Loopholes in the WTO’s patchwork deal

India emerged as the dealmaker at the World Trade Organisation’s (WTO) 12th Ministerial Conference in Geneva last week when the conference went into an extra day and India almost appeared to be a deal-breaker. Commerce Minister Piyush Goyal has emerged as an unlikely hero and he has been credited with holding a slew of bilateral meetings across the board to resolve outstanding issues. The four main issues are: intellectual property waiver for Covid-19 vaccines; public food stocks and their global trade; fisheries subsidies and customs duties waiver on electronic transmissions. The United States and China are yet to give the assent to the waiver on intellectual property rights on Covid-19 vaccines.

The farmers should seize the opportunity, and rules should be framed in a way that the traders do not rob the farmers of their due share of export profits.

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There is still not much clarity on public food stocks. The conditionality is that restrictions on procurement will arise only when there is a demand for foodgrains in the domestic market. And a government-to-government trade from public food stocks is to be allowed. The fisheries subsidies had a compromise clause. While subsidies were waived for deep sea fishing and the 200-nautical mile exclusive economic zone was recognised, subsidies for illegal fishing are to be barred. The waiver of customs duties on electronic transmissions, which mainly benefits the advanced economies, is to remain in place till the end of 2023. India said that if the 13th WTO Ministerial Conference is not held before the end of 2024, then it will not adhere to this understanding on waiver of duties on electronic imports.

The WTO has claimed this patchwork of a deal to be historic because it is based on the consensus of 164 countries, which seemed unreachable. The deal based on consensus had become crucial for the very credibility of the organisation, which is struggling to make its writ run. There are too many free trade agreements among countries and among groups of countries, which makes the WTO redundant. And these agreements break many of the fair-trade rules that are supposed to underpin the WTO, and which favours competition and market economy.

One of the reasons that the WTO has lost its authority is because the developed economies which had set the rules during the pre-WTO General Agreement on Tariffs and Trade (GATT) had lost much of their authority during the WTO era as the voices of developing economies and the least developed economies gained ground. The WTO became an open forum. Hurdles have increased and decisions have become difficult, and the rich economies have had to strategise to get their way. They still seem to get away behind the cacophony of differences. But it has become difficult. The WTO is forced to recognise the concerns and needs of the poorer economies. It is because of this apparent disorderliness of the working of the WTO that the powerful economies are getting things done outside the WTO framework.

India, which is neither a rich economy nor poor, is forced to play the difficult role of speaking up for the developing economies while trying to corner the advantages of an emerging economy. This is evident in the case of the waiver of intellectual property rights on Covid-19 vaccines. Indian pharmaceutical companies want to manufacture during the duty-free hiatus by making the Covid-19 vaccines developed in Europe and America. India would not want to make available its own indigenous Covaxin, manufactured by Bharat Biotech in collaboration with the government’s National Institute of Virology (NIV) in Pune. India would lose the advantage of earning on intellectual property rights if it were to market the home-made Covaxin.

So, India would like to manufacture the vaccines developed by Pfizer, AstraZeneca, Johnson & Johnson and sell them in Asian and African countries. The marginal profits to be made from this venture are quite huge. Opportunism indeed, but in the hard world of trade-offs, one cannot insist on being too generous. Of course, the government would want to pretend that it is doing it for the sake of the poor people and poor countries, which is plain hogwash.

The public food stocks are a trickier issue. The temptation to offload the overflowing public buffer stocks is indeed tempting, but it will be an unfair trade practice because a subsidy is involved through the minimum support price. There is also the hidden fact that the government is not able to procure more than 30 per cent of the foodgrains produced. The other two-thirds remain in the shadow world of private trade.

The honest way of dealing with it and making India an agriculture exports country is to evolve a mechanism where farmers benefit from the rising prices in the world grain markets. The producers’ cooperatives, that the government has envisaged, remain a dead idea. There is no dynamism to it. The farmers and traders should be forming a profitable alliance, but the farmers and traders remain at the primitive level of thinking. Of course, there are the privileged traders who strike gold in this labyrinth of inaction, with the government helping them with insider information.

The government, however, wants to keep its freedom to deal with the public food stocks as it deems fit. It wants to deal with foodgrain exports when there is an opportunity, as is the case now. The fair thing for the government then is to help farmers sell their produce in the export markets so that profits go to the farmers. But there are too many bureaucratic trapdoors on the way. And it is better that the government is kept out of the picture. It is the farmers who should seize the opportunity, and rules should be framed in such a way that the traders who facilitate the transport and sale of foodgrains do not rob the farmers of their due share in the export earnings. This might look like utopian, but it can be worked if the farmers pick up entrepreneurial courage.

What about the WTO and India in all this? The truth is that India is outgrowing the WTO, and it will be under pressure from developing economies to play by the rules, which will not be to the liking of India. Of course, India wants to be in the Big Boys Club and call the shots. But, as we have seen, the Big Boys have been marginalised in the WTO, and India too will be in the same position. Ultimately, democratic pressures work within countries and among countries.