We balanced domestic interests with our trade needs at the WTO

India was also successful in resisting the inclusion of environmental issues and labour standards in WTO talks.  (REUTERS)
India was also successful in resisting the inclusion of environmental issues and labour standards in WTO talks. (REUTERS)

Summary

  • India successfully defended important interests at home while enhancing its global trade prospects. A difficult balance was struck by Indian negotiators.

India being on a path to become the world’s third largest economy, with annual growth predicted at above 6% (double the world average) for the next two years, cannot be ignored in multilateral trade discussions. At the same time, our trade negotiators had a tough job balancing the interests of different domestic stakeholders with the changing dynamics of global trade and geopolitics, with India’s aim of playing a key role in resilient global value chains forming an important part of the context. In the recently concluded 13th Ministerial Conference (MC-13) at Abu Dhabi of the World Trade Organization (WTO), the Indian trade negotiating team led by commerce minister Piyush Goyal deserves a round of applause for striking a delicate balance of protecting the interests of domestic stakeholders, supporting initiatives that can help promote the exports of small and medium enterprises (SMEs) and making India’s voice heard at the WTO. While many delegates from member countries left after the conference’s scheduled end, the Indian delegation stayed back till the actual end and contributed as a key player to the final MC-13 Declaration.

The Indian team has successfully protected our domestic policy space on industrial policy and blocked the Investment Facilitation Development Agreement, for which more domestic consultations would be needed. At present, views differ among experts and policymakers in India on a large-scale investment agreement and its modalities. India is engaged in negotiating bilateral investment agreements with major investing countries and trusted trade partners.

The run-up to the MC-13 witnessed farmer protests, and India did not yield ground on a permanent peace clause on the procurement of foodgrain for our public distribution system, giving the government freedom to buy as much as it wants, regardless of a flawed limitation formula. India also defended its policy space for subsidies. In most WTO member countries, be it developed or developing, irrespective of the size of their agriculture sector and its contribution to GDP, farmers play a key role in trade negotiations and domestic politics, and India is no exception.

India was also successful in resisting the inclusion of environmental issues and labour standards in WTO talks. While it may have hurt the sentiments of its trade partners like the EU, with which a trade deal is under discussion, India is willing to discuss these topics bilaterally. For example, on 14 November 2023, India along with 13 other countries signed the Indo-Pacific Economic Framework (IPEF) Supply Chain Resilience Agreement, which has both these components. The IPEF Agreement, for example, proposes to set up a Labour Rights Advisory Board, to support member countries in the promotion of labour rights in their supply chains, promote sustainable trade and investment, and facilitate opportunities for investment in businesses that respect labour rights as per ILO standards. Rather than try pushing the issue at a multilateral platform, trade partners like the EU and India can set up a mechanism for tripartite consultation across government, worker organizations and employer organizations, as proposed in the IPEF Agreement. We need more domestic research, consultations and consensus-building on these issues.

I am delighted to see India softening its stance on the current moratorium on customs duty for e-commerce, which got extended for another two years. With the government supporting SME exports through e-commerce—there is a chapter dedicated to it in the recent Foreign Trade Policy—this was the right step. India is among the world’s leading exporters of IT/ITeS services and with the growing digitalization of services, from education to audio-visual media, and the global expansion of our startups, it is important to understand the full scope of the e-commerce sector first. Without a clear picture of its coverage and data on trade flows, it is better to support business as usual, and that is exactly the stand India took.

In a difficult global scenario, amid pressure from some of its key trade partners, India has been able to represent the interests of the Global South, protect the interests of its domestic stakeholders and support fairness in the global trade order, while emphasizing issues like the immediate need to make the WTO Dispute Settlement Mechanism and Appellate body functional. The Indian trade negotiating team has ably defended the country’s interests at the MC-13 at a time when the country is headed for national elections and we face a difficult geo-political scenario. India is expected to continue its leadership role in creating policy platforms for collaborations, partnerships and discussions on trade issues, for which it would engage academics, industry experts and other stakeholders to develop pro-active strategies for future negotiations, multilateral, plurilateral and bilateral.

Balancing the need to protect the genuine interests of a vast swathe of domestic pressure groups with the compulsions of India’s burgeoning global trade ambitions was expected to be a tough task for Goyal in an election year at the WTO ministerial conference. He has again pulled a rabbit out of a hat to strike a fine balance between India’s domestic and international needs.

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