WTO MC13: It’s time for India to move beyond Abu Dhabi and should engage in interest-based negotiations

Economics Times, March 04, 2024

By Pradeep S Mehta

The recently concluded WTO MC13 in Abu Dhabi would have collapsed like the 1999 Seattle and 2003 Cancun rounds had it not been for WTO director general Ngozi Okonjo-Iweala, and GoI trade minister Piyush Goyal.

The Seattle ministerial collapsed because the US and others tried to bring in non-trade issues like labour and environment standards on board. Many, including India, opposed them, as they did in Abu Dhabi, too. Cancun collapsed because of the US’ vast subsidies to the cotton sector. This issue is yet to be resolved.

Agriculture remains a bugbear in WTO, particularly ‘dirty subsidies’ in the West and the unresolved issue of food stockholding in poor countries, including India. When China is blamed for its industrial subsidies, it rightly points at farm subsidies in the West.

In Abu Dhabi, India opposed a plurilateral Investment Facilitation for Development (IFD) agreement since many alleged that China was ‘pushing’ it. This is nonsense. More than 125 countries other than China were ready to sign it. IFD is like ‘ease of doing business’. Currently, the IFD initiative has over 125 members, comprising three-quarters of WTO’s membership. This includes 25 LDCs and 85 developing countries, in which India is seeking a leadership role in competition with China. We are also a capital exporter and need smooth tracks for businesses.

MC13 chair and UAE trade minister Thani bin Ahmed Al Zeyoudi said, ‘[The IFD] agreement is proof of the power of collaboration and compromise and the shared vision of an open and rule-based trade.’ Participating members stress that the IFD agreement incorporated in WTO will create clear and consistent global benchmarks for investment facilitation, reducing regulatory uncertainty and making it easier for investors to invest. Unlike contrarian rumours, the agreement excludes market access, investment protection and investor-state dispute settlement.

For starters, India didn’t join it – or any other plurilateral discussions – because it would deviate from the consensus-based principle that WTO has been following. Frankly, we can’t read the tea leaves that if the multilateral agenda does not move forward, countries will engage not only in plurilateral negotiations at WTO but also pursue FTAs outside WTO. We are also doing it through FTAs.

At one time, India also pushed for a Services Facilitation Agreement at WTO, which included investments. It backed off unceremoniously as it had not done its proper homework. If we had pursued it properly, we would have become WTO’s darling. In Abu Dhabi, India argued for an international agreement on lower charges for remittances of workers sending money home, which should be resolved under GATS (mode 4), which also covers remittances.

Plurilaterals at WTO are not new.

GPA Agreement on Government Procurement, of which India is an observer.
MPIA Considering the hiatus the dispute-settlement system is in, many members led by EU have decided to create a plurilateral arrangement to resolve appeals in the Multi-Party Interim Appeal Arbitration Arrangement. India is not a member and has not objected to it. The first MPIA award seems to have achieved its goal. An MPIA panel ruled against Colombia’s imposition of anti-dumping duties on frozen fries from EU.

However, MPIA is an excellent interim solution, but not the best one. The best would be the original dispute settlement system (DSS) with a fully-fledged appellate body. This has been dysfunctional for the last four years. At MC12 in 2022 in Geneva, it was agreed to resolve it before 2024 ends. Much work has been done to find the best way forward to the US’ liking, and that must continue.

India should engage in interest-based negotiations, and not position-based negotiations. Unfortunately, its bureaucracy takes a rigid stand on all issues, earning it a reputation as a congenital naysayer. Even silly objections have been raised, such as the one to the creation of two advisory bodies by Okonjo-Iweala. In both business and NGO advisory bodies, there are Indians.

On DSS, India flagged the matter on the system revival in Abu Dhabi. It did not feature on the bilateral agenda of Narendra Modi and Joe Biden when they met in June last year in Washington, or last September in New Delhi. The September G20 declaration ended up with another anodyne statement in the final text.

Indian politicians and bureaucracy must recognise our geopolitical strengths and move ahead with a clear goal of becoming a developed country by 2047, instead of dragging its feet.

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