WTO’s existential crisis

With the Tenth WTO Ministerial starting today in Nairobi, the battle lines are once again drawn between the developed and the developing world over paring trade barriers — who does how much and how rapidly. It wasn’t very different at the December 2013 Bali Ministerial, but this time it appears that the US, the EU and Japan have had enough of the Doha Round. A ‘facilitators’ draft for the Nairobi meet, specifically Part III of the document, reveals an impatience over the lack of progress in agriculture and intellectual property in particular. The context is easily understood. The Doha Round, which began in 2001, argues (as does the Kyoto Protocol in the context of climate change) that the onus to liberalise must fall first on the developed world so that the poorer countries are not denied their development space. With the world economy in crisis and the developed countries battling recession, their patience with the niceties of the Doha Round is running thin; they would like emerging economies to open up their agriculture, industry and services faster than the Doha Round would possibly permit.

Meanwhile, market access to the developed world, as well as services issues such as the movement of people, remains unresolved, which has led to a deficit of trust. India has been under pressure to alter some of its IPR provisions and, as the EU has suggested recently, place a cap on its subsidy to farm producers. This goes against the commitment made by the US and the rest in September 2014 not to bring up India’s farm subsidies at the WTO (its calculation being a bone of contention between the developed and developing camps) till a ‘permanent’ deal is arrived at. In exchange, India has agreed to go along with ‘trade facilitation measures’. Developing countries, in line with the Doha Round principle, have been pushing for a deeper commitment from the US and the EU on farm subsidy cuts. But this is not going to happen. The US and the EU would rather move on with WTO-plus or ‘Singapore’ issues such as competition policy, procurement and labour standards, by introducing them in their regional trade groupings.

They have opened up fronts such as the US-led Trans Pacific Partnership (TPP), where the Doha Round principle of differentiated liberalisation does not hold. The WTO is under pressure to go the TPP way, with the 12 TPP countries accounting for 40 per cent of world GDP. TPP may be viewed as a threat to those out of it, except that there are other blocs such as the China-driven Regional Comprehensive Economic Partnership coming up. This climate of geo-political flux can work in India’s favour. While being “open” to discussing ‘Singapore issues’, India can stick to its post-Bali position on food subsidies (that it may be problematic from a domestic policy viewpoint is another matter). While its IPR laws seek to keep out flippant inventions, a system of ‘minor patents’ is worth considering. In sum, Nairobi points to the existential crisis of the WTO in an age of geo-politically competing mega-trade blocs.

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