Need to Breathe life back into WTO (The Hindu)

Mains Paper 2: International
Prelims level: WTO
Mains level: Various international organizations and their disputes settlement mechanism

Context

•  These are challenging times for developing countries at the WTO.
•  Ministers and officials of 23 Developing and Least Developed Countries (LDCs) will bear the brunt of the Delhi heat on May 13-14 to brainstorm trade issues of long-term consequences.
•  India is hosting this informal ministerial of select WTO members.

Four significant issues of concern

•  Push for a new decision making model at the WTO from the current all-member consensus principle to small group-based plurilaterals;
•  Push for negotiations on e-commerce where understanding is limited;
•  Push for abolishing flexibilities available to developing countries;
•  Prevent the Dispute Settlement Mechanism (DSM) from becoming dysfunctional. Let us understand the key arguments of each issue.

Plurilaterals:

•  WTO members at the launch of the Doha Round in 2001 agreed for an ambitious development-centric negotiation agenda on agriculture subsidy, market access and services.
•  However, big countries seem to have lost interest in these issues and are pursuing new subjects of interest to their corporates. This is the background for their pursuing plurilaterals.
•  But could consenting members coming together to sign plurilateral agreements be an alternative to the consensus-driven decision making at the WTO?
•  Even plurilaterals should be introduced only by consensus of all WTO members.

E-Commerce:

•  This sector has most dollars at stake and hence is turning out to be the most heated. Large US technology firms dominate the digital economy space.
•  Google and Facebook deal with data and services while Amazon sells goods.
•  With a technology lead backed by deep pockets, they have no rivals in any country. Except for China, which followed a three-pronged strategy.
•  It did not allow entry to Google or Facebook and gave a tough time to Amazon. It also developed national champions like Baidu and Tencent.
•  China also introduced cyber security laws and other necessary regulations creating a robust ecosystem.
•  Only after fortifying its interests, China has joined the e-commerce plurilateral negotiations.
•  It is now in a position to negotiate global markets for Baidus and Tencents while preventing the free run of Google or Facebook.
•  India has taken steps to introduce e-commerce policy framework, online data protection and data localisation rules.
•  These need to be expanded and woven into a central law. India also needs to promote national champions. But nurturing firms needs active government support.
•  On their part, the US, EU, and Japan are in a great hurry to have WTO rules on e-commerce.
•  The US wants no restrictions to data flow, the EU wants full protection of personal data, while others like India, countries of Africa and Indonesia feel it’s too early to make global rules at the WTO.
•  Members that are interested may sign FTAs.

Special and Differential Treatment:

•  SDT are flexibilities allowed by WTO to developing countries and LDCs in implementation of the WTO agreements.
•  A few examples are
•  To higher domestic support for agriculture,
•  Export subsidy not to be treated as prohibited subsidy for developing countries with less than $1000 per capita income,
•  To longer implementation period under various WTO agreements like TRIPS.

Dispute Settlement Mechanism:

•  DSM has proven to be the most useful of the WTO bodies, settling over 500 trade disputes. But it is at risk of being dysfunctional with the US stopping the appointment of Appellate Body members.
•  The US probably foresees that most of Trump’s action would fail the DSM test.
•  It will stop functioning from December 2019 with the retirement of last of the three members.
•  Without DSB, the WTO will lose its bite as countries cannot not be tried for violating WTO rules.
•  WTO has been a fertile ground for the power play. But the developing countries secured a reasonable deal in the past by having a common position. Time will tell if they are lucky again.

Conclusion

•  Countries are still grasping the significance of issues like data flow, server localisation, mandatory disclosure of source code, etc. Here is an example, how half-baked understanding does not help.

•  One country prescribed disclosure of source code as a necessary condition for grant of business. Firms from most countries declined.

•  Finally, a Chinese firm shared the code and got the business. It turned out that the code was dynamic and changed every moment.

•  Signing a deal without complete understanding will throw such surprises.

•  It would turn the world into a passive consumer with no place for domestic firms.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) Consider the following statements about Sicklecell disease:
1. It is a major genetic disease in which the normal round shape of red blood cells becomes like crescent moons.
2. Red blood cells can move easily through the blood vessels but sickled shaped cells interconnect and can result in blood clots.

Which of the statements given above is/are incorrect?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: D
Mains Questions:
Q.1) What are the Special and Differential Treatment? How SDTs were incorporated in the WTO agreements is interesting?