What is WTO?

Recently, the WTO 13th Ministerial Conference (MC 13) was held in Abu Dhabi, UAE. It concluded with the adoption of the Abu Dhabi Ministerial Declaration (ADMD). Member nations reaffirmed their commitment to preserve and strengthen the WTO’s multilateral trading system. They also agreed to extend the moratorium on imposing import duties on the e-commerce trade, which was agreed upon at the 11th Ministerial Conference, for two more years. There were some other important outcomes, such as discipline on domestic regulation of services, continuation of benefits for Least Developed Countries, induction of Comoros and Timor-Leste as member nations, etc. But from India’s point of view, this conference failed to live up to expectations. Despite the conference being extended by a day, members could not reach a solution for the public stockholding program or for curbing fisheries subsidies. India has long argued that its public distribution system is vital for poverty alleviation and food security, while other nations claim that public stockholding is market distorting. India also called for the restoration of the dispute settlement system of the WTO. Currently, the two-tier dispute settlement system is not fully functional because the US is blocking appointments in the appellate body. It is becoming increasingly difficult to reach a consensus on trade-related issues pending before the WTO. That is why India is calling for reforms in the workings of the WTO so that the member nations can tackle pressing challenges faced by global trade.

Ministerial Conference: It is the highest decision making body of the WTO. It is held roughly every two years. It brings together all the member nations to take decisions on important trade related matters. The 13th Ministerial Conference was held in Abu Dhabi, United Arab Emirates (UAE) in February 2024. The conference concluded with the adoption of the Abu Dhabi Ministerial Declaration (ADMD).

Progress of the Agreement on Fisheries Subsidies:

• Under the Geneva Package, at the 12th Ministerial Conference 2022 held in Geneva Switzerland, an agreement to curtail harmful subsidies that contribute towards illegal, unreported, and unregulated (IUU) fisheries was reached.
• Switzerland became the first member to accept the agreement. This agreement will come into effect when two-third of the member states accept it.
• At this conference, members discussed various measures that would bring more discipline to the agreement. However, no such conclusive measures were agreed upon.
• At MC 13, the progress made on this agreement was noted. As of March 2024, 71 member states have accepted the agreement.

Moratorium on E-Commerce:

• The moratorium on imposing import duties on the e-commerce trade was agreed at the MC 11 until the MC 12. It was subsequently extended up to MC 13 at the MC 12.
• Now the moratorium has been extended for two more years until MC 14 or March 31, 2026 (whichever is earlier).

Induction of new member: the membership to the WTO of two countries, Comoros and Timor-Leste, was formally approved. After the joining of these two Least Developed Countries (LDCs) the membership of the WTO will increase to 166.

Agreement on facilitating the transition of LDCs: Members agreed to ease the transition of Least Developed Countries (LDCs) to Developed countries by providing some benefits for up to 3 years.

• Members reaffirmed their commitment to bring in the necessary reforms that were discussed at MC 12. The progress made in improving the daily workings of the WTO in order to improve efficiency was also noted.
• Investment Facilitation for Development (IFD) aims to improve investment and the business climate. It is supported by more than 120 countries, including developing and least developed countries. But India and South Africa reportedly blocked this proposal. Discussions on this will continue in future MCs.
• Member nations deliberated the reforms to resolve the issue related to Dispute Settlement. However, no consensus was reached.

• Changed Globalised world order: the world has changed a lot since the Uruguay round of negotiation took place. Now, developing countries like India play a crucial role in world trade. But the operational framework of the WTO does not reflect this changed world order.
• Prolonged decision making process: some key issues have remained unresolved. This is due to the slow decision making process of the WTO. Consensus building has become a tedious task as political and ideological differences often get in the way.
• Dysfunctional Dispute Settlement: Appointments to the Appellate Body of the WTO have been blocked by the US since 2019. Although the dispute settlement panels are functioning, the eventual appeal mechanism is nonexistent due to the obstruction by the US. The US has alleged that there is ‘judicial overreach’ by the AB, which has resulted in several decisions going against US interests.
• Emerging protectionist tendencies: Long before the US-China trade war, protectionist tendencies were on the rise. These tendencies go against the principle of non-discrimination of the WTO. This has challenged the rule based order propounded by the WTO. Few member states have even mooted the idea of an alternative to the WTO.
• Shift from Multilateralism to bilateral/plurilatral trading: Slow progress on various important issues has pushed countries to pursue other options, such as bilateral or plurilateral trading regimes. For example, the Regional Comprehensive Economic Partnership (RCEP).
• New and Emerging areas for discussions: Digitalisation has been on the rise. There is a need to formulate new rules and regulations and incorporate them into the existing order. This will allow a level playing field for all the member states.
• Receding globalisation: The vision of a globalised world promoted by the WTO has been dented. Many nations have shown de-globalisation tendencies, and as a whole, it seems reverse-globalisation has been on the rise.
• Lingering effects of the COVID-19 pandemic: The measures employed by various nations to protect their domestic interests during the pandemic have not been restored to pre-pandemic levels. Such restrictions continue to disrupt global supply chains and disturb global trade. The WTO has not been able to tackle this issue in a holistic manner.

• No agreement on agricultural subsidies:
  • India has consistently raised this issue and called for a permanent solution to this problem. India’s Minimum Support Price (MSP) regime is viewed as trade distorting by the WTO and put under the amber box.
  • This means the subsidy has to be capped at 10% of the value of the product. Also, the subsidy cap calculation is based on the price level of 1986-88. Current price levels are substantially higher. This is deemed discriminatory by India. It argues that the MSP regime is crucial for food security and not for export promotion.
• Non trade issues: Developed countries allege that the products prepared in developing countries are not adhering to proper labour and environmental standards, and hence these issues must be brought to the negotiation table. Whereas, India has stated that these issues are non-trade issues and must be kept out of the discussions for now.
• Non-tariff barriers and market access: Technical barriers to trade, Sanitary and Phytosanitary measures, etc. that restrict India’s trade with developed countries. Therefore, it seeks improved market access by the developed countries and a positive approach towards removing non-tariff barriers.
• Issue of Geographical Indication: India has urged for equivalent protection for GI products globally that are domestically recognised. This will improve the marketability of products like basmati rice.
• Issue of labour movement: Currently, there are multiple constraints on smooth labour movement, such as lack of recognition of professional qualifications, opaque visa regimes, inconsistent labour movement policies, etc. Therefore, India seeks the removal of these constraints and more liberal labour movement policies.
• Investment Facilitation: India has sought flexibility under the TRIMs (Agreement on Trade-Related Investment Measures) regime when allowing the foreign investment.

• Member countries sort out the differences on certain issues and reach a common middle path. Countries should use the veto power very sparingly and responsibly.
• Appellate Body should be made functional as soon as possible. For this credible efforts must be made to end the deadlock. Further, some mechanism must be put in place to avoid this kind of problem in the future.
• The WTO must tackle emerging technological issues in a comprehensive manner.
• Revise rules and regulations and its operational framework to improve its working and ensure its effectiveness.
• To remain relevant, its regulations, rules and procedures must constantly evolve in order to reflect current world realities.

The 13th Ministerial Conference concluded after extension for an extra day of deliberation. Optimists might say that the conference was a success and built upon the outcomes of MC 12. Pessimists will conclude that MC13 was an utter disappointment as it did not accomplish according to the expectations. Reality lies somewhere between these two extremes. Although some important agreements on LDCs, reform agenda and E-Commerce were accomplished, a familiar refrain was observed on many contentious issues. This problem is intimately linked to the structure and functioning of the organisation. Member nations remained stuck in their ways and have shown their unwillingness to rise above the ideological and political differences for reaching a consensus. Ineffectiveness of the WTO in dealing with important trade-related issues questions its relevance in today's world order. Hence, the WTO must overhaul its working and bring in necessary reforms at the earliest to build trust and confidence. It should rely on cooperation and compromise among its members and actively work for a solution.