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Covid, Russia-Ukraine War and the Israel-Hamas encounters have accentuated the need for food security in developing countries.

In 1950, global trade was a mere $60 billion. In 2023, it has grown five hundred times to $31 trillion. WTO, which came into existence in 1995, with India being one of the 123 nations represented in it, has enlarged its membership to 166 countries today.

Institutions like WTO and UNSC, have a basic asymmetry of influence, power and money, built into their structure, and hence, conflicts are inevitable. Because of such skewed distribution of control over decision making, both are losing steam in a rapidly changing world.

India as the voice of the Global South, along with Indonesia, Brazil and South Africa, can play a significant role in restoring WTO to a rule based system of global trade. They can resist the pressures of weakening SDT, and move towards achieving a borderless world.

As G20 president, India has led this fora admirably for one year, and can exert pressures for recreating the Appellate Board, as it has the capacity to enable strategic decoupling with above countries’ support, and also provide a China plus one option, to those economies affected by its hegemony.

As WTO approaches its 30th year of life and its existence is being questioned. The time has come for the WTO to rethink why conflicts are persisting. There are ten critical questions which demand logical, legitimate and legal answers:

WTO Appellate BodyThe Appellate Body of WTO has been in a limbo for several years. All attempts to fill up the vacancies of judges have been blocked by the USA. Even though 130 countries have backed the constitution of the Appellate Body, the USA blocked it 70 times. As a result, the dispute resolution mechanism of WTO is in suspended animation.

Does the USA have vested interests in not allowing the dispute settlement system to function? Why would any country not want a dispute settlement mechanism if trade disputes are a regular feature in global commerce? Is it democratic and ethical to prevent a judicial mechanism built into WTO, to be thwarted, because it does not suit the USA? Can other member countries accept this situation where one country stalls the functioning of the WTO dispute settlement mechanism, to avoid any decisions that may arise against it? Does it behoove the USA to continue perpetrating such blatant discrimination?

These are crucial questions which need adequate research and collective confrontation of the USA on this matter, by the WTO member countries, so that sustained pressure results in the Appellate Board getting constituted in 2024, after a gap of five years.

Food security in developing countries

The issue of Public Stockholding for food security has been highlighted by 80 member countries of WTO, including G33, Caribbean and Pacific Group and Africa, because it is in line with the SDG goal of zero hunger by 2030.

Covid, Russia-Ukraine War and the Israel-Hamas encounters, have accentuated the need for food security in developing countries. For India, it is critical to support its large low-income population. It is a matter of national security as it affects the very fabric of our constitutional priorities. Hence, India is pushing for a permanent solution on public stockholding as such a structure existed even before WTO was born.

If food security is a national priority of developing countries, how can the developed world block this vital requirement? Isn’t global sensitivity a primary need for a country like India, which provides free foodgrains to 800 million of its 1.4 billion strong population under the National Food Security Act, 2009?

Food deficient countries have no option but to cater to food security for its citizens, and how can any other country trespass this legitimate right of a sovereign country? Is creating a buffer of agricultural goods a crime in a country which has a large population to feed, unlike many other wealthy countries, which cannot understand this acute welfare measure, imperative for existence itself?

Does the western world, understand the mechanics of procuring large quantities of food grains annually, from different states at the time of harvest, storing it in several warehouses, spread all over the country, and then dispatching it to half a million fair price shops for distribution of wheat, rice, coarse cereals and pulses to a large mass of population?

Fishing rights

Subsidies for fishing are important for a country like India as it addresses issues of hunger, poverty, food and nutrition for its four million fishermen. India is asking for a balanced agreement because it requires a permanent solution for low income countries, and a 25 year exemption to protect poor fishermen.

It also wants to prohibit subsidies for developed countries involved in illegal, unreported and unregulated (IUU) fishing, based on the polluter-pay principle. This is because FAO has found overcapacity and overfishing (OCOF) to the tune of 34%, including fish stock depletion by the advanced nations. The developed world (the USA, EU, China, Korea and Japan) have built massive capacities for deep sea fishing on the strength of large subsidies, to the tune of $10 trillion plus, whereas India’s subsidies to fishing have just reached $300 million.

Vessels fishing in other country’s waters need to be curbed or compensated. Can the advanced nations object to another food security element like fish, for its coastal population, surviving primarily on fish catch? After building capacities of deep sea fishing on large subsidies, do the big fishing nations have any moral right to stop poor fishermen from being subsidised for sustaining and maintaining their livelihood in 70 countries?

Is it not ironic that countries with the largest food wastage are wanting to prevent communities from developing countries from fishing in their exclusive economic zone, which in India’s case, borders its 7,500 kms coastline? Is it not a matter of overreach for the well fed economies, to start transgressing the rights of poor countries to look after their marine potential, for feeding their large population?

Cost of trans-border remittances

India has made a strong case for reduction of the cost of trans-border remittances, and this is duly supported by Brazil and EU. The global average cost today is 6.18% while the SDG goal is to reduce it to 3%. Global remittances are to the tune of about $860 billion of which 78% is accounted for by the low and middle income countries.

India has achieved its highest number of $125 billion in 2023, and wants to “promote interoperability and inter-linkages in digital payment infrastructure including a quick payments system”. Nepal, Sri Lanka, Bangladesh, Philippines, South Africa and almost all nations have backed this except the USA and Switzerland. Digital remittance cost is 4.84% now and can be reduced further encouraging higher remittances.

India has asked for assessing the trends and developments in expanding remittances and the technolpgical solutions available to create greater efficiency and speed in such cross border remittance services. Here again, opposition by the USA is inexplicable as it is not clear. Why should they oppose cheaper, faster, easy, accessible cross border payments with new technologies?

It is also unclear as to why a country like Switzerland, should oppose a system that helps faster movement of money across borders enabling developing countries to benefit from timely inflow of funds from their diaspora abroad? Doesn’t it appear that every move by developing countries to help their standard of living, is countered by the G7 on some pretext or the other, without realising that such benefits will bring succour to the underprivileged, at no perceptible cost to US and Switzerland.

E-commerce moratorium

India and South Africa have asked for a relook at the moratorium on customs duties on electronic transmissions since 1998, causing loss to the tune of Rs 3.6 billion to Thailand, 2.6 billion to Mexico and half a billion to India. All countries combined, the loss is estimated to the tune of $10 billion by UNCTAD, of which 95% is borne by developing countries.

It seems without reason that 105 countries, including the mighty ones, want this prohibition to continue.

At a time when e-commerce transactions value in India, has progressed from $13 billion, seven years ago, to $65 billion in 2022-23, and may near $ 300 billion by 2030, is it not appropriate that e-commerce moratorium on taxation be removed, so that justifiable revenues reach the importing countries, some of which are listed above?

Can the high table muscle perpetuation of such a moratorium, for advancing the interests of a few global monopolists in e-commerce? Is a level playing field not required in the world today , where online trading and digital commerce are becoming the norm globally, even in remote parts of the world?

Investment Facilitation Pact

The Investment Facilitation Pact proposed by China, has been blocked by India and South Africa on the grounds that it requires consensus of all nations as per WTO mandate. Also investment is not really a trade agreement.

India has objected on the grounds that the MSME sector needs support through incentives and subsidies and a level playing field. India also wants a pre-investment review through an independent body which will screen all investments, specially those coming from border countries to India.

The questions that arise here are fundamental to the WTO mandate of decision making by consensus. Can a big country like China with hegemonistic tendencies , be allowed to push through an investment facilitation pact when more than 40 countries are opposed to it? Does mustering support a large number of LDCs through muscle power, tantamount to a majority, pushing for something that is outside the purview of trade?

Should the hidden agenda of the rich be allowed to affect the fair share and the voice of developing countries? Is it not highly risky to allow an investment pact, where investment in the future is likely to be through cryptocurrencies, which have an inherent flaw, as they make private money, and hence can cause havoc to the financial systems of the developing countries?

World Trade Centers (WTC) Association

India is poised to overcome China as the largest member of the World Trade Centers (WTC) Association, an international platform connecting 300 WTCs in 100 countries. India alone has 40 WTC licensees in 30 cities, and the world recognises our position of dominance in view of our lower operational costs, intellectual capabilities and educated workforce.

Is it not therefore important for the world to recognise that India and its voice must be heard as a leader of the global south, for all WTO conflicts which are pending for a substantial period of time. India has been a founding member of GATT, WTO and is poised to become a $ 5 trillion economy by 2028, as per IMF estimates.

Critical world issues

India has called for giving recognition to important world issues, like access to finance including trade finance , for developing countries, as global trade expands and moves more towards Asia. India has already started online filing of authorized economic operators T2 and T3 applications, adhering to standards that secure and facilitate world trade.

As advised by the World Customs Union (WCU), India follows the international harmonised system (HS Codes), and administers the technical aspects of WTO agreement on customs valuation and rules of origin.

As a prominent member of the trading community today, India wants the development dimension to progress in the WTO proceedings. In this context, India has asked for revival of the working group on trade, debt and finance so that greater coherence is established with relevant inter-governmental organisations. Is it unfair to raise such issues that encompass all countries, especially the developing ones? Is it not conducive to expansion of world trade and commerce?

Access to technology

India has also raised cross-cutting real life trade issues which affect developing countries like access to technology, supply chain resilience and bridging the digital divide. In this context, India has asked for re-invigorating the working group on trade and technology transfer, so that the developing world can benefit from ongoing advancements, through technology adoption.

This provides flexibility for industrialisation of developing countries and emboldens them to continue to be a part of the WTO, if such benefits accrue to them. The question again arises whether anyone should object to these progressive courses of action, which are beneficial to the entire global south, in raising their standards of technology, finance and living?

Committee on Trade and Development

India has also suggested a review, at least three times a year, to improve the functioning of the Committee on Trade and Development so that its achievements can be monitored every four months, and the gaps can be plugged, which are hindering progress of its members.

Are such development parameters to be appreciated by the developed world, if the greatest good of the greatest number is the general principle of WTO? Should the advanced nations be engrossed in their own interest alone ,or should they look at development of the less privileged nations, who are historically disadvantaged for various reasons. WTO cannot survive if the South majority is neglected.

It can choose to decay slowly and fade into oblivion, or it can resurrect itself to ensure some semblance of equity in dealing with the developing world, which earned this epithet, because the might of the rich countries suppressed and oppressed them in the past. Time is ripe for re-engagement, reorientation and reconciliation.

(The author is retired IAS officer; Views are personal)

  • Published On Apr 8, 2024 at 06:50 PM IST

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