Global Economy

View: Will rich nations distort WTO?



With the next ministerial conference (MC13) of WTO starting tomorrow in Abu Dhabi, much of the attention has centred on issues related to agriculture and fisheries subsidies. Less visible, but no less important, could be the attempts by developed countries to tilt the WTO’s institutional architecture to make it more amenable to promoting their interests.

The US and the European Union are leading the charge to make fundamental changes on how disputes are resolved in WTO, how member countries take decisions, how the agenda of the negotiations is decided and the ability of member countries to remain in control of how the institution is run. Let us discuss some of the developments on WTO reform.

In respect of reforms to the dispute settlement mechanism, developed countries, especially the US, have resisted any discussion on the core problem—restoration of the now dysfunctional appellate body. These countries are strongly pushing for an alternative dispute resolution mechanism as a substitute to the appellate body, a move that has been opposed by some developing countries. The developing countries are finding it extremely difficult to get their voices heard in these negotiations, which are being undertaken in an informal and non-transparent fashion. The writing on the wall appears clear—the US will engage in discussions on reform of the dispute settlement mechanism on its own terms. Otherwise, it will continue to cripple this mechanism.

Turning to a few other aspects of WTO reform, developed countries are attempting to undermine some of the fundamental pillars of the WTO rulebook, particularly how decisions are made by members. To illustrate, new agreements among a handful of countries, commonly called plurilateral agreements, can be integrated into the WTO.

Many developing countries consider these agreements to be illegal, as the underlying negotiations were undertaken without a multilateral mandate. Unheard-of concepts, such as “responsible consensus”, are being crafted to dissuade the dissenting developing countries from going by the rulebook.

Further, under the rubric of “deliberative function”, developed countries are seeking changes that will allow them to initiate discussion on new issues, even if all members do not agree to it—a requirement under the existing rules. The objective is clear—push negotiations on issues of their interest even if the vast majority of the developing countries are against it. These initiatives will further diminish the already weak bargaining position of developing countries at the negotiating table.Another problematic aspect of WTO reform is the push by developed countries to increasingly substitute formal negotiations with informal discussions/ negotiations. If the experience of informal discussions on dispute settlement mechanism is an indicator, most developing countries would be hard put to protect their interests in informal discussions. Such discussions provide ample latitude for developed countries to indulge in power play, while affording opportunities to the WTO secretariat to expand its role. The latter aspect would reduce the control of WTO members over the functioning of this organisation.An institution, which stands primarily for multilateral trade agreements among all its members, is sought to be transformed into an organisation where plurilateral agreements increasingly become the order of the day. The task for India and many other developing countries at MC13 is clear—prevent developed countries from deforming the rules-based WTO into a power-based system, tailored to suit their commercial interests.

(Views are personal)

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