Beginning of the end of WTO

At the Nairobi ministerial of World Trade Organisation (WTO) in 2015, the five big sides - the US, European Union (EU), Brazil, China and India - decided to break the convention of open discussions and sat in a close room to decide the outcome of the world trade order. The result - the Western countries were able to convince India and China to allow circumvention of several crucial aspects of Doha Development Agenda (DDA), a new alliance of Brazil, the US and European Union was able to push trade facilitation. India was left diminished with assurances of reaching permanent solution for stockholding programme for food security in next round.

Flash forward to the ongoing Buenos Aires round, if the speeches of the trade representatives - especially Indian commerce minister Suresh Prabhu and US Trade Representative Ambassador Robert Lighthizer) - at the plenary session of the ongoing ministerial were any indicators, the impasse in talks is no surprise. But But what it is leading to is much worse is much worse; WTO itself losing credibility. As committed in the Bali round and ratified in the Nairobi ministerial, India was pushing for a permanent solution on public stockholding issue at the ongoing ministerial along with the safeguard mechanism. This will be a setback to the WTO process, if the mandate on finding a permanent solution is not met by the end of this year.

The big trade elephants, like the US and EU don't want to continue with the initial commitments of bringing development to the poor and poorest countries via trade, they all are pushing to put DDA on slow death part. India, along with Indonesia, Venezuela, various African countries et al are not letting them backtrack. At every ministerial, these two biggies want to throw their weight to get their pound of flesh in global trade order. Development was one of the biggest commitment of WTO to bring on board poorer countries. WTO needs to rethink, can the present mode of Globalisation survive without this crucial component and what role this organization envisages for themselves. WTO can't be alone for trade.

In Tuesday meeting facilitated by the chair of MC11 Susana Malcorra, between Prabhu & Lighthizer, the US trade representative on Agriculture negotiations, the US stated categorically that they cannot agree to any permanent solution on the public stockholding issue at MC11, leaving no room for further talks. He told Prabhu, the US has difficulties with the WTO system and not with India. In his plenary speech, Lighthizer already lamented many grudges against WTO, and the policy of differential implementation of the decisions.

The new regime in Washington under president Donald Trump has little belief in the previous negotiations at other multi-laterals and in last one year have backed out of many, this include Trans Pacific Partnership, or TPP North American Free Trade Agreement, or NAFTA and commitments at COP21 at Paris for conservation of climate. They have also given confusing signals related to Iran's nuclear programme. The stance at WTO is seen as an extension of the same policy, where the new establishment in the US is not convinced with the agreements reached at various deliberations by the erstwhile occupants of Beltway.

Those who are aware of the deliberations told Business Today, the US trade negotiators were trying to link the decision with India's stand on halting the deliberations on new issues such as e-commerce and investment facilitation. India continues to maintain the commitment to the DDA, and is seeking the completion of agenda before taking up new issues. Moreover, India entrusted that the new issues should be within the mandate of the WTO - i.e. trade and development - there are several issues, such as investment facilitation and components of e-commerce which don't fall in the same category.

This impasse also gave ammunition to the nationalist forces in the developing countries, who are disappointed and diminished. RSS's economic think-tank Swadeshi Jagran Manch immediately issued the statement backing Prabhu, and assured full support. A delegation of this outfit is in Buenos Aires, and criticized the role of the US using harsh words.   

For India the only takeaway, from the Buenos Aires is a consolation, Suresh Prabhu was better prepared and didn't hurry to push outcome in the ministerial. Earlier, Anand Sharma (at Bali) and Nirmala Sitharaman (at Nairobi) returned home disappointed. The continuation of peace clause and no outcome at the ministerial would not threaten country's food programme, but surrender on starting the discussion of ecommerce would have killed the indigenous players along with shrinking the policy space for the digital arena, which is at its nascent stage in India. But for WTO, there is point to rethink, that continuous two decade of negotiations can go wrong with one adamant member; it is high time to shape up else ship out...