Tough road ahead for India at WTO

Sushma Ramachandran

Senior Financial Journalist

INDIA will find it hard to push its agenda at the forthcoming 13th ministerial conference of the World Trade Organisation (WTO) in Abu Dhabi. This is largely because the conference, which represents the highest decision-making conclave of the multilateral trading body, has in recent years been unable to move forward on several issues owing to the intransigence of the North. One of the main problems has been the deadlock over the crucial two-layer dispute settlement mechanism. It has been paralysed for the past four years owing to the US decision to block appointments to the appellate body. There is also much talk about WTO reforms, but so far little has been done to give more support to emerging economies in an entity that was originally meant to provide a level playing field for both the haves and the have-nots.

Protesting farmers are demanding a legal guarantee for the MSP for all crops. It is this very MSP that is considered an excessive subsidy by the WTO.

For India, there are many issues that need to be resolved at the conference, but much will depend on the political will to move ahead with them aggressively. It will surely have to take a more forceful stance than at the last meeting in 2022. At that time, it did not vigorously advocate the proposal to allow patent waivers for the production of vaccines, therapeutics and diagnostics meant to meet the potential demands of any future pandemic. A partial waiver only for vaccines was agreed upon, with the Joe Biden administration also having softened its stance on the issue. But the wider proposals meant to avoid expensive imports by the developing world that had been mooted by India and South Africa in October 2020 and supported by 108 countries were given a quiet burial.

Ultimately, the negotiations at the 12th ministerial conference in June 2022 ended with merely a temporary patent waiver to manufacture Covid-19 vaccines for a period of five years. On therapeutics and diagnostics, talks were to be held under the purview of the waiver, ensuring that there would be no early decision.

Indications are that India may not have much leeway to move ahead aggressively in Abu Dhabi in view of the deepening bilateral ties between the host nation (UAE) and India. Given the growing bonhomie, India would not like to adopt an intransigent attitude at the WTO conference.

Nevertheless, New Delhi is bound to raise some critical issues. Among the most significant ones is the ‘peace clause’. This was extracted after protracted negotiations in 2013. It allowed subsidy on public stockholding based on government procurement of foodgrains at prices meant to support Indian farmers. It was successfully argued at the Bali ministerial conference that public stockholding of foodgrains — which is at the core of the procurement system — ensured food security for around 80 crore people.

The ‘peace clause’ stipulated that no country would be legally barred from food security programmes for its people even if the subsidy breached the limits specified in the WTO Agreement on Agriculture. The clause has been sought to be made a permanent provision by India since it involves the livelihood of crores of farmers, largely in the subsistence category. But so far it has only been extended on a temporary basis at every subsequent ministerial conference. In contrast, developed countries remain rigid on maintaining their enormous food subsidies.

The issue will be taken up at a time when foodgrain procurement has become a politically sensitive issue in the country. Protesting farmers are demanding a legal guarantee for the minimum support price (MSP) for all crops. It is this very MSP that is considered an excessive subsidy by the WTO. The ‘peace clause’ has ensured that other countries will not raise the issue as a dispute, but till it becomes a permanent provision, it hangs over this country like the sword of Damocles.

The second big item on India’s agenda is to ensure that non-trade issues are not brought into the negotiations. This is largely in regard to labour and environment issues, but also in respect of gender and small industry’s concerns. Trade barriers in the guise of sustainable development are being brought on the table to curb the competitiveness of developing economies. The European Union (EU) has enacted the Carbon Border Adjustment Mechanism along with laws on deforestation. Both could have an impact on India’s exports to the EU. The carbon tax envisages a levy on carbon embedded in emission-intensive sectors such as steel and aluminium and could thus affect a wide range of products.

While the Commerce Ministry has indicated that it will discuss these non-trade barriers with the EU, it needs to show the way to the South in opposing their introduction at the WTO. The battle to bring non-trade issues to the multilateral arena has been on for many years. The effort to bring labour standards into trade talks was made by the North shortly after the trade body was formed in a bid to raise non-tariff barriers for developing economies. The ambit of such non-trade issues has widened over the years to include gender and environment. This is continuing, even though it is a stretch to bring women’s empowerment into trade talks. India must join hands with other developing economies to resist the inclusion of such extraneous issues into multilateral trade discussions.

The third issue of concern for the country is the moratorium on imposing import duties on electronic transmissions. This has been a longstanding policy, but India is now reported to be in favour of reversing it in order to raise import revenues. The strategy needs a second look, given the rising electronics exports from the country which could be hit by tariffs imposed by others in case the moratorium is lifted.

The 13th ministerial conference is likely to be of significance if India is able to get the proposals on its agenda implemented. Much will depend on the health of the trade body, which has lost much of its sheen, with nations opting for regional trade agreements. It needs more support in terms of reviving the crucial dispute settlement mechanism. It also needs to ensure that reforms give primacy to the concerns of emerging economies. India must play a leader’s role, but this will require both political will and deft trade diplomacy.

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