"The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries." Discuss in the Indian perspective.
Question #17 2016
WTO Doha Round & India
Topper's Answer
The World Trade Organization (WTO) was established in 1995 with the broader objective of fostering a rules-based, predictable, and liberalized multilateral trading system. The Doha Round, launched in 2001, was distinctly termed the Doha Development Agenda (DDA) as it explicitly aimed to place the developmental needs and vulnerabilities of developing countries at the core of global trade negotiations.
However, the Doha Round has reached a virtual stalemate. The deadlock is primarily driven by entrenched policy divergences between the developed bloc (US, EU) and the developing bloc (led by India, China, South Africa) over historical trade asymmetries.
The Stalemate: An Indian Perspective
From India’s standpoint, the developed world is attempting to dilute the developmental mandate of the Doha Round to serve its own corporate and economic interests. The major areas of friction include:
1. Agriculture and Food Security
- Public Stockholding (PSH): India procures food grains at Minimum Support Prices (MSP) for its Public Distribution System (PDS) to ensure food security for millions. Developed nations argue this violates the 10% limit on subsidies (Aggregate Measurement of Support - AMS). India argues that the AMS is calculated based on outdated 1986-88 prices and demands a Permanent Solution for PSH, rather than the temporary 'Peace Clause' achieved at Bali (2013).
- Special Safeguard Mechanism (SSM): India demands the right to temporarily raise tariffs to protect its resource-poor, subsistence farmers from sudden surges in cheap, highly subsidized agricultural imports from developed nations.
- Hypocrisy in Subsidies: India points out that developed countries maintain massive, trade-distorting agricultural subsidies cleverly categorized under the "Green Box" (exempt from reduction), while targeting the survival-based subsidies of the developing world.
2. Trade in Services (GATS)
- Developed nations successfully pushed for the Trade Facilitation Agreement (TFA) in goods to ease customs procedures, which disproportionately benefits their manufactured exports.
- In response, India has demanded a reciprocal TFA in Services, specifically pushing for the liberalization of Mode 4 (movement of natural persons). India wants easier visa norms for its highly skilled IT professionals, which developed countries consistently block using protectionist immigration policies.
3. Intellectual Property Rights (TRIPS) and Public Health
- Developed countries, influenced by "Big Pharma," continually push for TRIPS-Plus norms, such as data exclusivity and extended patent terms.
- India, often called the "pharmacy of the developing world," fiercely resists this. India defends its use of Compulsory Licensing and strictly enforces Section 3(d) of the Indian Patents Act to prevent the "evergreening" of patents, ensuring that life-saving generic medicines remain affordable for the Global South.
4. Special and Differential Treatment (S&DT)
- S&DT is a foundational principle of the WTO, allowing developing nations longer timeframes to implement agreements and lower tariff reduction commitments.
- Developed countries argue that emerging economies like India and China have grown too large to avail S&DT benefits. India vehemently counters this, citing its low per capita income and immense socio-economic challenges, insisting that S&DT is a non-negotiable right for protecting infant domestic industries.
5. The Push for 'New Issues' vs. The Doha Mandate
- Developed nations are eager to abandon the unresolved Doha agenda and force 'New Issues' (the Singapore Issues) onto the negotiating table, such as e-commerce rules, investment facilitation, labor standards, and environmental norms.
- India opposes this paradigm shift, viewing it as a disguised form of non-tariff protectionism. India maintains that integrating labor and environment into the WTO would be detrimental to developing economies and insists that the historical Doha mandate must be resolved first.
Implications of the Doha Deadlock
- Rise of Mega-Regionalism: The failure of the Doha round has led developed nations to bypass the WTO in favor of mega-regional Free Trade Agreements (like CPTPP), which fragment global trade into exclusionary blocs.
- Threat to Multilateralism: The prolonged deadlock, combined with the current crisis in the WTO’s Appellate Body (Dispute Settlement Mechanism), threatens the very existence of a unified, rules-based global order, hurting developing nations that rely on collective bargaining.
Way Forward
India cannot afford the collapse of the multilateral trading system. As a leading voice of the G-33 and G-20 coalitions, India must:
- Continue to build strong coalitions with African and other developing nations to prevent the imposition of plurilateral agreements on the multilateral framework.
- Proactively propose constructive, middle-ground solutions for WTO reform rather than adopting a purely defensive stance.
- Enhance its domestic manufacturing competitiveness so that it can negotiate from a position of economic strength.
The broader aims of the WTO cannot be achieved by ignoring the developmental deficit of the Global South. For globalization to be sustainable and equitable, the concerns of nations like India—spanning food security, affordable healthcare, and fair market access—must be genuinely addressed rather than bypassed.