Developed countries want to include new issues like e-commerce, investment facilitation and government procurement in the discussion.
WTO headquarters in Geneva. Credit: Reuters
New Delhi: Battle lines have been drawn between developed and developing countries over the agenda for the forthcoming WTO ministerial conference at Buenos Aires, with India saying it will oppose discussion on new issues like e-commerce, investment facilitation and government procurement.
If India remains firm on its stand, the upcoming ministerial, to be held from December 10-13, could fail to produce any substantive outcome. But it remains to be seen how far India can fend off the developed world’s pressure on inclusion of new issues in the ministerial agenda.
The experience of the previous WTO Ministerial Conference, Nairobi in 2015, does not inspire much confidence that India would be able to thwart moves to push new issues onto the WTO agenda. There was no unambiguous affirmation on sticking to the Doha agenda at Nairobi, despite India strongly pitching for it.
The ministerial is the highest decision-making body of the WTO and meets at least once every two years to give political direction to the organisation.
As a priority, India wants the WTO to focus discussion on the Doha development agenda, without being distracted by new issues.
The Doha round of WTO negotiations was launched in the wake of the September 11 attack on the twin towers in the US by the Al Qaeda. The exigency of building a wider political consensus for a global response against terror forced developed countries to agree on giving some unilateral concessions to the developing countries.
Doha negotiations have dragged on since 2001, without any hope of conclusion. The problem with the Doha agenda is that nothing will be agreed on unless everything is agreed on. So no further progress is possible even on agriculture and services, areas where India has a lot to gain and where negotiations had started before the launch of the Doha round.
Much has changed globally since the Doha round was launched. Labour-intensive manufacturing has shifted to developing countries, causing massive job losses in developed countries. As a reaction, trade protectionism has gained ground in such countries.
Obviously, developed countries are now reluctant on taking forward negotiations on the Doha agenda.
During an informal meeting at the WTO, developed countries including Canada, Australia, South Korea, Norway, Paraguay and the EU circulated a restricted draft ministerial decision to establish “a working party” with the mandate to carry out negotiations on trade-related aspects of electronic commerce.
Prior to the latest proposal from the EU and other members, Japan and Russia too circulated their respective submissions seeking to establish a “working group”.
Japan claimed that all “existing WTO Agreements apply to electronic commerce”. According to the proposal submitted by Japan, even issues such as the free flow of data located on computer servers without data localisation requirements, permanent moratorium on customs duties, non-disclosure of source code and prohibition of forced technology transfer will come under the purview of future negotiations as and when they are launched.
The US too has made a strong pitch for bringing e-commerce onto the negotiating agenda.
In contrast, the predominant view within the government is that unless India has its own national policy on e-commerce and investment facilitation, it should not be making commitments in the WTO. India’s assessment is that pacts on e-commerce investment facilitation would limit its policy-making space.
India has reaffirmed its position on e-commerce at the informal gathering of WTO trade ministers in Marrakesh on October 9-10. The meet was held to seek inputs from members for preparing the Buenos Aires agenda.
Leading discussions on behalf of the developing world at the Marrakesh meet, commerce minister Suresh Prabhu called upon WTO members to first deal with the issues already under negotiation before moving on to new ones.
Prabhu also stressed the need for adopting a transparent and inclusive process of negotiation at the WTO and completing all preparatory work before the conference, so that only those issues which are ready for a conclusion are taken up for deliberation.
Suresh Prabhu. Credit: PTI
Commerce secretary Rita Teaotia recently elaborated on India’s negotiating position at the WTO. “Our position has been continuously that we will not refuse to engage (on new issues). We are ready to engage. Nevertheless, the technical work must happen at the committee level,” Teaotia said while speaking at Confederation of Indian Industry (CII) event.
“These issues must be thrashed out and only when they reached a sufficient level of maturity, they can be brought to a (WTO) ministerial. This is clearly is our position,” she added.
Teaotia said that many of the new issues being pushed by developed countries, including the US, are not directly linked to trade.
On e-commerce, she said even the definition and meaning of this varies from country to country and the issue is certainly not mature enough to come up for actually making some progress at the ministerial level.
India’s reservations on e-commerce
India fears that new rules could provide unfair market access to foreign companies, hurting the rapidly-growing domestic e-commerce platforms. A key demand by the developed countries is to make permanent the current ban on customs duties on global electronic transactions.
Trade experts said India is wary of the proposal because of its bitter experience of WTO Information Technology Agreement. Under the pact, it abolished tariffs on hardware, a move that ended up hurting the domestic electronics manufacturing industry.
Responding to developed countries’ proposals on e-commerce, India has maintained that the WTO should stick to the existing mandate set out in the 1998 electronic commerce work programme.
India has argued that negotiations on rules and disciplines in e-commerce would be highly premature at this stage and like a leap in the dark, especially given the highly asymmetrical nature of the existing e-commerce space.
The one-page draft proposal circulated by the developed countries says, “The Working Party shall establish its own procedures and shall report periodically to the General Council”.
India has linked the extension of moratorium on e-commerce transactions till 2019 to a similar renewal of moratorium on Trade-related Intellectual Property Rights (TRIPS) non-violation and situation complaints.
A large majority of developing countries has supported India’s stand at the WTO.
Fissures in developing countries over e-commerce
Breaking ranks with India, China and Pakistan have said they are open to engaging for formulation of rules to liberalise cross-border e-commerce, though they have also added some conditions. China has said that discussions should focus on the promotion and facilitation of cross-border trade in goods enabled by the internet. Discussions could also include services directly supporting this, such as payment and logistic services, said China’s proposal submitted to the WTO.
However, China stated that discussions should not lead to new market access commitments and that the needs of developing countries should be reflected in any outcomes.
It stated that priority should be given to “easy issues”, with a focus on realising “pragmatic progress”.
Pakistan too said has it is ready to engage with other WTO members to continue work on e-commerce.
Investment facilitation
The upcoming ministerial is scheduled to discuss five proposals on investment facilitation from member countries including Argentina, Brazil, China, Indonesia, Korea, Mexico, Pakistan, Russia and Turkey. However, India is strongly opposed to any discussion on the subject.
India feels allowing such a discussion at WTO would amount to handing over policy space to decide on things such as the foreign direct investment norms and arbitration clauses.
Labour, environment standards
Labour standards are not part of WTO negotiations. But some WTO member countries from Europe and North America say that the issue must be taken up by the WTO in some form if public confidence in the WTO and the global trading system is to be strengthened.
But most developing countries and many developed nations see the issue of trade and labour standards as a pretext for protectionism in developed country markets.
The proposal relating to introduce environment standards at the WTO is equally contentious.
Competition policy
The WTO Working Group on the Interaction between Trade and Competition Policy was established at the Singapore Ministerial Conference in 1996 to consider issues raised by members relating to the interaction of these two policy fields. Stalemate continues over the issue, with developing countries including India unwilling to play ball.
Transparency in government procurement
WTO already has a plurilateral agreement on government procurement, with 28 members as its signatories. But now the plan is to get a multilateral agreement.
The idea is to produce an agreement that all 146 WTO members will sign. The focus is on transparency in general, rather than on transparency as a vehicle for monitoring market access commitments. However, some members say they want future negotiations to have a broader mandate.
Many developing countries are concerned about enforcement rules in this area, including the use of the WTO dispute settlement system. They are reluctant to launch negotiations on this issue at this stage.
India’s priorities
India wants the WTO ministerial to focus negotiations on issues like public stockholding for food security and liberalisation of the visa regime for movement of professionals under the WTO agreement on services.
India has stressed the need for finding a permanent solution for public stockholding for food security purposes, which should be better than the peace clause which already exists. This clause enables India to continue procurement and stocking of foodgrains for distribution to the poor under its food security programme without attracting any kind of action from WTO members, even if it breaches the 10% subsidy cap as stipulated by the multilateral trade body.
While speaking at the informal Marrakesh meet, Prabhu had emphasised that a permanent solution on the issue of public stockholding for food security purposes must be a part of the Buenos Aires outcome.
Prabhu said that a solution on this issue would give a strong signal of determination to end hunger and achieve food security, as mandated by the UN Sustainable Development Goals.
India’s proposal to negotiate an agreement on trade facilitation in services (TFS) has received a mixed response from WTO member countries. The proposal provides a framework to address various impediments to trade in services in a comprehensive and holistic manner. It aims at liberalising rules for the movement of professionals and other steps to reduce transaction costs to boost growth of the services sector. India had circulated a draft legal text on TFS at the multilateral trade forum in February this year.