The WTO Dynamics – A Game Loaded Against Emerging Markets

The Backdrop

Since the first Doha Development Round took place in 2001, year on year bilateral trade relations between countries have been significantly realigned and continue to be dynamic. Mega Trade Blocks, Regional Trade Blocks as well as country to country FTAs have become order of the day. The developed world is still dealing with the impact of the global meltdown of 2007 and the aftershocks. The meltdown changed the global economic scenario in an unprecedented manner. In addition, global security threats are changing the fabric of geo politics – bringing together traditional rivals such as Iran and USA or Russia and USA.  Yet what has not changed is the fact that the developing and less developed nations continue to deal with challenges, both new and old. The long standing challenges of the developing countries – job creation and need for economic growth – can not be ignored.

The Doha Development Agenda (DDA) was meant to focus on helping developing countries enter global markets through reduced tariffs and preferential treatment. As part of the initiative, developed countries were supposed to work towards opening up their markets through rationalisation of agricultural subsidies and allow a level-playing marketplace for agricultural products to the poorer nations. That the DDA was a non-starter became very visible in the first major health check at Cancun, where the developed nations refused to join a consensus on four significant Singapore issues. Thereafter, at Ministerial after Ministerial, the WTO negotiations have broken down –  in 2005 in Hong Kong, in Potsdam in 2007, yet again in 2008 followed by failures in 2010 and 2013. From the very beginning the proposals have been skewed in favour of the developed nations.

Over the years I have observed the WTO developments from the sidelines where I have had the privilege of meeting the Trade Representative and WTO trade commissioners of various nations as well as the APEC Council chaired by Australia. The developed nations, not being keen to continue with the negotiations on the DDA, have been been preparing ground accordingly. Since the 9th Ministerial, they have increasingly tried to put in various drafts, not only to dilute the importance of the agenda, but also to jettison out of their commitments. Recently, Michael Punke, the Deputy US Trade Representative, Ambassador and Permanent Representative to the WTO in Geneva, attributed this unwillingness to missed timelines and failed negotiations. My belief is that this has been set rolling in a very structured manner. The developed nations are pushing their own agenda making the upcoming WTO Ministerial, a highly complex maze of interrelationships and negotiations. I see it as a game of chess being played; each move being made with much dexterity.

The Challenges for Emerging Nations

While I will not be able to witness the Nairobi Ministerial proceedings due to certain business exigencies, I have been deeply engaged in most of these in the past. It was first at the Hong Kong Ministerial that India came across as a tough negotiator, in an arena where the Least Developed Countries (LDCs) and the smaller countries find it difficult to voice their concerns. Having been privy to these negotiations, at both Hong Kong and Bali, I have seen our Ministers and negotiators work with a single minded determination – that of protecting the interests of our people as well as the LDCs and small nations.  At the 9th Ministerial, our then Commerce Minister alongwith our negotiators burnt the midnight oil as he navigated choppy waters.

This push for continuation of DDA is being leveraged by the more industrialised nations to offer a trade-off. They seem to be offering continuation of DDA negotiations only if radical changes in the WTO’s architecture are accepted. These would require India, China, South Africa, Brazil and Indonesia to accept “graduation” and undertake the same level of commitments as the developed countries for completing the Doha negotiations. The developed nations, see their interests being met only by the Trade Facilitation Agreement proposed under the DDA. Expected to lead to a global trade of USD 1 trillion, they wish to see this agreement being accepted in totality by all members.

The Mega Trade Blocks – A Pressure on Emerging Markets

In this labyrinthine landscape, India is under huge pressure, having been frozen out of the Mega Trade blocks, i.e. the Regional Economic cooperation agreements and partnerships. The Trans – Pacific Partnership’s (TPP) is now in the implementation stage. In my view they are clearly telling India to either step upto the plate or lose out in the global trade scenario. The US is applying pressure on India to revive the FTA inciting the Transatlantic Trade and Investment Partnership (TTIP) as a major threat. The developed markets have been talking about a South-South Trade Cooperaton as well. A truncated trade facilitation at Bali did not make things any easier. Many developing and smaller nations are signing on these agreements with the hope of the developed nations standing by their Doha commitments. Given the changing landscape of bilateral trade relations and geo political considerations, the developing countries and smaller nations have been unable to stand united against the new strategy.

India has often been projected as one of the “obstructionist nations” to the WTO proceedings. In 2010, the WTO launched an attack on India, China and Brazil, projecting the three nations as the hurdles in the Doha Negotiations. The three nations have, however, more than stood up to their mandates of 2001, the July 2004 framework agreement and the 2005 Hong Kong Ministerial. India, infact, has always been a firm believer in the multilateral process, and has been a late starter in bilateral negotiations.  We have learnt the nuances of these negotiations as we went along and many of our FTAs continue to be tipped against us. Several Indian products face both tariff and non tariff barriers in developed countries. If, in addition, under the WTO agreements we are pushed to reduce the tariffs at our end, job creation and our GDP are sure to be negatively impacted.

With the upcoming Ministerial being held in Nairobi, there is pressure on Africa to make it a success. In this light, it was a good move for India to engage with the African nations at the India Africa Summit in October, 2015. At the Bali Ministerial we received strong support of the African nations. With our positive political relationships and increased engagements with these countries, we expect the backing of about a 100 countries including the African group and the ACP group at the Nairobi Ministerial. India has also submitted a joint proposal with China, Ecuador, Indonesia, South Africa and Venezuela to the WTO highlighting the criticality of continuing the DDA. There is also a belief that if the Doha commitments are allowed to be abandoned it will open up the doors for rich countries to bring in new issues such as labour, environment, e-commerce, investment and competition policy into the WTO.

Indian Stand

I am glad that despite all the pressures, India has reiterated its firm stand on the food security issue just ahead of the Nairobi Ministerial. Although, the US driven compromise and proposal to India of including a permanent peace clause in the Bali Agreement has been made, there is no timeline as to when this will be achieved. I believe that finally a time frame has to be defined for when a permanent solution will be outlined; India cannot continue to go into these negotiations with a Damocles Sword hanging on its neck! In the most recent move the EU has tried to become a cog in the wheel by asking for a cap on PDS spending in return for the Food Security deal.

With a focus on preventing the annihilation of the Doha commitments, India has taken a position that addressing all issues in the current round of negotiations is critical for all developing and least developed nations. It is my belief that India needs to carry forth the DDA agenda and remain firm on its stance on the food security issue. But as some negotiators are making it sound is India really asking for too much by pushing for food security? Are the developed nations being fair in shying away from the commitments made in 2001? Has the WTO become irrelevant in the current global scenario?

The views expressed are personal.

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