India's Trade Overview

INDIA & THE WTO

MAJOR WTO MINISTERIAL CONFERENCES

The Ministerial Conference is attended by trade ministers and other senior officials of 164 member countries of the WTO. It is the trade forum’s highest decision making body, and under the Marrakesh Agreement, the Ministerial Conference has to meet every two years. The 12th Ministerial Conference will take place in Kazakhstan in June 2020.

The first Ministerial Conference of WTO was held in Singapore during December 9-13, 1996. It included plenary meetings and various business sessions related to the agenda of the WTO’s first two years of activity and the implementation of obligations under the Uruguay Round Agreements. The discussions revolved around trade and investment, trade and competition policy, trade facilitation and transparency in government procurement. These were collectively called ‘Singapore Issues’.On matters like investment and competition policy, India felt that having a multilateral agreement would be a serious impingement on the sovereign rights of countries. On the specific issue of competition policy as applicable to “hardcore cartels,” India pointed out that there is an ambivalence on whether these would include export cartels. On the subject of transparency in government procurement, the Indian position was that though the principle is entirely acceptable, there cannot be a universal determination of what constitutes transparent procedures. On trade facilitation, India argued that developing countries may not have the resources to bring their procedures in line with those in the developed world over the short to medium term.A few years down the line, these issues were abandoned in the Cancun Round, 2003.

This was the fourth Ministerial round. Discussions revolved around:

a. Agriculture –

The negotiations revolved around the need to establish a fair and market-oriented trading system through strengthened rules, and specific commitments on government support and protection for agriculture. They also encompassed special and differential treatment for developing countries, enabling them to meet their needs, in particular in food security and rural development.

The United States insisted on making substantial reductions in tariffs and to limit the number of import-sensitive and ‘special products’ (AoA) that would be exempted from cuts. While the developed regions are concerned about import-sensitive products, the developing countries are concerned with special products – that are exempt from tariff cuts and subsidy reductions because of development, food security or livelihood considerations. Brazil stressed on reductions in trade-distorting domestic subsidies, especially by the United States; whereas India insisted on a large number of special products that would not be exposed to wider market opening.

b. Access to patented medicines –

The Ministerial Meet had discussions on TRIPS. The issue involves the balance of interests between the pharmaceutical companies in developed countries that held patents on medicines and the public health needs of people in in developing countries. The United States claimed that the current language in TRIPS was flexible enough to address health emergencies, while other countries insisted on a new language.

After voting, member governments approved a decision that offered an interim waiver under TRIPS. It allowed a member country to export pharmaceutical products made under compulsory licenses to least-developed countries and certain other members. At the same time, it also allows members to not to allow evergreening (i.e. extending the life of patents without necessarily enhancing the drug’s therapeutic efficiency) of patents.

On November 6, 2015, the World Trade Organization Council extended the exemption for LDC WTO members to implement provisions of the TRIPS agreement related to pharmaceutical products until 2033.

c. Special and differential treatment (SDT)

In the Doha round, members agreed that developing and least developed countries will continue to enjoy a favorable treatment. At the December 2005 Hong Kong ministerial, members agreed to five S&DT provisions for least developed countries (LDCs), including duty-free and quota-free access.

However, of late developed countries now claim that big developing countries like India, China, Brazil and South Africa are unreasonable in their demand of SDT and only least developed countries are the rightful claimants of differential treatment. Addressing the World Trade Organization Ministerial Meeting in New Delhi (May’19), the former Commerce and Industry Minister, Mr Suresh Prabhu, stated that “questions being raised on S&DT are controversial and extremely divisive.”

The Generalized System of Preferences is an example of S&DT. Here, developed countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products originating in developing countries. Preference-giving countries unilaterally determine which countries and products are included in their schemes. Recently, USA pulled the plug on GSP for India, alleging that India has not provided it with “equitable and reasonable access to its markets”. India is not likely to ask the US to review the move.

This was the ninth WTO meeting and it led to the adoption of the Bali Package. These decisions revolved around streamlining trade, allowing developing countries more possibilities for providing food security, furthering least-developed countries’ trade and helping development more generally.

Trade facilitation was agreed to by all nations. It requires member countries to invest in infrastructure that facilitates imports and exports, to simplify customs & to remove other non-tariff barriers. A ‘peace clause’ (which gave countries 4 years time to adjust to the limit and avoid sanctions) was also agreed upon. While India initially declined to ratify the agreement, it later on signed on the dotted line after reaching an understanding with the US, in which the time limit of 4 years was removed and in return, trade facilitation was agreed to by India. Developed countries were able to woo under-developed ones on the basis of a ‘Special Package’ for them directed toward building social and physical infrastructure. As a result, India was isolated.

The 10th Ministerial Conference culminated in the adoption of the “Nairobi Package” – a sequence of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries (LDCs).

(a) The developed members committed to remove export subsidies immediately, except for a handful of agriculture products, while the developing countries agreed to do so by 2018. Furthermore, the developing members were given the flexibility to cover marketing and transportation costs for agriculture exports until the end of 2023, and the poorest and food-importing countries would get additional time to cut export subsidies.

(b) Members also adopted a Ministerial Decision on Public Stockholding for Food Security Purposes. It commits members to engage constructively in finding a permanent solution to this issue.

(c) A Special Safeguard Mechanism (SSM) for Developing Countries recognizes that they will have the right to temporarily hike tariffs in face of import surges by using an SSM.

(d) There were decisions pertaining to Preferential Rules of Origin. It necessitates that ‘Made in LDC’ products will get unobstructed access to markets of non-LDCs.

(e) There was an assertion that Regional Trade Agreements (RTAs) remain complementary to (not a substitute for) WTO.

(f) Ministers accredited that members “have different views” on how to address the future of the Doha Round negotiations.

The meeting was a huge disappointment for the developing and under developed world. Here, the US unabashedly called Doha Development Agenda outdated. The West focused on the Trade Facilitation Agreement, which was agreed to in Bali meet. Further, they have also been trying to introduce new issues (including some Singapore issues) such as government procurement, e-commerce, and investment and competition policy into the ambit of discussions. To this, India and other developing countries took strong objection.

The latest round of WTO Ministerial Conference led to discussions on the adoption of decisions on eliminating fisheries subsidies by December’19; e-commerce; small economies & intellectual property. There was no consensus on key issues. The US blocked a permanent resolution on government stockholding for food security purposes. India & China were reluctant to immediately commit to a deal on fisheries. India also hardened its stance on newer issues like e-commerce & investment facilitation. The draft ministerial declaration was devoid of issues related to India’s primary concerns like multilateralism, Doha Development Agenda and SDT.