Mint Explainer: Why the WTO’s Abu Dhabi meeting might be a downer

The World Trade Organization's 13th Ministerial Conference in Abu Dhabi has been marked by several disagreements among prominent member-nations. (AFP)
The World Trade Organization's 13th Ministerial Conference in Abu Dhabi has been marked by several disagreements among prominent member-nations. (AFP)

Summary

India has called out the US for obstructing reforms of the dispute settlement process, while India has been labelled as obstructionist for opposing the adoption of the IFD Agreement

By the end of the third day of the World Trade Organization’s meeting in Abu Dhabi, hopes of adopting new agreements that could transform world trade were replaced with disappointment.

It became clear that hard negotiations and compromises would be required to get some of the agreements that had been already or nearly finalised into the declaration. The Investment Facilitation for Development (IFD) Agreement, for instance, has run into rough weather due to objections by India and South Africa.

The Abu Dhabi session of the WTO’s four-day biennial meeting of trade ministers had begun on an optimistic note with Timor-Leste and Comoros, among the least developed countries, joining the global trade body. This increased the total membership of the organisation to 166 as the WTO marked 30 years of existence. 

That these two nations were the first additions to the WTO’s membership in eight years made it significant. Another 22 countries from Africa and the Arab region were in the queue to join, WTO director-general Ngozi Okonjo-Iweala told delegates and media.

But differences among prominent constituents of the WTO became evident from the slow progress on agriculture and fishing subsidies agreements, as well as on reforming the dispute settlement process. At the end of the third day, it was apparent that the WTO’s Thirteenth Ministerial Conference (MC13) would end without a deal on these contentious issues. 

India continued to be labelled as obstructionist for its opposition to the adoption of the IFD Agreement, while India called out the US for obstructing reforms of the dispute settlement process.

Mint looks at the state of play at the Abu Dhabi conference and India’s position on various negotiations.

 

Dispute settlement reforms

This has been one of the top priorities for India. The appellate arm of the dispute resolution system has not been functional since December 2019 as the US has been blocking the appointment of new judges. This has left trade disputes worth billions of dollars unresolved. 

An early resolution looks difficult as the US continues to stall progress. US trade representative Katherine Tai explicitly ruled out an agreement this week, saying the dispute settlement negotiations would continue on much harder issues after the conference ends.

India has maintained that a credible and reliable WTO dispute settlement system is the bedrock of an equitable, effective, secure and predictable multilateral trading system, and that the outcome of any reform process should provide for the restoration of the appellate body. 

Given the stalemate, India has called for measures for the immediate and effective ‘formalisation and multilaterisation’ of the informal dispute settlement reform process. 

India has been engaged in informal dispute settlement reform talks with certain members, but it says the format and pace of informal talks make it difficult for least developed nations to participate effectively.

Negotiations on agriculture

This contentious issue has been on the table for 20 years, although Okonjo-Iweala is cautiously optimistic about landing a deal. One of the critical areas of discussion is public stockholding for food security purposes, on which India and about 80 other countries have concerns. As Okonjo-Iweala said at one of the briefings, there are domestic issues to consider for every country. However, that all countries have agreed to negotiate off the same text is a significant development, she said.   

India wants a permanent solution. “I re-emphasize that the development agenda would remain incomplete without a permanent solution on public stockholding for food security purposes, which is directly related to achieving the sustainable development goal of zero hunger by 2030," India’s commerce and industry minister Piyush Goyal said in his pre-recorded inaugural address.

India has argued that the focus of the agricultural negotiations should not be narrowed down to the trade interests of exporting countries only, and that the real concern is the food security and livelihood of people.

Negotiations on fisheries subsidies

India has some differences with many nations on this. The objective of this negotiation, which also started about 20 years ago, is to ensure that fishing remains sustainable, given that about 260 million people across the world depend on it. 

The WTO estimates that the oceans are getting about 50% overfished. The agreement is meant to end subsidies that contribute to overcapacity and overfishing. 

India’s position is that the current approach of overcapacity and overfishing is flawed. The country has proposed the introduction of a moratorium on subsidies by distant water fishing nations for fishing or fishing-related activities beyond their exclusive economic zones for a period of at least 25 years.

The first part of the agreement to end illegal, unreported and unregulated fishing was reached at the previous ministerial conference held in Geneva in June 2022. Seventy members have accepted that agreement. Another 40 members need to accept it formally before it can come into effect. Agreements enter into force only upon acceptance of its legal instrument by two-thirds of the membership.

The WTO secretariat is hoping that a consensus is reached on the second part of the agreement. Both Okonjo-Iweala and facilitator of the negotiations, Iceland’s permanent secretary of state Martin Eyjolfsson, are hopeful of an agreement before the close of the Abu Dhabi conference.

Investment Facilitation for Development Agreement

Until India and South Africa filed a formal objection to this deal, IFD was considered an achievement of MC13. The stage was set for its adoption as 126 countries, or three-quarters of the WTO members, had accepted it. 

The initiative, supported by China, was meant to improve the investment and business climate in member countries and make it easier for investors in all sectors of the economy to invest, conduct their day-to-day business, and expand their operations. It is a most-favoured-nation-based plurilateral agreement and therefore binding only on the members that accept them.

India and South Africa argued that the agreement was not based on exclusive consensus and could not be part of the MC13 outcome document. WTO rules allow individual members to obstruct the adoption of a deal. India has also stressed that the agreement falls outside the scope of the WTO as it was not strictly a trade issue.

Services Domestic Regulation

This is one concrete achievement of MC13, and one where India and South Africa joined forces to successfully bring some amendments. The WTO considers the deal a major milestone–it is the first services agreement in 25 years and the first of the joint initiatives launched at the MC11 in Buenos Aires to be concluded and take effect. Seventy-two members who account for 92% of world trade in services are part of the agreement.

These regulations are intended to mitigate unintended trade-restrictive effects of measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards. These seek to make the regulatory environment more conducive to business and particularly help micro, small and medium-sized enterprises as well as women entrepreneurs.

The WTO estimates that implementation of the agreement will help to reduce services trade costs by 10% for lower-middle-income economies and by 14% for upper-middle-income economies, with overall savings of $127 billion for the world economy. 

Computer services, banking and telecommunication services–key intermediate services for all economic activities–are expected to benefit the most from a reduction in costs. Digital trade will also experience a reduction in costs.

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