Buenos Aires Ministerial was a non-event (20/12/17)

The 11 Ministerial Conference (MC11) of the World Trade Organisation (WTO) ended on December 13, 2017, as it had begun—without any fervour. At Nairobi in 2015—during MC10—there was a major agreement eliminating export subsidies in agriculture. At Bali in 2013—during MC9—there was the momentous trade facilitation agreement. At the Buenos Aires meeting in 2017, there was not even a ministerial declaration.

 

In fact, there was not even a big fight. On the agenda there were no big-ticket items like domestic support in agriculture, market access in non-agricultural goods or liberalisation of trade in services. There were only miscellaneous items such as fishery subsidies, e-commerce, investment facilitation, micro, small and medium size enterprises (MSMEs), public stockholding for food security and domestic regulations in services. Significant decisions are lacking even in these areas.

 

The best that the ministers could do was to agree on decisions to continue the ongoing work programme in some areas. The big takeaway from Buenos Aires is that the WTO is no longer a vibrant organisation. The paradox is that almost all the ministers came out in solid support of the WTO in their statements at the plenary. The United States Trade Representative Robert Lighthizer praised the WTO as “obviously a very important institution” that “does an enormous amount of good,” even though US President Donald Trump is a leading WTO-sceptic.

 

The European Commissioner for Trade Cecilia Malmström spoke of the need to preserve and strengthen the rules-based multilateral trading system. The Indian minister of commerce Suresh Prabhu called upon the WTO membership to unequivocally reaffirm the importance of a rules-based multilateral trading system as enshrined in the Marrakesh Agreement. Other ministers spoke in the same vein. As many as 44 WTO members joined to issue a statement reaffirming the importance that they attach to the rules-based multilateral system. And yet when it came to taking decisions to push the multilateral agenda forward, they could not put their acts together. Both developed and developing countries must take the blame for this. It is not because of weaknesses in the WTO Agreement that new liberalisation agreements are not forthcoming. The fault lies with the members of the organisation. Vision is missing, political will is lacking and a constructive approach for seeking compromise solutions is absent.

 

The main success of the WTO since its birth has been in providing the framework for managing trade relations and, in particular, for resolving disputes. It is this rules-based framework that has proved to be a bulwark against protectionism. However, at present, even this role of the WTO is in jeopardy. The US has been holding up appointment of new members of the Appellate Body, with the result that there are only four members in position out of the seven. The US grievance is that there has been judicial overreach by the Appellate Body, enabling members of the WTO to seek rights through litigation additional to those that they secured during negotiations.

 

The proper course for the US to correct any flaws that may have developed is to submit proposals in this regard and seek negotiations. Undermining the dispute settlement process is no way to seek a remedy. How did India acquit itself? For the most part, India did not join the mainstream and was held back by an extraordinarily defensive stance. Multilateral initiatives were not in evidence at all during the MC11, but there were several plurilateral ones. Almost all the developed countries and several developing countries joined in a statement on electronic commerce and declared their intention to initiate exploratory work together towards future WTO negotiations on trade-related aspects of electronic commerce.

 

India declared its opposition to the initiative. Similarly, 70 WTO members announced that they would pursue discussions to develop a multilateral framework on investment facilitation. India remained aloof. Further, 87 members issued a statement creating an informal working group on MSMEs. Brazil, China, the EU, Japan and Russia joined in, but not India. The danger in keeping out of the discussions in an important area like e-commerce is that the proponents might go for a plurilateral agreement within or without the WTO. It is true that, at present, India’s e-commerce entities lack the strength to compete with giants in China and the developed countries.

 

But if India joins the discussions, it can ask for being allowed to phase in its obligations and commitments. By remaining out of the early discussions, India will lose the opportunity of participating in shaping the possible agreement that might emerge. India has attached the highest priority to the issue of public stockholding for food security. In his statement at the plenary, India’s commerce minister declared that India could not envisage any negotiated outcome at the MC11, which did not include a permanent solution for the problem of public stockholding.

 

It is somewhat anomalous that while India has invested a lot of political capital on the issue, it has not submitted a well-designed proposal on it. Rather, it has been supporting a proposal of G33 seeking open-ended subsidisation, on which agreement will be virtually impossible at a time when the WTO members want to limit subsidies in agriculture. The corrective proposed in the G33 proposal for inflation in the minimum support price is also grossly insufficient to take care of India’s concerns. While there are some aspects on which possible problems need to be sorted, there is little justification for India to adopt such a high profile on the issue. It is also a fact that currently initiatives are being taken by the government to move from minimum support price to direct benefit transfer to the farmers. If these initiatives go forward, the need for India to have large food stocks may diminish considerably.

 

While precious little emerged from the MC11 to generate impulses towards multilateral trade liberalisation, there should be some relief that nothing happened in the opposite direction as well. There seems little danger at present of the WTO being plunged into an existential crisis.

Saturday, 06 January 2018 00:00 In Editorials & Articles English

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