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WTO in the grip of plurilateralism

D Ravi Kanth | Updated on December 27, 2019 Published on December 27, 2019

Lawlessness in trade is now pervasive   -  Getty Images/iStockphoto

The body that once set trade rules for all has turned into one that works out pacts which help a few countries and hurt others

In a few days, the World Trade Organisation (WTO) will complete 25 years of its existence. It was established on January 1, 1995, after eight years of Uruguay Round of trade negotiations. Surely, it ought to be a moment of celebration, as the organisation for promoting rules-based norms for public good would have taken strong roots.

Sadly, that is not the case. More than a fortnight ago, a vital arm of the WTO for resolving trade disputes has been clipped. The US chose to put the Appellate Body, the highest adjudicating body for resolving global trade disputes, to bed for the time being. Washington repeatedly criticised the functioning of the adjudicating body for allegedly straying away from the dispute settlement understanding. However, the US chose to pocket favourable rulings and forced countries to implement them within the reasonable period of time. From now on, illegal trade measures imposed by the US and other countries will not be resolved independently and impartially. Effectively, the Donald Trump administration has paved the way for ‘might’ to become ‘right’.

More importantly, successive American administrations over the past 20 years have ensured a steady descent into rules that were framed almost 70 years ago as part of the GATT (General Agreement on Tariffs and Trade) 1947. The Final Act that established the WTO in 1995 is being made almost redundant.

Self-interest agreements

The WTO is facing perhaps its biggest challenge on the negotiations front. Increasingly, a group of powerful countries led by the US, China, the European Union, Japan, Canada and Australia are steadily transforming the trade body into a plurilateral trade organisation by launching negotiations in areas of their core interests. For example, the US would like ensure that its GAFA (Google, Amazon, Facebook, and Apple) companies along with Microsoft continue to rule the roost in global electronic commerce through new rules that would ensure countries do not impose duties on electronic transmissions, or stipulate conditions for storing data in domestic servers.

China, along with a group of other countries, wants to create a plurilateral Investment Facilitation agreement despite opposition from many, including the US and India. Australia, the EU, Canada, Japan and others are attempting to create an agreement on domestic regulation for services that undermines the mandated multilateral negotiations being conducted by the Working Party on Domestic Regulation (WPDR).

Another plurilateral agreement for finalising disciplines for micro, small, and medium enterprises (MSMEs) is being negotiated by a different group of countries. Soon, there could even be a plurilateral agreement on the environment. The agreements among two or more countries are invariably dominated by key players, and the majority of participants will have little or no say.

Notwithstanding the surge of plurilateral agreements that are being currently negotiated, the US and its allies also insist on having multilateral agreements that suit their interests. The US wants a strong multilateral agreement to prohibit fisheries subsidies without adequate special and differential treatment for developing countries. Yet, it remains ruthlessly opposed to having a permanent agreement for public stockholding programmes to fight global hunger, as it would upset its fat-cat subsidised farmers.

Hindering process

As part of WTO reforms, the introduction of punitive transparency and notification requirements is being sought. India, South Africa, and China, among others, have fiercely opposed these provisions on grounds that they violate the Marrakesh Agreement that established the global trade body. The US is leading the charge for bringing these corrosive provisions.

More disturbingly, the US, the EU, and Japan and other countries want to do away with core principles such as consensus-based decision-making and special and differential flexibilities for developing countries. Lawlessness, which has all along been present in the global trading system, has now become pervasive. The Doha work programme that promised developmental dividends for developing countries has been killed by the dominant powers, especially the US, with support from the WTO Secretariat. The WTO Director-General, who is also the chair for the trade negotiations committee, rarely acknowledges that he derives his mandate from the Doha work programme.

In short, the WTO is being subjected to a partition of sorts, akin to what Africa witnessed between 1881 and 1914, when major western powers divided and colonised the continent. Effectively, a large majority of countries is being excluded from its decision-making process because of the ongoing plurilateral negotiations. So, as it turns 25, the WTO can be christened as the ‘World Plurilateral Trade Organization’, serving the interests of a small group of developed and developing countries.

Published on December 27, 2019
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