India is facing a grave crisis in global trade as the US attempts to change the rulebook of the World Trade Organization by working “closely with the very-able director-general, Roberto Azevedo". According to trade envoys who spoke on condition of anonymity, the US has made it almost clear that it will effect far-reaching changes in the WTO rules so as to ensure that India and other developing countries are denied ‘policy space’ to address their specific trade needs.
“We have been very active at the WTO [and] we work closely with the very-able director-general, Roberto Azevedo" for addressing the specific concerns bothering the US, said Ambassador Robert Lighthizer, the US Trade Representative, during a hearing of the US Senate finance committee on 12 March.
Soon after terminating benefits worth billions of dollars accruing to Indian exporters under the generalized system of preferences (GSP) scheme on 5 March, the USTR and his team had embarked on proposals that would deny India and other developing countries flexibilities accorded under global trade rules. The US, for example, declared that India and other developing countries such as South Africa cannot avail of special and differential treatment (S&DT) in any current or future trade agreements on grounds that they are members of the G20 which was created by Washington following the 2008 financial crisis.
Without naming India, the USTR said, “many members self-declare themselves to be developing countries even though they are among, in many cases, the richest in the world" to avail of special and differential treatment. The US proposal to deny S&DT, India warned on 28 February, “can cause lasting damage to the multilateral trading system."
S&DT enables developing countries like India to take commensurate trade commitments based on their economic capacity. It allows developing members like India to formulate “their domestic trade policy, in a way that helps them to reduce poverty, generate employment and integrate meaningfully into the global trading system."
While developing countries made progress on some economic indicators since the inception of the WTO in 1995, “the old gaps in the levels of development are far from being bridged, and in some areas, have even widened," India cautioned. But the US turned a deaf ear to the calls from India and a large majority of developing countries about the denial of S&DT. India, for example, is unlikely to secure any flexibilities for safeguarding livelihood concerns of its fishermen in the new trade rules for fisheries subsidies because of the US proposal to deny S&DT, said a trade envoy from Africa, who preferred anonymity.
Ambassador Lighthizer accused the WTO for having transformed into a “litigation forum" with its dispute settlement system for resolving global trade dispute having breached its mandate. The WTO members had established a facilitator to address the specific issues raised by the US early this year. But the US chose to cock a snook at proposals during the meetings specifically convened to address Washington’s special concerns about improving the functioning of the appellate body. India expressed alarm at a meeting convened by the facilitator Ambassador David Walker of New Zealand on 21 March that the US has not submitted any proposal on how to address the issues it had raised.
The US, which had blocked the selection process for filling vacancies at the appellate body, the highest adjudicating mechanism for resolving global trade disputes, seems determined to decimate the appellate body by the end of this year, said several trade envoys, who asked not to be named.