WTO (World Trade Organisation)
Principles and Structure
India at the WTO
WTO was established in 1995 and its predecessor organization
the GATT has helped to create a strong and prosperous international trading
system thereby contributing to unprecedented global economic growth.
GATT: Established in 1948 as the global trade
organisation to administer all multilateral trade agreements by providing equal
opportunities to all countries in the international market for trading purposes.
About World Trade Organisation
World Trade Organization (WTO) is the only
global international organization dealing with the rules of trade between
of the WTO is to help producers of goods and services, exporters and importers
conduct their business.
WTO currently has 164 members.
WTO activities are supported by a Secretariat
(situated at Geneva, Switzerland) led by the WTO Director-General.
Decision Making at WTO
Decisions in the WTO are generally taken by
consensus of the entire membership.
The highest institutional body is the
Ministerial Conference which meets roughly every two years.
A General Council conducts the organization’s
business in the intervals between Ministerial Conferences. Both of these bodies
comprise all members.
Specialised subsidiary bodies (Councils,
Committees, Sub-committees) also comprising all members, administer and monitor
the implementation by members
Agreement on Agriculture (AoA)
Agriculture has created the highest number of deliberations
in the WTO. Simultaneously WTO has a great prospect for agriculture as maximum
goods fell in the agriculture sector.
AoA is an international treaty of the World
It was negotiated during the Uruguay Round of
the General Agreement on Tariffs and Trade, and entered into force with the
establishment of the WTO on January 1, 1995.
The Agreement on Agriculture has three pillars
Issues with AoA
There are many provisions of AoA which have
affected the developing nations negatively relative to developed nations:
The Agreement has been criticised by civil
society groups for reducing tariff protections for small farmers. This was a
key source of income in developing countries, while simultaneously allowing
rich countries to continue subsidizing agriculture at home.
studies have demonstrated that how green box subsidies distorted trade,
affecting developing country farmers and harming the environment.
Official WTO shows that the United States has
provided $76 billion (more than 90% of total spending) in green box payments in
2007 and the European Union has notified $91 billion in 2005 (around half of
India & AoA
AoA has brought opportunity to make our masses have better
income and standard of living via profitable trade in agriculture. But
simultaneously India should focus on various issues too that may affect the
livelihood situations in India like-
Issue of food security
Viability of Agriculture: The major challenge,
posed by WTO is the viability of agriculture of most developing countries,
Developed countries’ high domestic support,
export subsidies, and denial of market access through various tariff and
non-tariff barriers has presented many challenges to India.
The WTO Subsidies
The three box subsidies pertain to domestic support clause
of Agreement on Agriculture, concluded in 1993.
1. Green Box Subsidies:
The subsidies which cause no, or at most minimal,
trade distorting effects.
These subsidies are permitted under WTO regime,
for instance; Government services such as research, disease control, and
infrastructure and food security.
2. Amber Box Subsidies or AMS:
All domestic support measures considered to
distort production and trade (with some exceptions) fall into the amber box.
For instance, MSP, Procurement Price, sum total
of subsidies on inputs like fertilizer, water, credit, power, etc.
3.Blue Box Subsidies:
It contains direct payment subsidies which can
be increased without limit, so long as payments are linked to
This is the “amber box with conditions”,
conditions designed to reduce distortion. Any support that would normally be in
the amber box, is placed in the blue box if the support also requires farmers
to limit production.
4.Special and Differential Treatment Box (S&DT):
The S&DT measures generally comprises of
Investment subsidies like tractors and pump sets to farmers
Agricultural input services like fertilizers to farmers.
The TRIPS (Trade-Related Aspects of Intellectual Property
Rights) Agreement under the World Trade Organisation (WTO), which entered into
force on January 1, 1995, is the most comprehensive multilateral agreement to
date on IPRs. This agreement sets down minimum standards for IP regulation for
WTO member nations.
This Treaty requires member states to make patents available
for any invention, whether product or process, in all fields of technology
without discrimination. Members may exclude plants and animals (other than
microorganisms) and essential biological processes for the production of plants
or animals (other than nonbiological and microbiological processes).
India has amended its Patents Act, 1970 to permit patenting
of products (and also of micro-organisms) and enacted the Protection of Plant
Varieties and Farmers’ Rights Act, 2001 to meet its national obligations. The
Union Ministry of Commerce & Industry is the nodal ministry for
implementing this Treaty.
Anti-dumping Agreement of WTO that an imported
product is “dumped” and that the dumped imports are causing material injury to
a domestic industry producing the like product.
The cases against India regarding anti-dumping
measures are: Anti-Dumping Duties on USB Flash Drives from the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu by the complainant China.
Sanitary and Phyto-Sanitary Measures
This agreement was one of the results of Uruguay
Round of negotiation entered into force with the establishment of the World
Trade Organization on 1 January 1995.
The Agreement sets out the basic rules for food
safety and animal and plant health standards.
It allows countries to set their own standards.
Negotiation of Agriculture
India, along with other like-minded countries, was able to
get some temporary relief in the form of a peace clause on food security issue
during the Bali Ministerial Conference in 2013.
Bali Ministerial Conference (Peace Clause)
Under it, if India breaches the 10% limit, other
member countries will not take legal action under the WTO dispute settlement
However, there was confusion over whether the
temporary reprieve would continue after four years.
government after coming to power in 2014 forced developed countries to
clarify that the peace clause will continue indefinitely if a permanent
solution on the matter cannot be found by MC11.
Nairobi Package In 2015
WTO Nairobi Ministerial Conference concluded that export
subsidies will be eliminated by developed countries immediately, except for
a handful of agriculture products, while developing countries have no time
period to do so.
WTO’s Trade Facilitation Pact
The WTO’s trade facilitation agreement (TFA),
which seeks to ease customs norms, has come into effect with its two-thirds
members ratifying the pact in February 2017.
The TFA has been ratified by India.
Importance of TFA
The main significance of TFA is that this is the
only meaningful multilateral agreement the WTO members have brought into force
since the launch of the Doha Development Round in 2001.
It will give a boost to the global trade, which
has been impacted due to slowdown in the world economy.
TFA on goods would simplify trade processes,
bring down barriers to trade and also enhance the capacity of the developing
world to engage better with the global trading network.
The trade facilitation agreement will also lead
to reduction in transaction costs.
Issues with Trade Facilitation Agreement
Rising protectionism may dent the success of TFA
National Trade Facilitation Action Plan (NTFAP)
The NTFAP plan was released with an aim to ensure compliance
with WTO’s Trade Facilitation Agreement (TFA) signed by India in February 2017.
This Action Plan gives a time bound map, not only for implementing TFA, but
also for India’s initiatives for trade facilitation and Ease of Doing Business
which goes beyond TFA.
GLOBAL INVESTMENT AGREEMENT
India, along with Brazil, Argentina and some
other countries, has rejected an informal attempt by the European Union (EU)
and Canada to work towards a global investment agreement at the WTO.
The EU and Canada have inked an investment pact
that has incorporated the contentious Investor-State Dispute Settlement (ISDS)
What is Investor-State Dispute Settlement (ISDS) mechanism?
The ISDS mechanism has become contentious as it
permits companies to drag governments to international arbitration without
exhausting the local remedies.
allows companies to claim huge amounts as compensation citing losses they
suffered due to reasons, including policy changes.
International arbitration tribunals can only be
used when all local options have been exhausted for settling disputes between a
corporate and a government.
also held that ISDS mechanism could be a part of bilateral agreements
but they can’t be allowed in a multilateral agreement.
WTO Related Issues And India’s Position
Debate In WTO on E-commerce
In 2015, as per the WTO, global e-commerce in
goods and services was worth about $22 trillion, and has grown the fastest in
The ICC (International Chamber of Commerce) and
B20 (The business associations from G20 members) proposed a holistic package of
trade disciplines, rules and assistance to boost MSME e-commerce with an
overriding objective to promote inclusive growth.
Fear of Indian MNCs:
Indian companies expressed reservations
regarding a global, regional or bilateral pact on e-commerce fearing it would
favour multinational firms.
India don’t have an e-commerce policy to take a
stand regarding a global e-commerce pact.
Various Concerns wrt WTO Measures
A WTO report says G20 economies Introduced new
trade-restrictive measures at the fastest pace since 2008 recession.
The rising protectionist measures and growing
voices against trade had resulted in slower international trade growth.
Opposition to Protectionist measures from BRICS
BRICS leaders while firmly opposing
protectionism emphasized the importance of an open and inclusive world economy
enabling all countries and peoples to share in the benefits of globalization.
BRICS leaders remain firmly committed to a
rules-based, transparent, non-discriminatory, open and inclusive multilateral
trading system as embodied in the WTO.
India- China Joint Initiative against AMS
India and China had jointly submitted a proposal
to the WTO, calling for the elimination of total ‘Aggregate Measurement of
Support’ (AMS) or ‘Amber Box’ subsidy.
It reveals that developed members are providing
subsidies, which, at times, exceed 200 per cent of the production value, despite
the 5 per cent de minimis prescribed.
The WTO rules make it possible for rich
countries to get away with such high subsidies as their historical bound AMS
levels are high.
Disputes involving India in WTO
Domestic Content Requirement (DCR) in Solar Panel
India had lost the case of DCR in solar panel to
US in WTO’s dispute resolution body.
India has prescribed ‘domestic content
requirement’ for procurement of Solar cells/panels for its target of installing
100 GW of solar power by 2022.
Under this about 5% procurement was reserved to
be bought from Indian vendors to promote indigenous industry.
US alleged that this is against principles of
Non Discrimination and National Treatment.
India’s domestic content requirements were
inconsistent with Article 2.1 of the TRIMs Agreement.
Import of poultry
The U.S. had filed the case against India’s
prohibition on importation of various agricultural products (including poultry)
from the U.S. purportedly because of concerns related to Avian Influenza (bird
The U.S. had claimed that the ban was against
WTO norms and had hurt its poultry exports to India.
The WTO Appellate Body had found that India’s
import prohibition on poultry and poultry products was ‘discriminatory’ and
‘more trade-restrictive than required’, and therefore violated WTO norms.
IPR concerns shown by US
US is a big critique of India’s IPR environment
and has put her on “Priority watch list” of special 301 report.
US accuse India of doing minimum to protect
patent laws on global level.
Indian patent laws are compliant with TRIPS
(Trade Related Aspects of Intellectual Property Rights).
flexibilities to governments to issue compulsory licensing in case the original
manufacturer reverts to anti-competition policy or in the interest of public
Solutions suggested by India
1.On Bali Peace Clause
a permanent solution, India had proposed either amending the formula to
calculate the food subsidy cap of 10 per cent, which is based on the
reference price of 1986-88, or allowing such schemes outside the purview of
subsidy caps .
2. On Tarde in Services
India had proposed Trade Facilitation in
Services (TFS) Agreement at the WTO-level which aims to ease norms relating to
movement of foreign skilled workers/professionals across borders for short-term
work as well as reducing transaction costs in services.
agreement could be based on TFA in goods, with suitable modification and
adaptation for services.
Why This Push By India ?
World Bank data shows the growing share of
services in the world economy, despite the fact that global trade flows in
services remain subject to numerous border and behind-the-border barriers.
Since the services sector accounted for more
than 60 % of GDP and 28 % of employment, there is a need to boost service
Making sure fees or charges for immigration or
visas are as reasonable, transparent, and non-restrictive (or impairing the
supply of services) in nature.
To ensure cross-border insurance coverage to
boost medical tourism, publication of measures impacting services trade and
timely availability of relevant information in all the WTO official languages
as well as free flow of data/information for cross-border supply of services.
Buenos Aires ministerial conference (MC11) of the World Trade Organisation
Buenos Aires ministerial conference (MC11) of
the World Trade Organisation (WTO) held between 10-13 December 2017.
made it very clear that it will not accept an inferior permanent
solution at WTO’s MC11 on public stockholding for food security purposes.
India’s stand in MC11
India wants a permanent solution on public
stockholding for food security .
India also sought more transparency in
negotiations and has opposed attempts to take decisions in small groups at the
MC11 drawing from its sour experience from the Nairobi ministerial in 2015.
Impact on Developing Countries
The restrictions on new food programmes is also
likely to impact other developing countries like Kenya, Zimbabwe.
India’s stand on E- Commerce at MC11
On setting global e-commerce rules, India’s
stand is that discussions should continue at various working groups and when
discussions mature to a certain level they can be taken up by the general
council of the WTO for further action.
Developed countries are pushing for accelerated
work programme on e-commerce to be finalized at MC11
China wants discussions on e-commerce to happen
in a single body instead of the various working groups going on at present.
Major Decision/Works form MC11
Decisions on fish subsidies,
e-commerce duties; ongoing work continues
A commitment from members to secure a deal on
fisheries subsidies which delivers on Sustainable Development Goal 14.6 by the
end of 2019.
They also committed to improve the reporting of
existing fisheries subsidy programmes.
took a number of other ministerial decisions, including extending the practice
of not imposing customs duties on electronic transmissions for another two
years, and they committed to continue negotiations in all areas.
EU gives EUR 1 million to enhance trading skills of developing countries
This will help them play a more active role in
New initiatives on electronic commerce, investment facilitation and MSMEs
UK pledges US$ 21.3 million to innovative trade programme for
Funds will help the least developed countries
(LDCs) develop the tools, skills and economic capacity they need to become
competitive in targeting new markets for their goods and services.
Buenos Aires Declaration on Women and Trade outlines actions to empower
For the first time in the history of the World
Trade Organization, WTO members and observers have endorsed a collective
initiative to increase the participation of women in trade.
In order to help women reach their full
potential in the world economy, 118 WTO members and observers agreed to support
the Buenos Aires Declaration on Women and Trade, which seeks to remove barriers
to, and foster, women’s economic empowerment.
Public and private sector leaders exchange best practices to implement
Trade Facilitation Agreement
event, entitled “Trade Facilitation on Track”, highlighted the importance of
local ownership of reform plans, multi-stakeholder cooperation, and capacity
building to successfully implement the Agreement.
WTO and ICC announce third successful proposal under “Small Business
The WTO and the International Chamber of
Commerce (ICC) announced “Small Business Champions ” initiative. This proposal
is to develop a training programme for small and medium-sized enterprises
(SMEs) so that that they can better access global markets.
Other Issues Related to WTO
‘Market economy’ status to China
Under WTO norms, once a country gets MES status, exports
from it are to be accepted at the production costs and selling price as the
benchmark. As per the 2001 agreement (Protocol on accession of China to the
WTO), WTO member countries had then decided to deem China as a ‘market economy’
from December 2016.
India’s stand to china’s MES (Market Economy Status)
India is not inclined to automatically grant the ‘Market
Economy Status’ (MES) to China under World Trade Organisation (WTO) norms. The
main reason India is reluctant to grant MES to China is that it will severely
curb India’s ability to impose antidumping Duties on “unfairly priced” Chinese
Fumigation with the banned chemical (MBr) Vs Sanitary and Phyto-Sanitary Clause
India, issued a notification making Methyl Bromide (MBr) Fumigation(sterilization)
mandatory for all agro produce imported into the country. Russia and six
African countries raised concerns at a WTO meet over such insistence.
India took the decision as per the Sanitary and
Phytosanitary (SPS) agreement of the World Trade Organization (WTO), which
allows member nations to take quarantine measures to safeguard against foreign
invasive species or pests.
MBr, which was introduced in 1970, several countries have
ditched the pesticide because of its toxicity and its impact on the ozone
So why is India continuing with the toxic chemical?
It is the most effective and cheap way to kill all pests,
insects and nematodes. Other Alternative like aluminium phosphide take 3 days
to fumigate the amount of area which MBr can fumigate in just 16 hours.
Aluminium Phosphate is also three times more expensive than MBr.
Scenario: All the countries have similar import protocols, and
Indian exporters follow them. India, for example, exports mangoes to the US
after treating them through the irradiation process because MBr is banned.
While, Indian agro exporters to Japan treat their products using a vapour heat