archives: WTO Info

The Indian Economic Times' sharp and pointed introduction on the Cancún ministerial:
What is a WTO ministerial?
THE ECONOMIC TIMES / MONDAY, AUGUST 18, 2003 07:18:39 AM

What's Cancun all about?

Cancun has been hitting the headlines recently, as the next ministerial meeting of the World Trade Organisation (WTO) is slated to take place in this Mexican city from September 10 to 14. The meeting is of significance to India, as is the case with all other WTO members. To understand why, we need to comprehend what the WTO is about. The WTO has 146 members including giants like the US, EU and Japan. The WTO makes rules to govern global trade and acts as the appellate body in case any member suffers from violation of rules by another member. A dispute settlement mechanism has been set up by WTO to resolve clashes between members. The multilateral trading system promoted by the WTO is said to be in the interest of tiny nations since the organisation treats them on par with giants. While this is the technical position, the ground realities are different in view of the vast influence that giants like the US and EU wield. But, dispute settlement panels (DSPs) set up by the WTO treat all members equally and there are several instances of trade measures of influential members being declared as illegitimate.

What is a WTO ministerial?

The trade ministers of WTO members meet once in two years and the last ministerial meeting was at Doha (Qatar) in '01. While preliminary work goes on at the Geneva headquarters of WTO with members providing inputs, key decisions are taken at the ministerial meetings. The Doha ministerial hogged the headlines as developing countries, including India, forced rich nations to look at the need for using trade liberalisation to promote development. Hence, rich nations agreed to set patents aside to supply medicine to poor countries suffering from epidemics, though the decision is yet to be implemented due to stiff resistance from American pharma companies.

What is the agenda at the Cancun?

The Cancun meet has generated interest since a number of controversial issues are likely to be discussed. Since its mandate is to promote fair trade, the WTO has been looking at the progressive liberalisation of international trade. The current phase of liberalisation is focussed on agriculture, while services, industrial tariffs and non-trade issues like the proposed multilateral agreement on investment (MAI) are being used to leverage gains in other areas. Therefore, the agenda for the Cancun ministerial meeting looks like this: The main course is an agreement to liberalise international trade in agriculture. To achieve this, rich nations have to cut down subsidies while every WTO member should agree to keep import tariffs low. Neither the EU nor the US seem to be interested in scrapping subsidies altogether. The Cairns group consisting of countries like Australia and New Zealand is pushing for steep cuts in subsidy as well as import tariffs since they are strong in agriculture. India is left watching from the sidelines as the giants clash, looking for ways to protect its 650m farmers while taking advantage of a reduction in import duties in key markets. The other important issue of liberalising trade in services has been pushed to the background. This sphere, which involves the liberal issue of visas for trained professionals, is important to India due to its vast human resources. Unfortunately, India has to wait beyond Cancun to look for gains in services.

On what issues is India defensive at the World Trade Organisation?

India is on the defensive on issues like the proposed MAI which seeks to usher in uniform investment rules all over the world. While this is good for investment exporting countries like the US and EU, countries like India will lose their freedom to determine controls on FDI according to their development goals. The EU is trying to push this agreement down the throat of unwilling WTO members. Similar is the case with environment and labour. India strongly opposes moves to link environment or labour standards with trade. Then, there are less controversial issues like government procurement and trade facilitation which are part of the Singapore issues (so-called since they first figured in a ministerial at Singapore) which many developing countries are opposed to.

Can India have its say?

Technically, decision-making at WTO is through consensus. So, even India can block major decisions. However, the history of WTO minsterials indicates that the big guys push things swiftly in at the eleventh hour meetings despite the wishes of the hapless majority, which includes African, Asian and Latin American countries.

Also, the meeting of trade ministers involves side-shows where deals are stuck to support or oppose major moves. Another typical style of operation is to introduce an issue first through a study and later push for a formal agreement.

While such strategies were paying handsomely for rich nations, recent developments have taken a slightly different route. Many developing countries are aware of their rights as well as the implications of 'studies' which are groomed into agreements. Many WTO members have not forgotten the Seattle (US) ministerial where anti-globalisation protesters ensured a washout and the Doha ministerial where developing countries raised their voice to a pitch never heard before.


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