LIVE TO FIGHT

India must not be made a scapegoat if the WTO fails to deliver in Nairobi

Quartz india
Quartz india

For the past 14 years, the World Trade Organization (WTO) has been unsuccessfully attempting to conclude the Doha Round of Negotiations, also known as Doha Development Agenda (DDA). The DDA aims to further liberalise international trade keeping in mind the interest of developing and least developed countries (LDCs).

Now, the ministers of the 162 member countries are meeting in Nairobi for the 10th Ministerial Conference—and things are not looking good. These talks revolve around making trade fairer and development friendly, including getting more trade under the rule-based system, cutting regulatory hurdles and increasing transparency. Though no one is averse to making trade work for everyone, members have divergent views on what items, for whom and how much to offer. The WTO principle of the single undertaking—the principle of either accepting everything, or nothing—also prevents members to pick and choose to their liking.

The DDA is a deal that LDCs need, developing nations want done, but the developed world is more than happy to jettison. Nonetheless, if these trade talks fail with India being the one disagreeing, New Delhi will be made the scapegoat for the death DDA.

The green room horror stories from the last ministerial still haunt India. At the Bali ministerial in 2013, India emerged as a lone warrior, which had to be pacified with a temporary peace clause for issues relating to trade in agriculture.

Eventually, the Bali ministerial ended on a relatively high note with the members adopting the last minute “Bali Package”, an understanding on important issues including the Trade Facilitation Agreement (TFA), which allows simplification of custom procedures for freer movement of goods. India held TFA hostage to get a solution on issues relating to agriculture, since nothing is accepted at the WTO until everything is accepted.

How it works

Since 1947, with the inception of GATT (the predecessor of the WTO), trade concessions—tariff reductions, rules for trade, rules for intellectual property rights, market access etc.—have been made on the basis of negotiation rounds. At the end of each round, all the outcomes (concessions/rules/agreements) were considered as one single document that had to be adopted through consensus. This is commonly referred to as a single undertaking.

Each round of negotiations results in trade concessions and rules on a huge array of topics. The last round of negotiations (Uruguay Round 1986-1994) resulted in the Marrakesh Agreement (which included the agreement for the creation of the WTO), and adaptation of various covered agreements that govern trade today. The current round of trade negotiations began in 2001 in Doha, and is the 9th round of trade talks.

The DDA was almost completed in 2008, with consensus on almost all major areas that were being discussed. But the negotiations broke down due to divergent views on rules for trade in agriculture between India and US, and some dissenting views of China on other areas. The disagreement over agriculture still persist.

Subsequently, the WTO split the DDA into smaller parts on what could be agreed at the ministerial and called them packages. The Bali Package was one such example, which included a deal on trade facilitation, rules for LDC preferential treatment, rules on cotton and some rules on agriculture.

Fighting on farms

The most contentious issue at the DDA for the past many years is agriculture, and any protracted disagreement could effectively kill the round. Differences on public food stockholding and agricultural export competition aren’t going to make matters easier.

Major trading parties including the EU and US have already stated that it is time for WTO to move on from DDA to discuss new so called 21st century items for inclusion within the WTO. The LDCs (and the African Block) want the members to deliver in Nairobi and not give up on the DDA.

Considering that there is no consensus on the issues relating to agriculture, the debate will rise and most likely, a temporary make shift solution will be offered.

Meanwhile, India has already taken a tough stand. Nirmala Sitharaman, minister for state for commerce, has categorically stated that India would not soften their stand in the WTO on agriculture, and wants a permanent solution to settle the issue. Yet, if Niarobi is similar to Bali, with India blocking a resolution on a mediocre deal, the countries currently supporting India may jump ship, leaving it to face the wrath of other members, resulting in the death of the DDA.

A failure to agree

A stalemate in Nairobi will be a big blow to the WTO. The African group will be disappointed (as this is the first WTO ministerial is being held in Africa), and the LDCs will be furious for giving up on a development agenda. There is also a chance that the developed world will shift the entire blame on to India for blocking a package. With developed countries already concluding mega regional agreements such as the Trans Pacific Partnership to facilitate trade, multilateralism and a common deal for all would be put on the back burner.

The death of the DDA due to India’s stubbornness would also have a severe impact on New Delhi’s reputation in the geopolitical arena. An anti-development tag would hurt even more. With the countries moving away from multilateralism, and India not being offered a seat at the table, domestic businesses may not get the privileges and concessions that could offered to others internationally.

India’s gameplan

It is imperative that India is careful in its approach for the remainder of the meetings to ensure it is not held responsible for the failure of these trade talks. India, therefore, should consider its stand tactfully in the WTO. It should keep its priorities in order and allow room for a partial deal. It may have to concede some battles for some not-so-important items, be open for discussions on new ones and agree on partial terms to get a Nairobi package.

We can live to fight another day.

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