WTO still lives

Outcomes for India were mixed

Officials of the World Trade Organization (WTO) and those from India, led by Union Commerce Minister Piyush Goyal, have hailed the breakthrough compromise that appears to have breathed life into the otherwise moribund governance structure of global trade. In their first set of major agreements for seven years, the countries at the WTO (they operate on the basis of consensus, meaning that any member-country can veto a deal) in Geneva came to a decision on issues as varied as patent protections for vaccines, fishing subsidies, and digital trade. India had to significantly soften its objections on several of these issues, but nevertheless claimed victory in post-agreement press briefings.

This notion of “victory”, however, needs to be understood in context. India’s demand for weaker intellectual property protection for pandemic-related medical requirements, for example — which it, alongside South Africa, has been pushing for over a year — may have come too late to make an appreciable difference to controlling the pandemic. Nor does it cover therapeutics and testing, but only the relevant vaccines. Given that most manufacturers of vaccines now believe there is a supply glut, it is hard to see this agreement being translated into material gains. The question of the fisheries agreement is more complex. This was identified by the WTO’s new leadership as the most likely location for a new agreement that would break the WTO’s decades-long inability to expand into new areas.

The hope was that inefficient national subsidies, which lead to overfishing outside countries’ exclusive economic zones, could be controlled, thereby leading to more sustainable global fishing stocks. India essentially wanted these subsidies in richer countries, including China, to be controlled while preserving the right to increase subsidies for poorer countries over the next 25 years. In the end, the fisheries agreement was a much more watered-down text, which eviscerated the crucial article about such inefficient subsidies and retained mainly its control on subsidies for illegal fishing and those that are targeted towards already depleted stocks. India will continue to be able to support its close-in fishing communities. India’s threat to torpedo an extension of the moratorium on taxing cross-border digital flows thankfully was not carried out. It is unclear what such a tax could bring in, or even how it could be implemented effectively without in effect cutting off domestic internet users from the wider world.

This is another occasion in which India’s digital-policy makers seem to be operating blind, with no modelling of costs and benefits. The most important issue for India remained, as always, protecting foodgrain procurement for the public distribution system (PDS). Given that the government has signalled it wishes to reform the system of procurement, it is not apparent why the PDS is always at the heart of its overseas negotiation tactics. In any case, India won not a permanent or long-term extension on the current carve-out for foodgrain stocks, but a decision to postpone discussion. Overall, it is at least gratifying that the WTO is not as somnolent as many supposed, and it can still take decisions by consensus. It is important, however, that India’s trade negotiators go to the next ministerial meeting — to be held before December 31, 2023 — with a clearer and more forward-looking view of the national interests, since many vital decisions have been postponed. With the country’s general elections due in 2024, the challenge for Indian negotiators could prove to be formidable.