negotiations for crafting rules in electronic commerce, investment facilitation, disciplines for micro, small and medium enterprises, and trade and gender, among others.
Effectively, plurilateral talks will enable jettisoning the Single Undertaking framework, which ensures nothing is agreed upon until everything is agreed upon. The US, the EU, Japan and Canada , which were earlier called the Quad had forced the Single Undertaking in the previous Uruguay Round that established the WTO. But now, they say WTO does not need that all encompassing/unifying framework.
The list of reforms also calls for disciplines to target state-owned enterprises, trade-distorting industrial subsidies, forced transfer of technologies, and stringent provisions for stopping the alleged threat of intellectual property rights.
Though the proponents of the reforms say they are targeted against China, they could adversely affect India and other developing countries for pursuing autonomous policies. Under the rubric of strengthening the transparency and notification provision, the proposals aim at enhancing the role of the WTO secretariat to conduct intrusive oversight. In short, for the fire that has engulfed the trading system thanks to Trump’s incessant attacks, countries like India are being asked to pay a price now.
“Some of the ideas on reforms being floated, in their breadth, novelty and potential impact of akin almost, to launching a new Round, even when we still need to address some of the Doha issues, build on the work done and harvest some outcomes," India has rightly argued.
Just when a healing touch is needed to enhance trust among members at the global trade body for addressing the outstanding issues, they are being subjected to another daylight robbery under the pretext of dousing the Trumpian flames!
forms maintain that they are specifically targeted against China, in reality, they could adversely affect India and other developing countries for pursuing autonomous developmental policies. Under the rubric of strengthening the transparency and notification provision, the proposed reforms aim at enhancing the role of the WTO secretariat so to conduct intrusive oversight and monitoring jobs.
In short, for the fire that has engulfed the trading system, particularly the WTO, thanks to Trump’s incessant attacks, countries like India are being asked to pay a price now. “Some of the ideas on reforms being floated, in their breadth, novelty and potential impact of akin almost, to launching a new Round, even when we still need to address some of the Doha issues, build on the work done and harvest some outcomes," India has rightly argued. Just when a healing touch is needed to enhance trust among members at the global trade body for addressing the outstanding issues, they are being subjected to another daylight robbery under the pretext of dousing the Trumpian flames!
