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  • Writer's pictureDivyashree Suri

MC13: The World (Trade Organization) Is A Stage!

If you recall, the Thirteenth Ministerial Conference (MC13) had a cumbersome checklist to take care of. Well, not many of the boxes have been checked, despite a day's extension to facilitate outcomes. The E-Commerce Moratorium was extended till the Fourteenth Ministerial Conference (MC14), there was not much progress made on the Comprehensive Fisheries Subsidies Agreement, and the Appellate Body (along with the rest of the WTO) remains in crisis.


However, what piqued my interest this past week, is the existing fragmentation within the organization. To put it simply - I thoroughly enjoyed the drama that ensued.


The Plurilateralism Drama

India, South Africa and some other countries have been strongly opposing the emerging trend of plurilateralism at the WTO. They have positioned themselves as staunch supporters of multilateralism, and are concerned about going back to a pre-WTO era. They have expressed concerns about the introduction of non-trade issues into the WTO and draining the WTO's resources meant for multilateral negotiations. They are not wrong - an integrated multilateral trading system cannot thrive while fragmentation exists. The lack of consensus is a core issue which must be addressed to reform the WTO today. So, unsurprisingly, they strongly opposed non-multilateral decisions at MC13:


Domestic Services Regulation. The Domestic Services Regulations is operational (for some countries at least)! They apply to domestic measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards affecting trade in services. They have been long awaited for filling the gaps in GATS (this may or may not be a cue to my GAPS in GATS series). The disciplines only create a binding obligation on Members who incorporate them as 'additional commitments' into their GATS schedules. What's more? They will be applied on a most-favoured-nation basis, meaning that service suppliers from all WTO members will be able to equally benefit from their implementation.


Where's the problem, right? Wrong.


When 61 Members asked WTO Members to accept their updated GATS schedules, with these additional obligations, India and South Africa strongly objected to these updates. In the past as well, they had objected to the Domestic Service Regulations as being anti-thetic to multilaterlism. They make substantial changes to GATS, a multilateral agreement, for a group of Members who agree. After long negotations, they reluctantly agreed to certify schedules with clarificatory changes to ensure that their additional obligations would neither create additional obligations for non-participants, nor would it diminish any rights for them. Currently, 26 revised schedules have been amended and certified.


Investment Facilitation Agreement. A Joint Ministerial Declaration on Investment Facilitation for Development Agreement (IFDA) was issued by 125 Members on February 25, 2023. However, India and South Africa (who have not signed the declaration) strongly opposed the inclusion of the IFDA as a 'plurilateral agreement' under the Marrakesh Agreement. They believe that issues concerning investment are beyond the mandate of the WTO. In particular, India's position is that the investment facilitation talks defy a “negative mandate” because of previous consensus decisions against the move. Since the inclusion of the IFDA as a plurilateral agreement did not receive consensus from all Members, the Agreement continues to be an agreement not 'covered' by the WTO (much like the Information Technology Agreement).


The legal implications of this are simple - without being a 'covered' agreement, the Dispute Settlement Body cannot make any rulings concerning the IFDA. More importantly, the point about multilateralism was made loud and clear.


Some more drama!

Public Stockholding. India (and other developing countries) has a public stockholding and public distribution system in place, which allows it to purchase, stockpile and distribute food (mostly at a price fixed by the government) when needed. This allows stability, predictability and good prices to poor farmers, and subsidized food for people who can't afford them. WTO Members consider these programmes trade distorting, since the price fixed by the governments are mostly above market price.


Public stockholding programmes are currently protected by a Peace Clause, which temporarily allows Members to mainintain these programmes. India has been seeking a permanent solution to the issue for over a decade now, and it resolved to not engage in any other issues at MC13 till this issue was resolved. This comes at a time when farmers are protesting in India, and one of their demands is for the Indian government to 'quit the WTO.'


Here's where it gets interesting - Thailand's ambassador to WTO, Pimchanok Vonkorpon Pitfield, accused India of using subsidised rice procured for the distributing among the poor in the country for capturing the export market! India 'boycotted' any discussions involving Thailand for a brief period in MC13, till Thailand decided to replace its ambassador to the WTO.


Post-Script

It's quite clear now - The WTO faces a critical challenge due to the frequent blocking of negotiations, making consensus nearly unattainable. As Members seek to address pressing issues in trade, progress is slow, with only a few significant agreements reached in the past decade. Resolving this requires greater compromise among members, who must actively seek trade-offs to achieve consensus. Merely restructuring the WTO or altering decision-making processes won't suffice. Without widespread agreement, talking global trade at the WTO will be dramatic, entertaining, intriguing - but not fruitful.



















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