The US has not just criticized the WTO.
It has also walked the talk by announcing a series of
unilateral tariff increases outside the WTO framework.
These includeSafeguard tariffs to guard against a
surge in imports of solar cells and washing machines,
Imposition of 25% tariffs on import of steel and 10%
on imports of aluminium from all countries, (including India) ostensibly on
national security grounds and,
Discriminatory tariffs on imports of about $50 billion
from China under Section 301 of the US Trade Act.
Safeguard action is allowed under WTO, but to be WTO
compatible, it has to follow a process that involves consultation between
the parties, and a possible resort to the WTO to determine WTO
compatibility. No such consultations took place.
The imposition of tariffs on steel and aluminium on
national security grounds is even more questionable.
Such action is tolerated when taken against imports
from countries which are seen as national security threats.
It is being used against countries some of which are
actually allies, and it is directed at specific commodities for purely
This relates to the issue of the practices of
member countries in reporting open and hidden subsidies.
It is argued that the current provisions are not
sufficiently clear, and are also not effectively enforced.
Compliance with reporting requirements is largely
The problem of non-transparent subsidies is not
unique to China. Similar subsidies exist in industrialised countries
For example, much of
The technology behind iPhones, touch screens, and
AI, have benefited from defence-sponsored research.
It may seem unfair that the issue is being raised
now, in the case of China, when it was not in the case of the existing
However, whatever the past practice, it is
reasonable that common degrees of transparency should be expected from
It is not clear what exactly can be done to make
the system more transparent, but there is surely room for negotiation
here, and we should support it.
The Ottawa communique lists a number of issues
related to strengthening the negotiating process which include making
progress on new trade issues along with making progress on existing
issues, and also keeping the focus on development.
These issues have proved difficult to resolve in
the negotiating process.
The communique only says that the officials of the
countries will work on these issues and report back when the group meets
next in January 2019.
One issue that is relevant in trying to break the
negotiating logjam is to reconsider the WTOs consensus rule itself.
The rule gives each country a veto. We could move
to decisions being taken by qualified majority. Voting strength of each
country could be based on share in world trade, and the qualified
majority needed could be say 85%.
This would mean that any proposal accepted by
members accounting for 85% of world trade would go through.
Both these proposals would meet with strong
However, we should be willing to consider them if
the alternative is the collapse of WTO.
The change to be implemented, the shift would have
to be approved under the existing consensus rules