Why India should Buttress WTO

Business Today, April 05, 2018

By Pradeep S Mehta and Bipul Chatterjee

The world is witnessing a dirty trade war with countries, including the US and India, adopting nonsensical protectionist tariffs. This will dirty the already muddy waters at the World Trade Organisation (WTO) whose integrity is under siege by the US, without any national gains. The comity of nations has to come forward to ensure that the WTO continues to function effectively.

However, as every crisis beckons opportunities, there is the need for thinking and acting on how to make best out of it. Here India’s role is exemplary as it has tried to buttress its faith in the multilateral system by calling a mini-ministerial meeting in March after the collapse of the 11th Ministerial Conference in Buenos Aires late last year.

It’s a fact that as compared to bilateral/regional/plurilateral trading regimes, the multilateral trading system is much better in every which way. Notwithstanding a functioning dispute settlement mechanism, it operates on a number of non-discriminatory principles, which are mainly to the advantage of small trading nations.

Since the WTO’s establishment in 1995, India has benefitted hugely from its participation in this system. It has helped India to more than double its share of global exports in goods and services, create new jobs and reduce poverty. More importantly it helped us in undertaking crucial domestic reforms in a number of areas. Therefore, restoring the WTO’s integrity and status is in India’s interest. Some pundits have argued that this is possible if there is forward movement in having disciplines on new issues such as investment facilitation, electronic commerce, micro & small enterprises, gender, etc.

While it is true that India has huge interest in resolving some remaining Doha Round issues in the areas of agriculture and fisheries subsidies, the argument in favour of not engaging on new issues is flawed on several grounds. Most important is the fact that both the global economy and the Indian economy have undergone significant changes over the last two decades. For India to develop in future by creating new jobs and income opportunities and play a much greater role in global affairs, it is in our interest to engage in discussions on these issues at the WTO.

This is not to say that while agreeing to discuss and/or negotiate new issues at the WTO, there will not be any red lines for India. There are and will be, such as in having special safeguard mechanisms for protecting the interests of our small and marginal farmers, in having more effective special and differential treatments by linking them with our objective of achieving the Sustainable Development Goals, and in preserving the sanctity of the WTO’s dispute settlement system with some reforms as necessary.

In other words, India will not have to make unilateral concessions to other WTO members. What is needed is constructive engagement on the part of India and other major players in resolving some Doha Round legacy issues and in negotiating new issues by keeping in mind and balancing their role in the delivery on development.

However, this can happen under a crucial assumption – that the US will not wreck the system by making unjustifiable demands, such as complete overhaul of the WTO’s dispute settlement system by taking away its enforcement power.

This is time for India to show its leadership and once-and-for-all dispel a popular notion, particularly in the west, that we are not a good sport in trade negotiations.

Pradeep S. Mehta is the Secretary General while Bipul Chatterjee is the Executive Director at CUTS International, a global think- and action-tank on economic policy issues.

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