Was WTO meet a success for India?

Was WTO meet a success for India?
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Was WTO meet a success for India?

Highlights

India has been partly successful in areas of fisheries subsidies and patent waiver for vaccines, but not so much in other key issues like food subsidies and e-commerce taxation

The outcome of the 12th ministerial conference of the World Trade Organisation (WTO) was a mixed bag for India. Commerce and Industry Minister Piyush Goyal's claims that it was a spectacular success was far from the truth. In fact, the official delegation ended up compromising in many areas, much unlike previous Indian teams that have tackled WTO summits. It must be recalled that previous Commerce Ministers ranging from Murasoli Maran to Arun Jaitley to Kamal Nath have taken rigid positions to ensure that India's interests are not left by the wayside. In the process, there has at times been a deadlock in WTO decision-making but this has not deterred Indian negotiators. In contrast, this time there was a mood to make concessions.

It has to be said that much was expected from the 12th ministerial which was held in mid-June after a gap of five years owing to the pandemic. It did not lack the usual midnight drama of negotiations which normally accompanies the multilateral trade body's biannual meetings and was even extended by a day. But for a change it ended up taking some firm decisions. It is after nine years that the 164 member organization has been able to conclude a summit with concrete outcomes. One of the main difficulties in taking decisions is the need for consensus. All members have to agree before a decision is agreed upon. In the past India has been one of the toughest negotiators and rarely relented after taking positions in its long term self interest. This time, however, the country has made several compromises.

On fishing subsidies, it was able to ensure that developing economies have exemptions within their exclusive zone of the sea extending 200 miles from the coastline. The fishing subsidy issue has been one of the longest pending issues at the WTO, having been debated for 21 years. The new pact bans any subsidy for illegal, unreported and unregulated fishing with a two year exemption for developing countries like India within their exclusive economic zones of the sea. It also restricts fishing in overfished stocks with a two year relief for poorer countries. India's proposal for a 25 year transition period for developing economies was not agreed upon. But it was able to ensure that subsidies were retained for small scale artisanal fishing.

The fisheries agreement must be viewed in the context of the huge subsidies doled out by rich countries which contribute to overfishing. Estimates are that 35 billion dollars of subsidies are given annually of which 20 billion dollars support overfishing. As for the much-awaited patents waiver for Covid-19 vaccines, therapeutic treatments and diagnostics, only partial agreement could be reached on the issue. The original proposal made by India and Japan included not just vaccines but drugs and diagnostics needed to tackle the pandemic. The scheme had been submitted in October 2020 by the two countries seeking a waiver for all WTO members on the implementation of certain provisions of the intellectual property rights agreement, TRIPS, in relation to Covid 19.

In the final agreement, the waiver is only confined to vaccines. It has been agreed to temporarily waive intellectual property patents on Covid 19 vaccines for five years so they can be manufactured without any problems in other countries. The non-inclusion of therapeutics and diagnostics has been a big disappointment for poorer countries. On the plus side, it has been agreed that this issue will be revisited after six months.

There was also little progress on key issues related to agriculture which have in the past been debated fiercely by developing countries led by India. It has been seeking to allow government to government sales of food grains kept in public stockholding programmes such as for the public distribution system. The proposal was shot down on the grounds that sale of subsidised grains could distort global food prices.

Another long-standing issue on which a decision has been repeatedly delayed over the years has been the need for a permanent solution on public stockholding for food security. Subsidies for developing countries are currently capped at ten per cent of the value of production. As a temporary measure, these are covered by what is known as the "peace clause" ensuring that there will be no action by WTO members if India's food subsidies cross this level. The subsidies are critical as these are meant to provide support to farmers through the minimum support price programme as well as to acquire and release grains to weaker sections of society. India has already invoked the peace clause twice, the last time being during the pandemic when higher support was needed for the food security programme.

A permanent solution has once again been pushed forward till the next ministerial conference, which delays it for another two years.

India had along with other developing countries also sought an extension of the moratorium on customs duties on e-commerce transactions. This includes digitally traded goods and services. Commerce Minister Piyush Goyal had told the conference that developing countries lost a potential tariff revenue of about 50 billion dollars on imports from only 49 digital products over the period from 2017 to 2020. The moratorium had been imposed in 1998 when the internet was a new entity and regularly extended since then. This meeting gave yet another extension. In other words, countries like India will continue to lose revenue on such transactions for the next two years.

The 12th ministerial conference has thus been a mixed bag for this country. It has been partly successful in the areas of fisheries subsidies and the patent waiver for vaccines, but not so much on other key issues like food subsidies and e-commerce taxation. It is clear that at future ministerial, India needs to stand firm on areas that are of critical importance keeping in view the country's long term interests especially livelihood issues related to farmers.

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