21 Dec 2015 21:08 IST

From Nairobi, without love

At the ministerial meet in Nairobi, the WTO has alienated a significant part of the developing world

What’s the WTO?

The World Trade Organisation was founded in 1995 as successor to the General Agreement on Tariffs and Trade (GATT). Its avowed purpose is to promote free trade among nations by dismantling barriers and in the process aid global economic growth. Promoting a rules-based multilateral trading system is the primary objective of the WTO. Presently, the WTO has 160 members, 117 of which are developing countries or separate customs territories.

What was on the agenda of the recently concluded Nairobi meeting of trade ministers?

The Nairobi meeting was the 10th Ministerial Conference of Trade Ministers of WTO-member countries. Ministerial conferences are held every two years and the last one was held in Bali in November 2013.

Ministerial conferences have set agendas that are discussed and agreed upon. By tradition, all WTO agreements are arrived at by consensus, which means that even if one of the members dissent, final agreement is not possible. The WTO, since inception, has been a showcase of the divide between the developed world and developing countries in relation to trade issues. The developed world led by the US and the EU have been relentlessly pushing the developing countries to open up their markets even as they practised the opposite.

The last ministerial in Bali was a landmark one when the WTO secured an agreement among its members for the first time in its history. The Trade Facilitation Agreement that aimed at simplifying customs procedures and lowering trade barriers was agreed upon as a composite package along with the understanding that the trade body will work towards a permanent solution on the issue of food subsidy in India and other developing countries. In the interim, a “peace clause” was put in place that would allow food subsidies to be continued until December 2017.

The Nairobi meeting was, thus, expected to take up the food subsidy issue for discussion along with the issue of Special Safeguard Mechanism or SSM, which allows developing countries to impose duties when there is a sudden surge in imports into the country.

The United States and the EU were pushing for closure of the Doha Round of negotiations (so called because the agenda was set in Doha during the WTO ministerial meeting in 2001) which included the parts on agricultural subsidies. Their argument was that the issues in the Doha Round were overtaken by other important issues such as e-commerce, labour laws, competition laws, environment and investments which needed to be discussed and debated upon.

What were the agreements finalised in Nairobi?

As it happened, the developed countries bloc managed to prevail in Nairobi. The Doha Round has effectively been kissed goodbye even as the US and the EU managed to push through a new agreement on export subsidies in Nairobi. India’s demands for a discussion and agreement on food subsidies has been pushed to the backburner with the Committee on Agriculture in Special Session tasked with the responsibility of arriving at a permanent solution in an “accelerated time frame”.

The SSM issue has also been relegated to a committee that will discuss the subject under the Hong Kong Ministerial Declaration, which does not entail conceding additional market access.

Did India achieve what it set out to at Nairobi?

India failed to ensure continuation of the Doha Round agenda. It could merely manage a commitment to keep the subject on the table for negotiations at the Geneva secretariat. While the developed world bloc stood strong, the desertion by Brazil from the developing world bloc (India, China, Brazil) — Brazil agreed with the US and the EU on export subsidies — seems to have weakened the latter group’s position vis-à-vis the developed world.

What is the road ahead?

It is difficult to say right now. It is clear that the Doha Round is over for all practical purposes and with it has gone the set of issues that were dear to the developing world. In the quest for arriving at an agreement in Nairobi, the WTO may have alienated a significant part of the developing world, including India and China. Will these countries now embark on forming their own regional trade blocs? And if they do what does it mean for the future of multilateralism? These are the worrying questions at this point in time.