How India can lead multilateralism at WTO

Source- The post is based on the article “How India can lead multilateralism at WTO” published in “The Indian Express” on 17th June 2023.

Syllabus: GS3- Economy

Relevance- Issues related to WTO

News– The recently concluded meeting of the G20 working group on trade and investment focused on the important issue of WTO reform.

How has the approach of the global community towards global economic governance changed in recent times?

Earlier The world favoured economic interdependence. The WTO was aimed at legalising and policing economic interdependence.

Today’s world is dominated by geoeconomic considerations and heightened securitisation of international economic relations.

The pursuit of unilateralism in international economic relations, especially by developed countries like the US, is on the rise. There is little regard for WTO law.

Economic policies such as industrial subsidies and local content requirements have made a comeback. There is a deliberate effort to weaken trade multilateralism in favour of external plurilateral alignments keeping the big power confrontation in mind.

What are the WTO reforms that should be advocated by G20’s “middle powers” such as India, Indonesia, Brazil, and South Africa?

First is related to the special and differential treatment (SDT) principle in WTO agreements. SDT provisions give special rights to developing countries and obligate developed countries to treat the former more favourably.

However, only 21% of the SDT provisions in various WTO agreements oblige developed countries to provide differential treatment to developing countries. SDT provisions need to be given more teeth and effort.

Second is related to the appellate body. It remains paralysed since 2019 because of the US.

The remaining G20 countries need to either persuade the US to change its position or resurrect the appellate body without the US.

Third is related to the consensus-based decision-making in the WTO. It is slowing from 2017 onward. There has been a shift away from this principle toward plurilateral discussions on select issues such as investment facilitation.

While the plurilateral approach is a welcome development for rule-making, there is a need to develop a multilateral governance framework for plurilateral agreements.

This governance framework should include key principles of non-discrimination, transparency, and inclusivity. Forcing plurilateral agreements on non-willing members will increase the trust deficit between developed and developing countries.

Fourth is related to addressing the transparency gap in the WTO, especially in terms of notification requirements.

The WTO member countries are obliged to notify all their laws and regulations that affect trade. But, the compliance with this obligation is poor. This increases the cost of trade, especially for developing countries.