WTO's Buenos Aires ministerial starts today: Why it's a make-or-break meeting for both Suresh Prabhu and trade body

The eleventh ministerial of the World Trade Organisation (WTO) that kicks off at Buenos Aires today will be a crucial test, at least at three counts. One, it will be a test for the continuation of the Doha Development Round. Two, related to this, it will be a test for the very future of the rules-based multilateral trade regime. And, three, closer home, it will be a test for commerce minister Suresh Prabhu, on whose shoulders lie the responsibility of ensuring India’s interests as well as continuing the Doha Round. Remember, he’s just about three months into his job.

The Doha Development Agenda (DDA) has been hanging by a thread since the tenth ministerial in Nairobi in December 2015. The ministerial declaration, for the first time in the history of the WTO, acknowledged sharp differences over an issue; ministerial declarations had, till then, always been consensus documents, and even one country’s opposition can hold it up. More importantly, this was not just any issue, this was the very survival of a negotiating round. The declaration noted that many members reaffirmed the DDA while others did not.

Commerce Minister Suresh Prabhu. Image: AFP.

Commerce Minister Suresh Prabhu. Image: AFP.

It is no secret that the developed economies, especially the United States and the European Union, are not interested in the continuation of the Doha Round. The Round, initiated at the Doha ministerial in 2001, has been going, pardon the pun, round in circles since then and precious little has been achieved in terms of furthering the interests of the developing countries, which was what the DDA was supposed to achieve.

India has been at the forefront of efforts to keep the Round alive and has enjoyed the backing of the developing countries group. But 17 years is a long time (the Uruguay Round, which gave birth to the WTO lasted for eight years, and that was considered long) and interest could be beginning to flag. The fact that the developed economies managed to wrest a non-consensual declaration at Nairobi is a sign of that. It is possible that even this token continuation of the Doha Round was the result of the need for optics – a ministerial held in a developing country could hardly be seen to junk a developmental round.

There are conflicting reports about whether or not India is isolated on wanting the continue with the Doha Round and further the DDA. Even if other developing countries want it to continue they may not be able to resist pressures from the United States and the European Union, especially the former. The developed bloc has been known to break developing countries solidarity with paltry concessions to a few members. So Buenos Aires will, in a sense, decide the fate of the Doha Round.

What happens to the Round and the role of the United States in this will also determine the fate, or at least the future shape, of the WTO. The United States has always led the developed countries charge against WTO rules that do not favour them. Of late, it has not bothered to hide its disinterest in investing in the WTO, as evidenced from the initiation of the Trans Pacific Partnership (TPP) and the intransigence at Nairobi. But the Donald Trump administration is not even interested in the TPP or any multilateral fora, preferring bilateral arrangements instead. So it may not be bothered about even token gestures to keep the WTO alive.

That will lob the ball into the developing economies court. If Buenos Aires sees life support being withdrawn from the Doha Round, will they continue with the WTO? Indeed, will there be any point continuing with it? And yet, the WTO is their best bet as of now; it alone gives them some leverage in the global market. But if they acquiesce to the burial of the Doha Round, then even this gain will be lost. This will be a real dilemma for them.

Can Prabhu provide the leadership to the developing countries bloc that three of his predecessors – the late Murasoli Maran, Arun Jaitley and Kamal Nath – did? If India is not to be isolated on wanting the Doha Round to continue, he will need to step up to the plate.

Commerce ministers have generally indulged in tough talk ahead of a ministerial and played hardball during it. Prabhu, however, has struck a sober note, saying that India should be realistic about the outcome of Buenos Aires. At the same time he has said India will not give up on the Doha Round and that he has the support of many countries.

But more than the continuation of the Doha Round, what Prabhu will be judged for back home will be how he advances and protects India’s interests. There are several issues where India has an interest – food security, agriculture subsidies of developed countries, special safeguard measures in agriculture, fisheries subsidies and e-commerce. But the focus will be on food security and e-commerce.

The issue of food security really revolves around finding a permanent solution to the knotty issue of public stockholdings for food security (the minimum support price based procurement done by the Food Corporation of India). Developing countries with large public stockholding programmes got a peace clause at the Bali ministerial in 2013, which protects them from any challenges to these programmes on grounds of violating limits on agricultural subsidies. Initially this peace clause was only till 2017 but after strong protests by the current government, it was left open-ended till a permanent solution to the problem was found.

There has, however, been precious little progress towards finding such a solution and India has not been pushing too hard for one, since the peace clause is, in effect, a perpetual one (though there are some caveats – it will not cover new public stockholding programmes). Prabhu has, in fact, said it is a mistake for India to press for a permanent solution since the peace clause is a perpetual one. But if there is a possibility of getting a favourable permanent solution, what will be the concession India will be asked to make? Will it be willing to do so? After all WTO negotiations are all about give and take.

Developed countries are pushing for inclusion of e-commerce in the WTO negotiating agenda and latest reports indicate that they have dug their heels in on this, ahead of Buenos Aires. India has officially made it clear that it will not agree to this and that this is non-negotiable. India and many other developing countries feel that e-commerce is not an issue that should be negotiated at this point of time.

Nor can India afford to make concessions on the issue of getting developed economies reduce their agricultural subsidies. The high level of subsidies these countries give expose Indian farmers to cheap imports and India still does not have sufficient firepower in terms of safeguard measures. Some countries like Brazil and Argentina, which were aligned with India earlier, may break ranks with it on this issue.

Right now, Prabhu appears to be going to Buenos Aires saying, okay, don’t give us a permanent solution, the perpetual peace clause suits us just fine, but India will not cave in to bringing the Doha Round to an end or bringing in new issues like e-commerce into the negotiating agenda or conceding on issues relating to agricultural subsidies. Will he return a hero as Maran, Jaitley and Nath did or with dubious gains the way Anand Sharma and Nirmala Sitharaman did? We will know in three days.

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Updated Date: Dec 10, 2017 11:46:34 IST

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