Why in the News?

• The 14th Ministerial Conference of the World Trade Organisation has begun amid debates on global trade reforms and India’s policy stance.

What’s in Today’s Article?

• WTO (Objectives, Key Principles, Mechanism, Significance, etc.)
• News Summary (Crisis of Relevance, India’s Trade Strategy, etc.)

World Trade Organization

• The World Trade Organisation (WTO) is a global international body established in 1995 to regulate and facilitate international trade among nations.
• Objectives

• Promote free and fair global trade.
• Ensure predictability and transparency in trade rules.
• Provide a platform for negotiation and dispute settlement.
• Support development through trade integration.

• Key Principles

• Most-Favoured Nation (MFN): Equal treatment to all member countries in trade.
• National Treatment: Imported goods should be treated equally with domestic goods.
• Consensus-based decision-making: Decisions are typically taken with agreement from all of the members.

• Institutional Mechanisms

• Ministerial Conference: The highest decision-making body, held every two years.
• Dispute Settlement Body: Resolves trade disputes among member countries.
• Trade Policy Review Mechanism: Monitors trade policies of member countries.

• Significance
  • The WTO plays a crucial role in maintaining a stable global trade system.
  • However, in recent years, it has faced challenges such as weakening dispute settlement mechanisms and rising protectionism.

News Summary

• The ongoing WTO Ministerial Conference (MC14) takes place in a context of a changing global trade order and growing tensions among major economies.
• Crisis of Relevance
  • The WTO is facing a crisis of relevance due to disruptions in global trade rules.
  • The dispute settlement mechanism has become ineffective because of the blocking of judge appointments by the United States.
• Push for WTO Reforms
  • The United States is advocating significant reforms, including reconsideration of the MFN principle.
  • There is also a push to incorporate plurilateral agreements, which involve a subset of countries instead of all members.
  • This represents a shift away from the WTO’s traditional consensus-based approach.
• E-commerce Moratorium
  • One of the key issues is the continuation of the moratorium on customs duties on electronic transmissions. It has been in place since 1998.
  • Developed countries support its continuation.
  • India, along with countries like Indonesia and South Africa, opposes it.
  • India argues that:

• It may lead to significant revenue loss.
• It restricts policy space in the digital economy.
• Developing countries lack the technological capacity to benefit equally.

• Investment Facilitation Agreement
  • Another major issue is the China-backed Investment Facilitation for Development (IFD) Agreement.
  • Supported by over 120 countries.
  • Aims to improve the flow of foreign direct investment.
  • India opposes this agreement because:

• It is being introduced through a plurilateral route.
• It undermines the multilateral and consensus-based structure of the WTO.
• It may have strategic implications linked to global investment networks.

• Public Stockholding for Food Security
  • India continues to push for a permanent solution on public stockholding.
  • WTO rules limit agricultural subsidies to 10% of production value.
  • India seeks flexibility to support farmers and ensure food security.
  • This is crucial because:

• India supports millions of small farmers through MSP.
• Around 80 crore people receive free food grains under welfare schemes.

• Fisheries Subsidies and Livelihood Concerns
  • India advocates a balanced approach to fisheries subsidies.
  • It supports sustainability in fishing practices.
  • It emphasises the protection of small fishers’ livelihoods.
  • It calls for greater responsibility from developed nations engaged in distant water fishing.

• India’s Broader Trade Strategy
  • India’s approach to the WTO is guided by the need to preserve policy space.
  • India has a relatively low share in global trade but high growth potential.
  • Past experiences, such as the Information Technology Agreement (ITA-1), influence its cautious approach.
  • India aims to ensure that:

• Development concerns remain central to WTO reforms.
• Trade rules do not constrain domestic policy flexibility.
• Emerging sectors like digital trade are regulated fairly.