WTO informal meet in India brings together key members

By Skylar Cheng Geyu

From 19 to 20 March 2018, India hosted a gathering of the World Trade Organisation (WTO). This informal ministerial meeting was prompted by the aftermath of collapsed talks at the Eleventh Ministerial Conference (MC11) in Buenos Aires in December 2017. The US had backtracked on its commitment to discuss agricultural issues, which is India’s key area of interest.

A month before the informal meeting, Biswajit Dhar, from Jawaharlal Nehru University, said, “There is no clear agenda yet for this meeting. We don’t know where we are going and whether we are still supporting development issues.” Trade experts had cautioned that India needs to have definitive agenda in mind and a clear idea on what to focus on. This lack of clarity was further highlighted in the words of a Commerce Ministry official who spoke to BusinessLine: “We hope to have a clearer picture of how to move ahead at the WTO and what our priorities should be at the end of the meeting.”

Details of the informal meeting

The two-day meeting was attended by representatives of 50 countries, including the US, some African nations and China.  

Following the meeting, on 21 March 2018, Minister Prabhu reiterated the purpose of the informal ministerial meeting: “[The] WTO Ministerial Meeting was an exercise to create confidence and bring countries together to discuss common issues like food security and agriculture. Although there are differences among countries, there is no substitute for dialogue, bilateral and multilateral.”

The delegates present explored options for revitalising the WTO over the two days. The meeting concluded with a Chair’s Summary which was to be delivered by Minister Prabhu.

One of the main topics under discussion, as expected, was agricultural trade, which according to India, should be prioritised and conclusive. As a majority of the population of developing countries relies on agriculture, food security and livelihood became the prime concerns. However, one must understand that agriculture is not a new issue in the WTO. Since the days of its predecessor, GATT, up till the collapse of the recent Doha Development Round (DDR), agriculture has always featured strongly as a highly controversial issue. The issue is incredibly intricate and complex. It must be understood with consideration of its development throughout the history of negotiations in the GATT and WTO, with particular attention given to the DDR.

The tariff issue

The other issue previously mentioned was also raised at the New Delhi meeting. Protectionism under the US President Donald Trump had resulted in the implementation of a 25 percent import tariff on steel and 10 percent on aluminium. This violates one of the founding principles of the WTO, the principle of reciprocity. The principle of reciprocity was established even in the GATT 1947 and, as such, forms the backbone of international trade after World War II. Enshrined in the treaty establishing the WTO, it provides a political imperative towards full liberalisation through gradual tariff reduction and widening market access. The only nations exempted are developing countries, under the concept of special and differential treatment. This principle was highlight by Abhijit Das from the Centre for WTO Studies in light of the upcoming informal ministerial meeting. He restates, “special and differential treatment continues to be relevant for large economies such as India, China, Brazil and South Africa, particularly in view of their low per capita income and vast pockets of poverty.” He goes on to add that India needs to fight attempts by the developed world to stop extending special treatment to such countries.

Furthermore, such an increase in tariffs may result in a trade war. Certain developed countries have threatened to retaliate the duty hike on steel and aluminium products by the Trump administration. The status of the WTO in supervising international trade seems ever more fragile, especially taking into account the recent failures in the disastrous DDR.

The failing WTO: Agriculture and the recent Doha Development Rounds

At the end of the Uruguay Round in 1994, the Marrakesh Agreement was signed by 124 nations and refurbished the GATT into the World Trade Organisation (WTO). Renaming the institution did not rid it of animosity. Tensions flared up during the Round and were carried over to the next. The US advocated strongly for countering protectionist pressures in the face of agricultural protectionism in EC and Japan. The G10, led by Brazil and India, insisted that developed countries were not sufficiently developed to negotiate the new issues–services, investment and intellectual property–which threatened to reduce the negotiations for agricultural trade. In his book, ‘Reshaping the World Trading System’, John Croome observes that GATT was close to breakdown. Countries began to prefer bilateral and regional trade agreements to GATT and, eventually, the WTO. For example, US negotiated such agreements with Israel and Canada, defaulting to those terms instead of WTO ones.

Following the Battle of Seattle in 1999, where protestors gathered to prevent a meeting of the WTO, in 2001, the Doha Development Round finally began. Even after almost 17 years, this has yet to be finalised.

In July 2008, the negotiations broke down over disagreements concerning agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. It was no less than an unyielding clash between the developed nations on one side, led by the EU, the US, Canada and Japan, and the developing countries on the other, led and represented by India, Brazil, China and South Africa. This was specifically over the Special Safeguard Mechanism (SSM) that would have enabled developing countries to protect themselves from import surges or collapse in import prices in foodstuffs. Once again, agriculture was the main point of contention. In 2011, a declaration of an impasse was made, and members were directed to explore new negotiating approaches. This was a clear admission that what had worked before under the GATT could no longer hold up negotiations in the present day.

In 2013, the Bali Package was delivered, which introduced a new Trade Facilitation Agreement, and a decision on developing countries and agriculture. However, the success was short-lived. The US and India had a stand-off over the Package’s ‘peace clause’, which stated that no country would be barred from food security programmes even if it breached support limits in the Agreement on Agriculture. This was yet another sign of the negative atmosphere surrounding the WTO; trust no longer existed among key members. While a Ministerial Declaration was made in Nairobi in 2015, it seemed as if consensus no longer existed among WTO members on the Doha mandate.

How did the recent negotiations play in this context?

Agriculture has always been an issue both reoccurring and majorly divisive in the WTO. It had almost led to the collapse of GATT and now threatens the integrity of the WTO. Both official and informal ministerial meetings are commonplace within negotiation Rounds. As one of the leaders of the developing countries bloc at the WTO, India was commended for taking the initiative to host this informal meeting. However, keeping in mind WTO’s negotiating history, it is hard to take the results of the informal meeting in Delhi as being capable of manifesting into progress. Furthermore, the Trump administration continues to become more protectionist, coming into direct conflict with the principles of the WTO.