Home >Opinion >Columns >Opinion | The coming apart of WTO spells an opportunity for Indian trade

Trade has never been free or fair. Now, as the world reels under covid-19, it looks like worse is coming. In an un- expected announcement, Roberto Azevedo, Brazilian diplomat and director general (DG) of the World Trade Organization (WTO), said he is leaving the top job ahead of schedule. This is the first time in the history of the relatively young WTO (which succeeded GATT, or the General Agreement on Tariffs and Trade) that a DG has resigned. Azevedo’s departure is a major blow, the gravity of which is slowly surfacing. “I will not be the leader with whom you will chart and walk the strategic path ahead," the Brazilian said in a carefully worded resignation note.

Strategic yes, but path to where? And more importantly, who and who all will help lead it? From the days of pirates to those donning three-piece suits, carving up the world and later its goods trade, business across the high seas has often been ruthless, where the first to blink loses all. Set up in 1995, the WTO was supposed to end all that. The tumult that has hit the trade body now will have far-reaching consequences for covid-struck economies, tossed unto turbulent waters without a compass and no lighthouse in sight. This malaise has come at a time when the WTO’s appellate body (where trade disputes are settled) has systematically been rendered ineffective by the US, which privileges bilateral trade over multilateral rules.

The battle is now between the US and China. The world’s strongest free market and the world’s largest dictatorship, the latter with its one-way embrace of the free market, are slanging it out at the cost of years of painstaking work by over 150 countries to bring some order to the multilateral trading system, without which there will be a return to the law of buccaneers. It is a difficult course for an aspirational India.

Protectionism? Nationalism? What will be the new normal of global trade, as the world grapples with a new post-covid reality? How free and equitable will the new scenario be? Diplomats and others in Geneva, which hosts the WTO’s headquarters, say trade and public health have never been as intertwined as now and the absence of a system to democratically address both poses threats to national sovereignty.

“The increasingly moribund WTO Appellate Body, the premature departure of the Director General Roberto Azevedo and the protectionist fervour of economic nationalism unleashed by the covid-19 pandemic paint a grim picture for the future for the multilateral rules-based system that has formed the bedrock of globalization and international trade," says Thiru Balasubramaniam, the Geneva representative of Knowledge Ecology International (KEI). “In 1494, new emerging Iberian powers carved up the world in the Treaty of Tordesillas. If the rules-based system unravels, will we see a return to the days of might makes right? Smaller countries, rich or poor, will find it difficult to navigate the waters of a mare clausum."

From masks and other personal protective equipment to ventilators, pharmaceuticals and bandages, covid-19 has laid bare the world’s dependence on China. “WHO and WTO are working together to support efforts to ensure the normal cross-border flow of vital medical supplies…to resolve unnecessary disruptions to global supply chains," the World Health Organization and WTO said in a rare joint statement, fanning concerns that China, widely believed to be driving the health body, will seek further WTO capture. “But any measure taken to promote public health that restricts trade should be “targeted, proportionate, transparent and temporary", and “consistent with recent calls from world leaders", the statement said. This came as countries, including India, wrote new laws to protect their domestic industries from hostile takeovers during the pandemic.

We are just a heartbeat away from lawless trade, and it is no small irony that the WTO, pushing 30 years as the ultimate rule-bearer, finds itself adrift. Called the third Bretton Woods organization (the World Bank and International Monetary Fund being the other two “twins"), it came in to create a rule-based order for world trade. Unlike the 1948 GATT, which was a provisional contract between governments acceding to it, the WTO was a full-fledged treaty among trading nations.

The Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS, (intellectual property, including public health-related), and the Agreement on Trade-Related Investment Measures, or TRIMS, which covered services too, were among the later additions to the system. It allowed for cross-sectoral retaliation. If country A’s banking services were kept out, for example, it could retaliate by cutting off access to its vegetables or technology. Globalization was the buzzword and India was in focus. Successive Indian governments did what they do best—they sat on the wall, when not petulant.

The WTO’s woes today are an opportunity for India. As global companies leave China, New Delhi needs to think on its feet. The recent shot in the arm to small and medium-sized firms comes at the right time. “Countries like India will now need to put life into the trading organisation after having been free-riders. Global trade and investments are now an Indian imperative, atma-nirbharta (self-reliance) notwithstanding," says Samir Saran, president of Observer Research Foundation, a think-tank. Can India spot an opportunity?

Chitra Subramaniam is an award-winning journalist and author.

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