World Trade Organization (WTO)’s 12th Ministerial Conference (MC12)

Syllabus: General Studies Paper 3

Context:

The World Trade Organization (WTO)’s 12th Ministerial Conference (MC12) will be convened in Geneva, Switzerland. Earlier it was scheduled to be held in Kazakhstan (June 2020) but postponed due to the novel coronavirus pandemic).

• MC12 needs to consider how the economically weaker countries “can secure a share in the growth in international trade according to  the needs of their economic development, 
• It is an objective that is mandated by the Marrakesh Agreement Establishing the World Trade Organization.
  • The Marrakesh Agreement of 1994 is the culmination of the GATT’s Uruguay Round that was introduced in 1986 and led to the establishment of the World Trade Organisation (WTO). 
  • The General Agreement on Tariffs and Trade (GATT) 1994 is an international treaty binding upon all WTO Members. It is only concerned with trade in goods.
  • The General Agreement on Tariffs and Trade (GATT) traces its origins to the 1944 Bretton Woods Conference.
  • On 1 January 1995, the WTO replaced GATT, which had been in existence since 1947, as the organization overseeing the multilateral trading system.

Key issues:

• • Fisheries: The current drafts on this issue are completely unbalanced as they do not provide means to rein in large-scale commercial fishing that are depleting fish stocks the world over. It is threatening the livelihoods of small fishermen in countries such as India.
  • E-commerce: In recent months, the proposal by the members of the Organisation for Economic Co-operation and Development and the G-20 members to introduce global minimum taxes on digital companies has made headlines. 
    • Discussions on e-commerce have been held in the WTO since 1998 after the adoption of the Ministerial Declaration on Global Electronic Commerce. WTO members had agreed to continue the practice of not imposing customs duties on electronic transmissions. 
    • The more substantive outcome was the decision to “establish a comprehensive work programme” taking into “account the economic, financial, and development needs of developing countries”.
    • Currently “development needs of developing countries”, is entirely missing from the text document that is the basis for the current negotiations. 
    • On the negotiating table are issues relating to the liberalisation of the goods and services trade, and guarantee for free flow of data across international boundaries. This is all aimed at facilitating expansion of businesses of e-commerce firms. 
    • The sole objective of the negotiations on e-commerce is to facilitate expansion of e-commerce firms.

• IPRs and vaccine issue

• Intellectual Property Rights (IPRs) protected using the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are formidable barriers to ensuring equitable access to vaccines. 
• Pharmaceutical companies controlling the global markets have used monopoly rights granted by their IPRs to deny developing countries access to technologies and know-how. 
• This undermines the possibility of production of vaccines in these countries. 
• The involvement of developing countries in vaccine production could have increased supplies of affordable vaccines to the low-income countries. 
• Availability of vaccines remains a critical problem in these countries even after a year since the first dose of COVID-19 vaccine was administered. 
• Recent statistics show that until now, a mere 4.1% of the population in low-income countries have received at least one dose of the vaccine.
• India and South Africa had tabled a proposal in the WTO in October 2020, for waiving enforcement of several forms of IPRs on health products and technologies useful for COVID-19 treatment. 
  • By doing so, barriers created by IPRs to timely access to affordable medical products could be removed. 
  • This proposal, supported by nearly two-thirds of the organisation’s membership, was opposed by the developed countries batting for their corporates. 

Divisions over investment: The current focus of the WTO to promote the global interests of oligopolies is the initiative for the adoption of an investment facilitation agreement. An oligopoly is a market form wherein a market or industry is dominated by a small group of large sellers.

• In 2001, the Doha Ministerial Declaration had included a work programme on investment but developing countries were opposed to its continuation because it favoured expanding the rights of foreign investors through a multilateral agreement on investment. 
• Its ultimate objective was to bind host governments into a multilaterally agreed commitment to comprehensively protect investor interests.

Concerns:

• Besides the bias in favour of global oligopolies, the current negotiating processes in the WTO are fundamentally flawed. 
• The negotiations on e-commerce and investment facilitation are being conducted not by a mandate given by the entire membership of the WTO in a transparent manner.
• Instead, these negotiations owe their origins to the so-called “Joint Statement Initiatives” (JSI) in which a section of the membership has developed the agenda with a view to producing agreements in the WTO. 
• This will then be offered to the rest of the member nations on a “take-it-or-leave-it” basis. 
• This entire process is “detrimental to the very existence of a rule-based multilateral trading system under the WTO”.

Recent WTO estimates show that global trade volumes could expand by almost 11% in 2021, and by nearly 5% in 2022, and could stabilise at a level higher than the pre-COVID-19 trend. The buoyancy in trade volumes has played an important role in supporting growth in economies such as India where domestic demand has not yet picked up sufficiently. Therefore, these favourable conditions provide an ideal setting to revisit trade rules and to agree on a work programme for the organisation, which can help maintain the momentum in trade growth.

The Hindu link- 

https://www.thehindu.com/opinion/lead/charting-a-trade-route-after-the-mc12/article37347786.ece 

Question- Describe the issues under the ambit of World Trade Organization (WTO) that still need to be resolved.