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General Studies 2 >> International Relations

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WTO MINISTERIAL CONFERENCE

WTO Ministerial Conference

 

1.Context

The World Trade Organization (WTO) held its 13th Ministerial Conference (MC13) at Abu Dhabi in the UAE between February 26 and March 2, which was attended by 166 member countries. At the conclusion of the meeting, a ministerial declaration was adopted that set out a forward-looking, reform agenda for the 30-year-old organisation, which is tasked with overseeing global trade regulations and facilitating smooth cross-border flow of goods, services, investment and people. The members resolved “to preserve and strengthen the ability of the multilateral trading system, with the WTO at its core, to provide meaningful impetus to respond to current trade challenges, take advantage of available opportunities, and ensure the WTO’s proper functioning”.
 
 

2.What is the WTO's Ministerial Conference?

  • The MC is at the very top of WTO's organisational chart.
  • It meets once every two years and can take decisions on all matters under any multilateral trade agreement.
  • Unlike other organisations, such as the International Monetary Fund or World Bank, WTO does not delegate power to a board of directors or an organisational chief.
  • All decisions at the WTO are made collectively and through consensus among member countries at varied councils and committees.
  • This year's conference took place in Geneva, Switzerland, it is co-hosted by Khazikisthan.
 

3.Key Takeaways

  • The ministers made several decisions, including reaffirming their commitment to establish a fully operational dispute settlement system by 2024 and enhancing the utilization of special and differential treatment (S&DT) provisions for developing and least developed countries (LDCs).
  • The multilateral trading order faces significant challenges from a growing movement, particularly in developed economies, advocating for a shift towards isolationism and a departure from a globally unified tariff approach to international trade.
  • This trend is occurring amidst ongoing conflicts worldwide and the imposition of sanctions by certain states, posing threats to global supply chains and the seamless flow of goods and services.
  • Additionally, the differing levels of development between wealthier nations and LDCs have underscored the importance of avoiding a uniform 'one-size-fits-all' approach in establishing norms
 

4.Debates around the agriculture 

  • As far as agricultural, trade and food security are concerned, the challenge is to figure out the most appropriate trading rules in dire situations or natural disasters.
  • Many countries become inward-looking in such times and impose outright export bans citing domestic food security needs.
  • Recent examples include Russia's export ban on wheat and sunflower oil, Ukraine's ban on exports of food staples, Indonesia's ban on Palm oil exports (It was lifted last month), Argentina's ban on beef exports, Turkey, Kyrgyzstan and Kazakhstan's ban on a variety of grain products and India's wheat export ban.

5.Significant debates on India

  • The agreements on the subject are of particular significance to India.
  • India has a significant contribution to the World Food Programme (WEP).
  • It stated that it had never imposed export restrictions for procurement under the programme.
  • It put forth that a blanket exemption could constrain its work in ensuring food security back home.
  • Negotiators agreed that member countries would not impose export prohibitions or restrictions on foodstuffs purchased for humanitarian purposes of the WFP.
  • The decision would not prevent member countries from adopting measures for ensuring domestic food security.
  •  
  • Negotiators could not reach agreements on issues such as permissible public stockholding of domestic food security, domestic support for agriculture, cotton and market access.
  • The central premise agreement was to ensure the availability, accessibility and affordability of food in humanitarian emergencies.
  • Member countries were encouraged with available surplus to release them on international markets in compliance with WTO regulations.
  • It helps LDCs (least-developed countries) and NFIDCs (Not Food Importing Developing Countries) through work programmes to enhance their domestic food security and support agricultural production.
 

6.India's major imports 

  • Indian edible oil bill in 2021-22 crossed $19 billion. India imports 55 to 60 per cent of its oil requirements.
  • India's Agri-exports in FY22 touched $50.3 billion against its agri-imports of $32.4 billion.
  • Indian agriculture is largely globally competitive but its biggest agri-import item, edible oil, accounts for 59 per cent of the agri-import basket.
  • Despite high import duties that have generally been imposed on edible oil imports are followed by fresh fruits and vegetables, pulses, spices and cashew among others.
  • The excessive dependence on imports has raised the pitch for Atamanibharta in edible oil.
  • The Prime Minister launched the National Edible Oil Mission-Oil Palm (NEOM-OP) in 2021.
  • Achieving atmanirbhata in edible oils through traditional oilseeds such as mustard, groundnuts and soya would be required an additional area of about 39 million hectares under oilseeds.
  • Such land will not be available without cutting down the area under key cereals.
  • This could endanger the country's food security even more.
  • A rational policy option to reduce import dependence on edible oils is to develop oil palm at home to ensure that it gives productivity comparable to that in Indonesia and Malaysia about four tonnes of oil per hectare.
  • It is 10 times what mustard can give at existing yields.
    India has identified 2.8 million hectares of the area where oil palm can be grown suitably.
  • The objective of NEOM-OP is to bring in at least 1 million hectares under oil palm by 2025-26.
  • The problem with oil palm is that it is a long gestation period crop. It takes four to six years to come to maturity. 
  • During this period, smallholders need to be fully supported.
  • The support (subsidy) could be the opportunity cost of their lands, say profits from paddy cultivation, which is largely the crop oil palm will replace in coastal and upland areas of Andhra, Telangana and Northeast India.
  • The pricing formula of fresh fruit bunches for farmers has to be dovetailed with a likely long-run average landed price of crude palm oil with due flexibility.
  • The other option is to declare oil palm as a plantation crop and allows the corporate players to own or lease land on a long-term basis to develop their plantations and processing units. it is not plausible in the current socio-political context.
  • India thinks holistically and adopts a long-term vision to reduce its imports from 14MMT in FY22 to 7MMT by FY 27 look bleak.
 

7.Fisheries-related agreements

  • India is successfully managed to carve out an agreement on eliminating subsidies to those engaged in illegal, unreported and unregulated fishing.
  • Overfishing exploits fishes at a pace faster than they could replenish themselves.
  • Currently standing at 34 per cent as per the UN Food and Agriculture Organization (FAO).
  • Declining fish stocks threaten to worsen poverty and endanger communities that rely on aquatic creatures for their livelihood and food security.
  • According to the agreements, there would be no limitation on subsidies granted or maintained by developing or least-developed countries for fishing within their exclusive economic zones (EEZ).
 

8.Moratoriums on electronic transmissions

  • Member countries agreed to extend the current moratorium on not imposing customs duties on electronic transmission until MC13 ( scheduled to take place in December 2023. India and South Africa opposed it.
  • ETs consist of online deliveries such as music, e-books, films, software and video games.
  • They differ from other cross-border e-commerce since they are ordered online but not delivered physically.
  • The moratorium would help maintain certainly and predictability for businesses and consumers, particularly in the context of the pandemic.
  • India and South Africa citing data from the UN Conference on Trade and Development submitted that extending duty-free market access due to the moratorium resulted in a loss of $10 billion per annum globally 95 per cent of which was borne by developing countries.
  • Customs duties have been traditionally used to avert an undesired surge in imports, allowing nascent domestic industries to remain competitive.
  • Developing countries need to import sizeable equipment and services for upscaling their digital capabilities.
  • Customs duties provide the necessary capital infusion for capacity building and in turn, attempt to address the digital divide particularly high in low-income and developing countries worsen by the covid-19 pandemic.
  • India and South Africa had sought to preserve policy space for the digital advancement of developing countries by letting them generate more revenues from customs and thereby facilitating more investment.

 

9.Patent relaxations

  • Member countries agreed on authorising the use of the subject matter of a patent for producing Covid-19 vaccines by a member country, without the consent of the rights holder.
  • It asks member countries to waive requirements, including export restrictions set forth by WTO regulations to supply domestic markets and member countries with any number of vaccines.
  • The agreement is too late for economically poorer countries.
  • Several LDCs have suffered in their efforts to combat the pandemic, owing to factors stressed balance of payments situation, different levels of development, financial capabilities and varying degrees of import dependence on those products.
  • Within the next six months, members are expected to decide on increasing the scope of the agreement to cover the production and supply of Covid-19 diagnostics and therapeutics as well.
10.How did India approach the deliberations?
  • The primary focus of the Indian delegation, led by Union Commerce Minister Piyush Goyal, was to address a crucial issue concerning India and several other developing economies, specifically regarding the public stockholding (PSH) program.
  • This program plays a crucial role in ensuring food security in these nations. In India, the PSH serves as a vital policy tool, allowing the government to purchase crops like rice and wheat from farmers at a minimum support price (MSP).
  • Subsequently, the government stores and distributes these foodgrains to the less privileged. The MSP is typically higher than market rates, and the government provides cereals at a reduced price to secure food security for over 800 million beneficiaries in the country.
  • However, according to WTO norms, a member nation's food subsidy bill should not exceed 10% of the production value, based on the 1986-88 reference price. Developed nations argue that such programs distort global trade in foodgrains, potentially affecting global grain prices.
  • Additional concerns include issues related to the fisheries sector and a moratorium on customs duties for e-commerce trade. India, being a low subsidizer of the fisheries sector, proposed that developing countries should be permitted to provide subsidies to their impoverished fishermen within the nation's exclusive economic zones (EEZs) or up to 200 nautical miles from the shore.
  • It also suggested that affluent countries should refrain from subsidizing fishing activities carried out by their industrialized vessels beyond the EEZs, at least for the next 25 years.
  • Regarding e-commerce, India, along with several other developing nations, has consistently advocated for ending the moratorium, in effect since 1998, on their ability to impose customs duties on cross-border e-commerce. India contends that this practice undermines its capacity to generate revenue from this rapidly expanding segment of global trade
11.Way Forward
On the agriculture front, as the WTO’s Director General Ngozi Okonjo-Iweala acknowledged in her closing speech, this was the first time that there has been a text. “This has been in the works for the past two decades plus. At MC12 we couldn’t even agree on a text. Even though there are challenges, for the first time we have a text,” she observed. Also, on the fisheries front, a consensus accord now appears close to reaching fruition by mid-year.

However, disappointingly for India, the exemption from customs duties for e-commerce will now carry on for at least two more years

Source: The Hindu
 

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