Proposed Reforms to WTO

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• Recently, India expressed concern that some suggestions on reforming the WTO will hurt developing nations.

About World Trade Organisation

• It is an international institution that oversees the global trade rules among nations.
• It was established in 1995.
• It superseded the 1947 General Agreement on Tariffs and Trade (GATT).
  • The GATT traces its origins to the 1944 Bretton Woods Conference, which laid the foundations for the post-World War II financial system and established two key institutions, the International Monetary Fund (IMF) and the World Bank.
• The main function of the organisation is to help producers of goods and services, exporters, and importers protect and manage their businesses.

Reforms suggested at Geneva meet

• Pandemic Response:
  • Even though demand for COVID-19 shots has tapered off, India, South Africa and some 100 other backers are seeking a potential waiver of intellectual property rights for vaccines and treatments.
  • However, WTO members remain divided over a draft deal for vaccines negotiated between the four main parties (India, South Africa, the European Union and the United States) that were forged to break an 18-month deadlock.
• Fishing:
  • Separate negotiations are aimed at removing subsidies that contribute to overfishing, a step that environmentalists say is important to help fish stocks recover.
• Food Security:
  • It aims for a response to the food crisis driven partly by export disruptions from major wheat exporters Ukraine and Russia.
• E-Commerce Moratorium:
  • A ban on import duties or so-called “electronic transmissions” worth hundreds of billions of dollars a year is up for renewal.
  • The moratorium has been in place since 1998 but South Africa and India have launched a separate proposal to lift it. They have opposed an extension in the past, citing lost customs revenues, but have not so far blocked it.
• Environment:
  • New Zealand submitted a fossil fuel phase-out proposal but most delegates see this as too ambitious.
  • If a deal on cutting fishing subsidies is agreed, that could give environmental efforts some momentum.

Challenges associated with India

• India has always faced pressure from developed nations, including the US, EU and Canada, to reduce the subsidy it gives to farmers.
• WTO rules deal strictly with product-specific support to producers (as given by India) but they do not discourage “green box” subsidies.
  • India has fought for dropping the distinction between green box and other subsidies.
• Peace Clause only includes the government programmes started before 2013 and the Indian government wants programmes started after 2013 to be included as well.
• Special and differential treatment: The gaps between the developing and developed members have widened in many areas, emphasising that the special and differential treatment (S&D) must continue.
  • Such treatment has been a treaty-embedded and non-negotiable right for all developing members.

Importance of WTO for India

• India has visibly benefitted from the open market reforms that it embraced in the early 1990s. Through WTO India can ensure a rule-based global trade regime.
• The dispute settlement body of the WTO is important for India as India has appealed to it seeking exemptions from the import duties on steel and aluminium imposed by the US.
•  India harbours the ambition of becoming a superpower and therefore needs more and more platforms to take up leadership roles as it has been doing at WTO.

Way forward/ Suggestions by developing countries

• Reforms and modernisation agenda: India strongly supports robust WTO reforms and modernisation agenda, it stressed that the reform process should take place in the general council and other regular bodies too.
• At least 60 countries including India, China, Pakistan, Egypt, Indonesia and South Africa have proposed a new method to calculate subsidies given to purchase, stockpile and distribute food to ensure food security for developing and poor nations.
  • It should account for inflation and also be based on a recent reference price instead of an old one based on 1986-88 prices.
• External Reference Price (ERP): Countries have suggested a new methodology to calculate the subsidies by either accounting for “excessive inflation” in the External Reference Price (ERP) or calculating the ERP based on the last five years excluding the highest and the lowest entry for that product.
  • ERP is the average price based on the base years 1986-88 and has not been revised for decades.
• Anti-circumvention clause: The grouping has also proposed to amend the anti-circumvention clause in the Bali Ministerial Declaration of 2013 as per which developing countries who procure food stocks for security “do not distort trade or adversely affect the food security of other Members”.
  • This is important as it would ensure certainty for exports of food stocks from the public stockholding to the needy countries.
• Subsidies by developed countries: However, analysts say that the US and European countries also offer enormous subsidies to their farmers and that far outweighs India’s subsidies.
• A key difference between our subsidy and their subsidy is that developed nations invest in research, disease control and infrastructure building for agricultural support.

Source: ET