The World Trade Organisation’s 12th Ministerial Conference (MC12) will kick off today in Switzerland’s diplomatic town of Geneva. Originally scheduled to be held in June 2020 in Kazakhstan’s Nur-Sultan, it was postponed twice due to the pandemic. There are, therefore, more pending issues than ever before as trade ministers from across the world assemble at the WTO headquarters between June 12 and 15. Delegates from 164 member nations have to take decisions on a range of unresolved issues — from farm and fisheries subsidies to temporarily waiving off intellectual property rights for manufacturing Covid-19 vaccines and products.
Such a miracle, though, is unlikely to happen. If the pre-event negotiations and the convergence therein are any indication, the ministerial conference is likely to falter once again. The deliverables on the table are getting shrunk even as Indian officials who are privy to the negotiations tell ET that there could be some headway on fisheries subsidies as well as in the wrapping up of a text — more a declaration than an agreement — on what should be the role of trade in encountering future health crises.
No meaningful outcome at MC12 would lead to a volley of questions on the relevance of the WTO and whether multilateralism will soon be dead. These questions will have some add-ons. More and more nations today are embracing a self-reliance mode and a few biggies, including the US, are turning into protectionism. Then there is a subtle attempt of rich and powerful nations within the WTO to form elite sub-groups to advance their own agenda by relentlessly pursuing what is called plurilateralism, which could threaten to alter the multilateral and consensus-based fabric of the WTO. On top of it, key economies are aggressively pursuing bilateral and regional preferential pacts, which economist Jagdish Bhagwati had once called termites in the global trading system.
Amid such a dismal outlook, it is important that the WTO remains relevant and retains its original characteristics — member-driven, consensus-based and multilateral.
“India’s interests lie in the multilateral trading system. WTO is a rule-based, democratic and transparent organisation. Every nation has a veto. If one country objects, a proposal can’t go forward. All decisions need to be taken by consensus. India’s stand should be to make the WTO work more efficiently and effectively.”
Former Union commerce and industry minister Suresh Prabhu, who is known for his advocacy of multilateralism, argues that India’s interests lie in the multilateral trading system. “WTO is a rule-based, democratic and transparent organisation. Every nation has a veto. If one country objects, a proposal can’t go forward. All decisions need to be taken by consensus. India’s stand should be to make WTO work more efficiently and effectively,” he says, adding that he expects MC12 to bring in some forward-looking dynamism in the global trading system.
Since it was established in 1995, the WTO and its agreements have dealt with international trade in goods and services, covering some newer areas such as intellectual property and subsidies. It also created a well-defined procedure for settlement of disputes. Its predecessor, the General Agreement on Tariffs and Trade or GATT (1948-94), was confined to trade in goods but it was the harbinger of multilateralism. The present WTO rules are an outcome of GATT’s Uruguay Round of negotiations (1986-94), the complete set of which runs into some 30,000 pages.
In terms of structure, the ministerial conference, which usually meets every two years, is the top decision-making body of the WTO. Below that lies the general council comprising ambassadors and select officers posted in Geneva. It meets multiple times a year. Other smaller bodies such as goods council, services council and intellectual property council report to the general council. Unlike in the UN, the WTO secretariat wields very little power.
A new challenge for middle-income nations such as India has been the growing formation of elite clubs within the WTO framework. Some developed nations/members, the EU in particular, are seeking to make fundamental changes to the very architecture of the WTO, which will enable them to negotiate new agreements without receiving approvals from all WTO members. They also want to
the WTO secretariat, an exercise that may indirectly benefit the EU and other rich members more. Now, the ultimate power rests with its members irrespective of whether they are big or small.
At the last count, there are 355 free trade agreements, of which some are large plurilateral pacts — agreements among select WTO members. Plurilateralism is not a new phenomenon. Yet it is turning into a big concern as high-income, influential members have increasingly demanded it to be a ubiquitous feature of the WTO, more as a reaction to what they call the failure of multilateralism—that several countries are still not willing to liberalise themselves.
“India has been opposing plurilateral treaties because plurilateralism creates elite groups within the WTO. If countries are allowed to bypass multilateral and consensusbased mechanisms and permitted to have agreements among themselves, making WTO a party to it, then it will be a UN Security Council moment for WTO.”
“India has been opposing plurilateral treaties because plurilateralism creates elite groups within the WTO,” says Jayant Dasgupta, former Indian ambassador to WTO. “If countries are allowed to bypass multilateral and consensus-based mechanisms and permitted to have agreements among themselves, making WTO a party to it, then it will be a UN Security Council moment for WTO.”
Future of multilateralism
The elite groups within the WTO, for example, seek to prohibit restrictions on crossborder data flows and ban localisation of servers, clearly in a bid to freeze the firstmover advantage of businesses like those in Silicon Valley. In effect, they will curtail the ability of governments across the world to tax the electronics-digital sector. “The EU, US, Canada, Australia etc, want to change the very structure of the WTO by bringing in plurilateralism as an accepted mechanism.
India’s view is — let’s bring in reforms but don’t change the basic characteristics of the WTO, which are multilateralism and members-driven,” says a Geneva-based Indian negotiator mounting a last-ditch effort to swing MC12 negotiations in India’s favour.
The initial draft, which was prepared for discussion during the MC12, was strongly opposed by India and several other nations. The text was later watered down. “The new text has still not used the term multilateralism, but it says it accepts WTO’s commitment to its founding principles,” the negotiator adds. “Now the problem is that the US and the UK are opposing the new paragraph.” Plurilateralism as an accepted WTO norm has turned into such a vexed subject that it could even derail the very initiative of reforming the apex trade body. WTO’s deputy director-general Angela Ellard acknowledged publicly in March that members had different ideas on reforms. “While this issue is unlikely to get resolved at MC12, it is important to set a path for future work,” she said at an event hosted by the Organisation for Economic Cooperation and Development.
The WTO model of negotiating trade rules and settling disputes is better because it brings all nations to one table. “Theoretically, it embeds two value systems — one, non-discrimination, two, national treatment which means no discrimination between imported and domestically produced goods,” says a former official of India’s commerce ministry, requesting anonymity as he had handled international trade matters earlier.
At MC12, the agenda for WTO reforms will find a prominent berth, with developed and developing nations likely crossing swords over its future contours. In the parlance of WTO’s Director-General Ngozi OkonjoIweala, MC12 deliverables can be classified as “four pillars plus”, meaning — i) fisheries subsidies, ii) agriculture, iii) WTO response to the pandemic which may include the waiver to the Agreement on TradeRelated Aspects of Intellectual Property Rights and iv) WTO reform, plus least-developed country (LDC) issues. She summarised the agenda while speaking at a special meeting of the general council on June 7 — just five days before the event starts. DG Okonjo-Iweala added, “Many gaps remain but we are making progress. Let us keep on the pressure, let us keep up the work at this critical juncture.”
Negotiation, it is said, is a strategic conflict; there will always be leeway to manoeuvre till the last moment to bridge the gap and clinch some tangible outcomes. At MC12, backchannels will be live 24×7.