Why WTO is loosing its significance?
- Bilateral agreements like TTIP, TPP etc. are weakening the multilateral arrangements that looked after the LDCs (Least Developed Countries)
- IPRs being used to curtail access to medicines in poorer countries
- WTO TRIPS gives waiver to LDCs with respect to patent protection of pharmaceutical products. This is being diluted/eroded in bilateral agreements
- These agreements are being made outside WTO
What should be India’s stance?
Till now, India is rigid in its demands of say agricultural subsidies, access to services etc. This rigidness has led to stalemate in WTO negotiations and hence developed world is moving towards bilateral/multilateral arrangements outside of WTO. Policy maker should adopt a more give and take attitude in trade matters without compromising on India’s need for food security. The emergence of plurilateral agreements is a warning that the world will simply pass by ignoring India’s interest.
How India can negotiate?
India needs to identify its trade interest areas and propose alternative negotiating templates. One such area is biopiracy, protection of traditional knowledge, and the link between the WTO’s Trade-Related Aspects of Intellectual Property Rights agreement and the Convention on Biological Diversity. There have been several instances of biopiracy in the past, of Indian traditional knowledge, such as the patenting of the wound-healing properties of haldi (turmeric). Being among the 12 mega biodiversity-rich countries, India needs to bring this issue to the negotiating table in its own free trade agreements.
What is Generalised system of preferences (GSP) system and its impact on India?
Generalised system of preferences is a system of preferential treatment to developing and Least Developed Countries(LDCs) to boost their exports.
Although the exemption was made to help developing countries and LDCs to compete with developed countries in the international markets, the benefits have accrued mainly to richer developing countries like India and Brazil.
Recent negotiations of renewal of GSP for Indian gem and jewellery industry in the USA will boost the sector which is facing slowdown owing to low global demand in the international markets. Similar negotiations are also going with countries like Israel and Belgium.
The sector is extremely important for the Indian economy as it is labour intensive and export oriented. Any system that increases the export of India will have a positive impact by providing employment, bringing in foreign exchange. This has a cascading effect in the economy. So, such steps are welcome and government of the day must engage in constructive negotiations with developed countries for such concessions.
It is said that if India agrees to the commitments sought from it by the developed countries at WTO, this would limit the policy space of the government in respect of certain categories of farm subsidies. Do you agree? If so, how should India respond to the demands made on it? Critically discuss. (200 Words)
The demands from the developed countries seeking India’s (and other developing countries) commitments to make cut on their farm subsidies in the ongoing negotiations under the Doha Round, would limit the policy space of the government in respect of certain categories of farm subsidies. This can be attributed to following main reasons.
- Would jeopardize the food security programme that aims to cover nearly 70% of the population. The government would lose its flexibility to determine the extent and size of its food programme in future due to obligations imposed by these commitments at WTO .
- MSPs support to farmers would be limited by WTO restrictions ,bringing further woes to the already distressed farm sector in India facing declining farmers’ incomes and rising cost of production.
- Various priority based sectorial subsidies on farm equipment ,agricultural inputs and certain crops that farmers are encouraged to grow in order to increase productivity ,would have to be slashed .
- Farmers support measures like farm loans ,subsidy on exports of their agricultural products , tariffs imposed on imported agricultural goods in the domestic markets so as to control the availability and prices of food items domestically ,would be seriously affected.
The response of India to such unreasonable demands should be the followings: –
- Showing unequivocal resistance and firmness on any concessions and demands that are beyond the negotiating mandates of the Doha declarations by seeking the active support of developing countries.
- Fighting the perception battle in media to counter any attempt by developed countries to shift blame on India for any WTO impasse by elucidating their onerous and unreasonable demands while failing to agree to cut their own farm subsidies on reciprocal basis.
- Seeking commitments from developed countries to cut their farm subsidies and reduce tariffs barriers (as per agreed under the Doha mandates) that impedes farm exports of developing countries.
Critically analyse why is India demanding a substantial cut in subsidies given by rich countries to their farmers. Do you think India should cut subsidies to its own farmers too? Comment. (200 Words)
The WTO regime is conceptualized to ensure a free and fair international trade, by cut in various trade barriers and trade distorting subsidies. Agriculture has also been laced under the ambit of the regime through “Agreement on Agriculture” and agriculture subsidies are sought to be cut.
The rich nations, however, mask their huge subsidies as being “non-trade distorting” and being in the green box. However, these subsidies are in the form of interest free loans, farm mechanization etc., which can bring down the cost of production substantially. This ultimately would lead of dumping of cheap food grains in the Indian market. This dumping would cause a huge farming distress in India as agriculture is a livelihood issue.
On the other hand, Indian subsidies in the form of MSPs have been labelled as “trade distorting” and have always been opposed by the rich nations. But, India’s
commitment to food security for its huge population needs procurement by the state.
The farmers also need to be provided an assured income through MSP so that distress does not set in. Though there is no need for India to cut its subsidies to farmers, but in the long term, we should focus more on investing in modernization of agriculture so that farmers are benefited in the long run
Why we need to protect Agriculture?
Agriculture contributes 17% to GDP, but 50% population dependent on it hence need to provide support
India’s worries at Dispute Settlement Board:
- Lack of a sufficient pool of trade law experts to represent them effectively at the DSB
- Developed world’s efforts to bring within the body’s ambit non-trade issues such as labour and environment
India has been advocating that certain issues, including labour and environment, must be kept out of the WTO’s purview and instead be dealt with by the global bodies concerned such as the International Labour Organisation and the United Nations Framework Convention on Climate Change. The developed world, however, is keen that the WTO addresses, what they call, global trade’s new challenges, including labour and environment
The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) makes decisions on trade disputes between governments that are adjudicated by the Organization.
What is India-US tussle on Solar/ Renewable appliances?
- India has complained to the World Trade Organization (WTO) about support given to the renewable energy industry in United States
- The complaint alleges that 8 states in US have prop up their renewable sector with illegal subsidies and domestic content requirements, an obligation to buy local goods rather than imports.
- By filing the complaint, India has triggered a 60-day window for US to settle the dispute, after which India could ask the WTO to adjudicate
- In May 2016, India lost a case at the WTO after the US complained about India’s national solar programme over illegal subsidies and domestic content requirements. India has appealed that ruling
- India is finalising a scheme to subsidise both domestic and foreign companies that will manufacture in the country, without running contrary to the WTO rules