‘Virus’ of US unilateralism threatens WTO

D Ravi Kanth | Updated on March 06, 2020 Published on March 06, 2020

The US’ persistent efforts to deny special and differential treatment to developing countries has destabilised the institution

Two unrelated viruses are currently wreaking havoc around the world. The novel coronavirus (Covid-19) is rapidly, bringing the global economy to a halt. Economic costs are mounting with each passing day. The need of the hour is a fiscal boost for the health sector, not the continuation of austerity policies. Otherwise, proliferation of restrictions on travel, trade, and supply chains may make matters worse.

Already, the growing number of countries resorting to quarantine-restrictions on people who have travelled through China and other inflicted countries are assuming nightmarish proportions. “It brings to mind the Yellow Peril hysteria of the late 19th and 20th Centuries,” which was used to justify European colonialism in Asia while blocking inflow of Asian immigrants to California, said John Weeks, a former economics professor of SOAS University of London.

The other virus, stemming from unilateral trade measures and muscular trade policies, is as dangerous to the global trading system as the Covid-19. “The collapse of the Appellate Body, the attack on the principles we have held dear, like non-discrimination and special and differential treatment, have cast a pall of hopelessness on the WTO,” said Ambassador JS Deepak, India’s trade envoy to the WTO.

Trade negotiations

Without naming the US, which is responsible for the trade-related virus over the past three years, Deepak said at an informal trade negotiations committee meeting on March 2 that the “MC12 (the WTO’s 12th ministerial conference, scheduled to begin in Nur Sultan, Kazakhstan, on June 8) provides us an opportunity to address these grave challenges, if we can only get our act together.”

But can the 164 member nations with diverse trade interests get their act together against one member thay is determined to cause incalculable damage? The answer came the next day from the latter member, ie the US. Washington has put two proposals on the table for discussion at the General Council, which is the highest decision-making body after the ministerial conference. The first proposal seeks to bring about “differentiation” for availing special and differential treatment (S&DT) among developing countries in current and future trade negotiations. The second proposal intends to bring market-based conditions at the WTO based on the arbitrary interpretation of the Marrakesh Agreement.

The US’ proposal on S&DT has been rejected repeatedly since February 2019. Normally, a proposal rejected thrice at the General Council is dropped from further discussions. But the US has persisted against the existing rules and conventions. “The US proposal establishes objective criteria for determining whether a WTO member may continue to avail itself blanket S&DT in current and future trade negotiations,” said Ambassador Dennis Shea, the venerable US trade envoy, in an eloquent intervention at the meeting.

The four-point objective criteria, explained Shea, will determine if a developing country like India is a member of the Paris-based OECD (Organization for Economic Cooperation and Development, a rich-country economic club that the US had established after World War-II); a member of the G20; a WTO member that is designated as a “high income” country by the World Bank, and that accounts for no less than 0.5 per cent of the global merchandice trade.

“Members who meet at least one of the four criteria” will forego blanket S&DT, Washington has insisted, adding that developing countries “would retain the ability to negotiate the flexibilities they need to defend their interests”. The proposal is supported by other developed countries such as the European Union members, Australia and Canada.

Unfair move

What was India’s response to this unilateral US’ proposal? “S&DT,” argued the Indian trade envoy, “is a treaty-embedded right at the WTO, an entitlement which developing countries have paid for, and that cannot be taken away from us, based on certain arbitrary assumptions, including creative interpretations of the basis of G20 membership.” The parameters used by the US are “unrelated to development, (and) to target certain members”, Deepak argued. More disturbingly, “new divides, especially in the digital and technological spheres” have become more pronounced, he suggested.

“The S&DT, in favour of developing countries and LDCs is, therefore, as relevant and required today as it was in 1995 (when the WTO was established),” he said. He drew attention to the recent unilateral action to treat India as a developed country and thereby deny S&DT for the imposition of countervailing (anti-subsidy) duties. Indeed, the US’ recent actions to seek special treatment for its exports while denying the same to developing countries “reflects double-standards of the US.” The US’ stance on S&DT “appears to be a case of not only not practising what you preach but also not preaching what you actually practice,” Deepak emphatically told his US counterpart.

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Published on March 06, 2020
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