Developing nations wary of WTO’s reforms proposals

Developing nations wary of WTO’s reforms proposals

News

1. WTO in its new report titled “Reinvigorating trade and Inclusive Growth” argued to abandon consensus principle and introducing a case by case approach for plurilateral negotiations.

  Important analysis:

2. The WTO is planning to change the ‘consensus based multilateral rule making’ for plurilateral negotiations on grounds that it is disrupting the negotiating activity at the global trade body.
3. The WTO has argued that the practice of bundling negotiating issues together in trade rounds (based on the Single Undertaking) has become extremely difficult to manage.

Marrakesh Rubicon

4. Marrakesh agreement has laid out the rules for the conduct of business for the WTO secretariat.
5. As per the agreement, the WTO Secretariat is required to remain neutral in negotiating new trade rules without advancing the positions of any one country or groups of countries, and is expected to respect rules in a member-driven, inter-governmental organization.

Report’s Goal

6. The report’s central goal is aimed at preparing the ground for the WTO’s 12th ministerial conference to be held in Astana, Kazakhstan, in June or July 2020, for the launch of plurilateral negotiations in electronic commerce, investment facilitation, disciplines for MSMEs, domestic regulation for services, and gender.

Report outcome

7. The report fails to answer how the rules for plurilateral negotiations were going to be enforced and if there will be a system to settle disputes

Report Suggestions

8. The report suggested that the “single-undertaking approach” has become vulnerable to delays and deadlocks.
9. It is alleged that the multilateral trading system has not always relied on large-scale ‘single undertakings’ like the Uruguay Round.

It argued that “many approaches have been deployed over the years, some fully multilateral, and others not”, suggesting that “key parts of the current WTO rule book were initially agreed by and applied (in the 1970s and 1980s) only to those countries adopting the Tokyo Round Codes”.

Need for change in consensus based approach

10. In the case of emerging issues where policy innovation is needed and where not all 164 WTO members are equipped or ready to engage, some countries wish to move further and faster than others, and are doing so.
11. The open-plurilateral discussions on issues like

• e-commerce,
• investment facilitation,
• services domestic regulation, and
• micro, small, and medium scale enterprises (MSMEs)

Are aimed at  improving regulatory coordination, in order to minimize policy frictions and advance shared goals in a ‘least trade restrictive’ way that could lead to a more cooperative, less mercantilist, approach to WTO negotiations in the future.

Nature of new rules

12. New rules negotiated through plurilateral negotiations in e-commerce, domestic regulation, investment facilitation, disciplines for MSMEs, and gender would likely be inherently non-discriminatory, because they involve domestic regulations that cannot be easily tailored to benefit specific trade partners, making concerns about “discrimination,” like calculations of “reciprocity,” less relevant”.
13. Structure for new rules under GATS

14. The report maintained that the General Agreement on Trade in Services (GATS) offers a structure for new agreements in electronic commerce, domestic regulation for services, investment facilitation, disciplines for MSMEs and gender.
15. But the report did not reveal the gross asymmetries in market access commitments of Mode 3 and Mode 4 under GATS.

E-commerce

16. On electronic commerce- the report advocated that members must be guided by the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), which had replaced the TPP (Trans-Pacific Partnership) Agreement.