Charting a trade route after the MC12

News: An improvement in global trade scenario provides an ideal setting for Trade Ministers to revisit trade rules which can help maintain the momentum in trade growth.

The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) is being convened in Geneva, Switzerland at the end of this month. The MC12 is being held at an important juncture when the global trade scenario is quite upbeat.

What is the current outlook on global trade?

Expansion: Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend.

Buoyancy: It has played an important role in supporting growth in economies such as India where domestic demand has not yet picked up sufficiently.

What are the key points which MC12 should consider?

Securing a share in the growth for economically weaker countries is mandated by the Marrakesh Agreement Establishing the World Trade Organization. There is also need to discuss adoption of WTO rules on electronic commerce, investment facilitation, and fisheries subsidies.

Issue of IPRs: there is demand that technologies necessary for producing vaccines, medicines, and other medical products for COVID-19 treatment should be available without the restrictions imposed by intellectual property rights (IPRs).

Equitable access to vaccines: Pharmaceutical companies controlling the global markets have used their IPRs to deny developing countries access to technologies and know-how, thus undermining the possibility of production of vaccines in these countries.

Proposal of India and South Africa: both countries had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs. This proposal, supported by nearly two-thirds of the organisation’s membership but it was opposed by the developed countries batting for their corporates.

Fisheries, e-commerce: the current drafts on this issue are completely unbalanced as they do not provide the funds to rein in large-scale commercial fishing that are depleting fish stocks the world over, and at the same time, are threatening the livelihoods of small fishermen in countries such as India.

Discussion on e-commerce firms: the proposal by the members of the OECD and the G-20 members to introduce global minimum taxes on digital companies has made headlines. But in the WTO, discussions on e-commerce are being held in the WTO since 1998.

The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.

Objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms: In 2021, the issues on negotiating table are relating to the liberalisation of the goods and services trade and guarantee for free flow of data across international boundaries, all aimed at facilitating expansion of businesses of e-commerce firms.

Divisions over investment: the current focus of the WTO is to promote the global interests of oligopolies. For example, investment facilitation agreement.

In 2001, the Doha Ministerial Declaration had included a work programme on investment, but it was soon taken off the table as developing countries were opposed to its continuation. The opposition was due to the fact that the discussions were geared to expanding the rights of foreign investors through a multilateral agreement on investment.

One-sided negotiations: The negotiations on e-commerce and investment facilitation owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO. This will then be offered to the rest of the membership on a “take-it-or-leave-it” basis. India and South Africa have forcefully argued in a submission against the JSIs early this year.

Source: This post is based on the article “Charting a trade route after the MC12” published in The Hindu on 6th November 2021.