The COP26 Climate Summit showed India emerge as a world leader in climate action and as a voice for the Global South. The biennial 12th ministerial conference of the World Trade Organization (WTO) is scheduled to start in Geneva on 30 November where trade ministers and senior officials from 164 WTO member countries will take part. The event may see yet another occasion where India becomes the voice for developing nations, pushing back against concerted efforts from the richest bloc to bend the rules in their favour.
India will also be fighting to secure its own interests, as increasingly it is being asked to pick up the tab for the recklessness of the Global North nations that ransacked global resources for centuries on their way to becoming rich, and now want multilateral forums such as WTO to adopt unequal policies to arrest the anomaly and champion themselves as the saviour of the planet. The hypocrisy is staggering.
This is as much an existential fight for India as it is moral. To lift millions from poverty and give them a chance to aspire to a better quality of life, India must secure its own interests, but it has never shied away from carrying out its duties as a responsible member of the global commons. What it seeks, therefore, from multilateral, consensus-based forums such as WTO is an extended deadline for policymaking. And yet, this reasonable demand is frequently labeled as pejorative, and India is accused of recalcitrance.
Take, for instance, the issue of fisheries, where the pressure to act is high on WTO and it may come up for extended negotiations. Decades of illegal, unreported and unauthorized (IUU) fishing, fishing of overfished (FOF) stocks, over-capacity and overfishing (OCOF) on an industrial scale in deep-sea by some countries with advanced capabilities have led to the extinction of some species and destruction of marine ecology to an extent that the world is in need of urgent action, and it has fallen on the WTO to hammer out a solution.
China, for instance, has a fleet of fishing vessels — some so advanced that they resemble veritable fish processing units on sea. They fish, store, process, freeze, package and ship out the package to the destination via ship-to-ship transfers. When you add this capability to the fact that Chinese fishing vessels have been going up till Peru coast, fishing in South China Sea, Andaman Sea and all over the place in Indian Ocean well beyond their EEZ (excluding economic zone), you begin to get an idea of the scale of the problem.
Part of the problem also lies in the fact that all the developed countries (China included, though it is technically a developing nation) give a lot of horizontal subsidies to promote the fishing industry, which includes fuel subsidies for the ships. Through a clever bit of strategy, a draft negotiating text on fishery subsidies circulating at the WTO has proposed that subsidies targeted at the fishing sector be discontinued, but the ingenuity of the proposal lies in the fact that non-specific subsidies (which form the bulk of the sops offered to the fisheries industry by developed nations) may continue. This harms India’s interests that don’t violate marine resources, but such a policy may hamper the future growth of its industry.
As Financial Express observes in its report, “the fear is the text is drafted in such a manner that advanced fishing nations (led by China), which have been exploiting the global resources can show compliance to be able to perpetuate their subsidy. In contrast, most developing nations that haven’t quite developed the capacity for distant water fishing but are willing to do so as they achieve a certain degree of economic progress, won’t be able to immediately demonstrate these standards; consequently, they can’t offer the dole-outs.”
Just to give an idea of the skewed game of subsidies, “China provided $5.9 billion worth of harmful fishing subsidies in 2018 or roughly a quarter of the global total. That was followed by Japan at $2.1 billion, the European Union at $2 billion and the United States at $1.1 billion.” In contrast, India’s share of fishing subsidies is a modest $174 million, according to 2018 figures cited in a Politico report.
This is because leave alone fishing in the deep sea, India’s capabilities are not enough to exploit even its own EEZ, since a majority of Indian fisherfolk are involved in subsistence fishing (catching for direct consumption or selling it to local markets for direct income).
As a senior Indian official involved with the WTO negotiations tells me, “India’s problem is that it cannot agree to phase down what it doesn’t even give. Now, the challenge here is that the developed countries have in the current text kept non-specific subsidies out of the purview of the subsidy cut, which is a complete sleight of hand because 75 percent of all subsidies are non-specific.”
He adds that in fisheries “we don’t even have a moral obligation since we have done nothing at all, and the crisis has nothing to do with us. All we are saying is that we will not give away our future security. So, we are asking for something called S&DT (Special and Differential Treatment). This means that for any new clause which is agreed on, developing countries get more time to adjust to it.”
It is evident that India will not budge from its position at the cost of being labeled an “impediment”, a resolve that is admirable.
“We will not give away an inch of our future requirement. And plus, if you ask us to do something in 5 years, we will take 25 years to do it, not now,” says the high-ranking official. This puts India on collision past with rich nations as Bernd Lange, chair of the European Parliament’s International Trade Committee, told reporters last week that India’s demand for a 25-year exception is “not acceptable.”
A similar situation is developing in agriculture, where seeking a ‘permanent solution’ on the issue of public stockholding (PSH) is high on India’s priority list. India finds that the draft text on agriculture that has been firmed up four months ago by a WTO panel “completely imbalanced”.
India and some developing nations stockpile and distribute food grains as part of food security to mitigate hunger and promote sustainable development. That places India at odds with the WTO trade norms that require food subsidy bills to be kept under the limit of 10 percent of the value of production based on the reference price of 1986-88 at the Uruguay Round. India has been pitching for a change in this formula because it prevents developing nations from ramping up their procurement program to ensure food security for a large section of their population who are poor.
India also has geopolitical reasons to consider when it comes to ensuring food security. India is placed in a hostile neighbourhood and must make adequate arrangements. For instance, a 15-day war with China — which is not outside the realms of possibility — may kill India’s economy for a year. Food security in the form of stockpiles under a minimum support price program enables India to react to these situations.
On the other hand, richer economies say stockholding programmes such as MSP have a distorting effect on global trade. Faced with this predicament, the Bali Ministerial in December 2013 agreed to put in place a mechanism termed as ‘Peace Clause’ which exempted developing nations from getting penalized at the WTO dispute settlement forum even if there was a breach in the ceiling of 10 percent.
If, for instance, India’s subsidies exceeded the WTO commitments, it was still okay as long as it was being done for the domestic, non-commercial purchase of foodgrains for future food security. Though interim in nature, the Bali Peace Clause has been accepted as a de facto permanent clause, assuming the character of being ‘in perpetuity.’
India has invoked the ‘Peace Clause’ for its rice procurement in 2018-19 and 2019-20, as its subsidy level hit 13 percent and 11 percent respectively, to breach the ceiling.
Now, developed countries such as the US and the EU have challenged the ‘in perpetuity’ character of the Peace Clause. According to a report in Hindu Business Line, which cited a Geneva-based WTO official in its report, “the main challengers of the invocation of the ‘peace clause’ were the US, EU, Canada, Brazil, Japan and Paraguay who registered a total of 25 questions in relation to India’s additional notification obligations, reporting methodologies and the trade impact of the support.”
India also wants a “permanent solution”, but our solution is diametrically opposed to the one being pushed by the richer nations. India wants a permanent solution on more favourable terms and conditions that has been agreed to in the Bali Peace Clause. India is on high moral ground here because the free foodgrain that we give under the PM Jan Kalyan Yojana, for instance, is a great example of why India needs food security.
Whereas the wealthy nations have challenged India’s continuation of subsidies (despite the fact they continue with their farm subsidies), India wants the ‘Peace Clause’ to get enshrined in the agreement forever. As the senior explains, “We don’t want to give anything away. We want to reserve our policy space. Say, today we are consuming wheat, tomorrow we may want millets as part of our food security program.”
India’s second-most important area of priority is getting a temporary waiver on the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement to help the Global South get equitable access to vaccines. India and South Africa’s joint proposal in October 2020 for a waiver, that seeks to include industrial design, trade secrets, patents and copyrights, has 100 nations supporting it, of which 64 have become co-sponsors.
As usual, some developed nations such as the European Union, Australia, the UK, among others, have opposed the proposal and India is reportedly in discussion with them to allay their concerns but the key issue that emerges is that while Indian manufacturers are ready to be a part of the agreement, the developed world — under Big Pharma pressure — would support vaccine apartheid than ensuring equitable access of the live-saving jabs to nations that badly require help.
India, a big manufacturer of vaccines, has taken a selfless leadership position on TRIPS. India has two IPs of its own — Covaxin and Zydus. Other IPs are also on their way. India’s manufacturers have not shied away from investing in IP despite the fact that the India-moved proposal was on the table. Bharat Biotech, Biological E, or Cadila Healthcare have taken altruistic positions.
As the senior Indian official says, “India’s leadership role is that of genuine global leadership. We are talking about other countries, mainly the African nations and Latin American nations. And yet some of the developed nations are stalling it due to no small amount of pressure from Big Pharma who are worried that our pharma industry will reengineer the mRNA technology into cancer vaccines. If cancer vaccines come, then, of course, the pharma market gets disrupted.”
Finally, apart from a permanent solution on PSH and TRIPS waiver, India will also focus on WTO reforms. The multilateral body was supposed to work by consensus, which is that even if there’s a voting provision of two-thirds, etc, it has never been invoked. It is always done through a consensus mechanism.
Of late, however, a lot of countries have started creating what is called a Joint Statement Initiative (JSI), which are essentially small groups that discuss topics like environment, trade and gender, e-commerce, digital trade, investment, facilitation, etc., to bypass the consensus mechanism and act as a bloc during WTO negotiations.
The JSI, launched at the eleventh ministerial conference (MC11) in Buenos Aires, Argentina, in December 2017, was not approved by many members through consensus. According to the position taken by India and South Africa, “when discussions under Joint Statement Initiatives turn into negotiations, and their outcomes are sought to be formalized into the WTO framework of rules, it can only be done in accordance with the rules of procedure for amendments as well as decision-making as set out in the Marrakesh Agreement.”
India and other developing nations are worried that these plurilateral discussions run contrary to WTO’s multilateral character, and many nations are introducing new trade rules to the WTO framework “surreptitiously through the JSI agreements despite not having the consent of all member nations.”
India’s effort, therefore, will be to ensure that the fisheries deal doesn’t shortchange India and restricts India’s space for future growth and policymaking, see to it that a permanent solution on public stockholding in agriculture that doesn’t go against our interests is arrived at, get a favourable outcome on health and trade where, if not full TRIPS waiver, negotiations proceed in that direction, and move towards ending new norm of JSI small cliques in WTO. The path ahead will be difficult, but India is determined not to get bullied by the richer nations.