India, a key player in the global trade arena, grapples with persisting challenges as the 13th World Trade Organization (WTO) Ministerial Conference (MC13) concludes. In the bustling backdrop of Abu Dhabi, this assembly of nations addressed critical issues, particularly India’s agricultural and fisheries sectors. As we unpack the outcomes of MC13, it is essential to delve into the role and composition of the WTO, the significance of Ministerial Conferences, and India’s strategic standpoints
The World Trade Organization (WTO) stands as the sole global international body overseeing trade regulations among nations. Its core consists of agreements negotiated and endorsed by a majority of the world’s trading nations, ratified in their respective parliaments. Currently, the WTO boasts 164 members, including the European Union, and 23 observer governments, such as Iran, Iraq, Bhutan, Libya, etc.
WTO is one of the three key international organizations alongside the International Monetary Fund (IMF) and the World Bank Group, significantly shapes and coordinates global economic policy. It plays a pivotal role in international trade, global economics, and addressing political and legal issues arising from globalization in international business. Positioned as the world’s preeminent institution for reducing trade barriers and expanding markets, the WTO collaborates with the IMF and World Bank to ensure cohesion in global economic policies. By resolving trade disputes through negotiations, consultations, and mediations, the WTO holds the potential to foster world peace and enhance bilateral relations among member countries.
The organization’s decisions are typically made by consensus and ratified by members’ parliaments, contributing to a more prosperous, peaceful, and accountable economic world. The GATT and WTO have played instrumental roles in shaping a robust and prosperous trading system, fostering unprecedented growth through trade negotiations.
Ministerial conferences of the WTO are the highest decision-making authority within the WTO and are convened approximately every two years. There have been thirteen ministerial conferences from 1996 till 2024. This assembly unites all WTO members, consisting exclusively of countries or customs unions, and possesses the capacity to make decisions on all aspects covered by the various multilateral trade agreements.
The first ministerial conference took place in Singapore, in 1996, with the primary aim of launching an international initiative among global trading nations. This initiative aimed to revamp the structure and mechanisms of the General Agreement on Tariffs and Trade (GATT) while safeguarding the significant progress and success attained by that system since its establishment in 1948.
The Ministerial Conference of WTO brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can make decisions on all matters under any of the multilateral trade agreements.
WTO’s 13th Minstrel conference, MC13 was unfolded in Abu Dhabi, UAE, on February 26 and extended till March 2, 20till the Global ministers convened to assess the multilateral trading system’s performance and strategize for the WTO’s future work. Dr. Thani Bin Ahmed Al Zeyoudi, the UAE’s Minister of State for Foreign Trade chaired the conference.
The 13th Ministerial Conference of the World Trade Organization (WTO) in Abu Dhabi was poised to address critical issues that could reshape global trade dynamics. The focus was on India’s flourishing agriculture and fisheries sectors, with developed countries pressing for control or cessation of subsidies provided by India.
The Conference, faced a deadlock primarily due to India’s unwavering position on the public stock-holding (PSH) program, leading a group of around 80 countries against the opposition from the EU and USA representing developed nations. The main contention was finding a permanent solution for the PSH program, where India’s approach was strongly opposed.
India’s PSH program involves government agencies purchasing agri-produce at minimum support prices (MSP) and distributing it to the poor under the National Food Security Act. The WTO’s concerns focus on “product-specific” and “non-product specific” subsidies. The “Amber box” subsidies, governed by the Agreement on Agriculture, limit the total subsidies for a developing country to 10% of the value of agricultural production.
The failure to secure a permanent solution for Public Stockholding (PSH) was a setback, impacting India’s MSP programs and limiting its right to extend them to new initiatives. Critical decisions on Special Safeguard Measures (SSMs) and reducing cotton subsidies were also left unaddressed. The agriculture negotiations faced criticism for their inability to respond to the demands of farmers globally, exemplified by ongoing protests in India and Europe. The conference’s conclusion underscored the challenges in achieving consensus on pressing global trade issues, leaving several crucial matters unresolved.
India argues that flaws in subsidy computation, outdated External Reference Price (ERP), and inclusion of subsidies to resource-poor farmers inflate the perceived subsidy percentage. Despite invoking the ‘peace clause’ multiple times, developed countries have objected, claiming lack of transparency and illegitimate export of cereals procured under PSH.
Developed countries’ reluctance to address these concerns reflects their interest in maintaining the status quo, favouring their agri-produce in the international market. The U.S. leads this demand, impacting India’s agricultural support prices and storage subsidies. While Indian farmers advocate for broader support, Commerce Minister Piyush Goyal represents India in resisting developed countries’ pressures. The peace clause, extended with riders, has been in place for over a decade without progress towards a permanent solution.
Beyond agriculture, other key concerns included customs duties in agriculture, fisheries subsidies, and e-commerce transactions. India strives to rally developing nations against undue interference in subsidies. However, divisions persist, notably regarding subsidies in the fisheries sector.
India’s fisheries negotiations saw a collapse, resulting in the retention of subsidies for Indian fishers, paralleled by rich nations and China with significant distant water fishing fleets. This conference marked a crucial juncture for the WTO to fulfill its mandate amid a challenging global environment, characterized by conflicts, disruptions in shipment routes, and shifts in supply chains.
India’s attempts to end the e-commerce duty moratorium were unsuccessful, with the majority deciding to extend it for two more years. India also resisted China’s push for an ‘investment facilitation’ agreement and opposed efforts by developed countries to introduce non-trade issues into WTO discussions.
Despite an extension of deliberations, significant outcomes were not anticipated from the outset. Unfortunately, it failed to reach agreements on fisheries and agriculture. However, a consensus emerged to extend the e-commerce moratorium on customs duties for two more years, marking its final extension.
India’s strategy involves ensuring compliance with the peace clause to avoid challenges from developed countries. On fisheries subsidies, India proposed a 25-year timeline for developed nations to abolish subsidies, with exemptions for developing countries. Despite some concessions at MC-12 in 2022, MC-13 saw developed countries refusing unconditional exemptions for poorer nations’ subsidies and the extension of a moratorium on customs duty on e-commerce, causing financial losses for developing countries.
Piyush Goyal, India’s Commerce & Industry Minister, expressed satisfaction, emphasizing India’s retention of policy space to safeguard farmers and fishers. While a permanent solution to public stockholding for food security eluded India, it successfully prevented other issues, such as domestic subsidy and market access in agriculture, from entering negotiations immediately. The unresolved agenda from WTO MC13 is expected to be addressed in subsequent committee meetings at the WTO Secretariat in Geneva, with further discussions slated for MC14 in Cameroon in two years.
The two-year extension of the e-commerce moratorium, expiring at the next Ministerial Conference in Cameroon, posed a potential setback for India, which had sought its end due to revenue losses and undefined scope. However, Goyal clarified that India was not fundamentally opposed to the extension. The decision to terminate the moratorium at the next conference was applauded, but concerns lingered about potential extensions favoured by developed nations. Sofia Scasserra, an Associated Researcher, emphasized the missed opportunity for developing countries to discuss their digital industrialization plans.
Key points of contention included India’s push to end the exemption from customs duties for e-commerce, a stance that will continue for at least two more years. Commerce Minister Piyush Goyal nuanced India’s position, stating that the country is not necessarily fully opposed to these exemptions. The future of the WTO’s dispute resolution body remains uncertain, despite a commitment to revive it by 2024.
The organization, led by its first female Director General, Ingozi Okonjo Iweala, navigates issues such as vaccine production, distribution independence, and agreements on online trade and e-commerce. Amidst historical disputes and challenges, including disagreements over subsidies, intellectual property rights, and the ongoing palm oil conflict with Malaysia, India grapples with its stance on global trade regulations.
Additionally, the conference delves into the extension of a moratorium on customs duties for cross-border e-commerce transactions since 1988. Simultaneously, the WTO faced challenges beyond trade discussions, with the inactive Dispute Settlement System (DSM) at the forefront.
The 13th Ministerial Conference also presented an opportunity to address these issues, shape the post-COVID international trade landscape, and potentially revive the WTO’s DSM, a crucial aspect in resolving global trade disputes. The decisions made in Abu Dhabi echoed beyond trade, impacting diverse sectors, and defining the organization’s relevance in the evolving global order.
The Abu Dhabi declaration also acknowledged challenges, emphasizing the importance of open, inclusive, and resilient supply chains. However, critics argue that the document lacked substantive measures to address these issues, offering little beyond rhetorical commitments.
Divergences among the WTO’s 164 member countries persisted, echoing unresolved issues from the previous conference in Geneva (MC12). India, in particular, tried to sort out solutions in agriculture, emphasizing the need for a permanent framework on public stock holding to ensure domestic food security and addressing subsidies in the fisheries sector. Which was achieved to an extent. While progress was noted in the agriculture discussions, the WTO’s Director-General, Ngozi Okonjo-Iweala, highlighted the prolonged nature of these negotiations.
Notably, attempts to formalize the China-led Investment Facilitation for Development pact within the WTO framework were thwarted. Goyal, post-conference, asserted that India’s primary objectives, focusing on the protection of farmers and fishermen, were largely achieved.
India achieved notable success at MC13 by collaborating with South Africa to thwart an attempt led by China and supported by over 120 countries to introduce an investment facilitation pact into the WTO framework. Looking ahead, India faces the challenge of safeguarding policy space for sensitive sectors, especially agriculture.
The broader context underscores the WTO’s need to evolve to remain relevant in a polarized world. The organization’s efficacy has been questioned, with member nations often portraying failed biennial meetings as successes, a concerning indication of its diminishing influence. As global trade dynamics continue to shift, the WTO must adapt and address contemporary challenges to regain its prominence in shaping international trade policies.
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