With the US playing its Trump card, the multi-lateral trade organision’s very existence is under threat

The US has got increasingly isolated owing to the protectionist and impulsive economic policies under president Donald Trump, perhaps based on a propped up  notion of American power. The multi-lateral trading regime, World Trade Organisation (WTO), on the other hand, is under severe stress to justify its existence. WTO director-general Roberto Azevedo, who has referred to US demands for reforms in the organisation, has raised concerns about the possibility of a global trade war against the backdrop of recent US decisions to raise tariffs unilaterally. For their part, developing and under-developed countries, including India, continue to face the wrath of an unfair and unruly trading regime that had turned global markets chaotic.

The two-day 52-member informal meeting of WTO called by India made very little headway in New Delhi to change these conditions that are bound to hit global investment and trade in the short term. India wants continuance of the Special and Differential Treatment (S&DT) for developing countries. “The need for all developing countries, including LDCs, to benefit from S&DT provisions in future trade agreements was emphasised in many interventions,” commerce and industry minister Suresh Prabhu said at the WTO meet.

It is unreasonable that many members blame the US for undermining the role of WTO. With or without the US as a key stakeholder, WTO will have to reform itself into a more vibrant organisation. It is a fact that till the trade body addresses the issues of agricultural subsidies and farmers, its future will be under a cloud. Commerce minister Prabhu made an earnest attempt to bring some relevance to the moribund WTO. Beginning with the Doha summit and various ministerial conferences, India has played a very constructive role from formulation of the famed development agenda to keeping the WTO on track as a ‘inclusive’ forum. But, the US does not seem to be in the mood for giving up its protectionist and ultra-nationalist trade and investment agenda. This was exemplified by the abusive duties brought in by Trump administration on steel and aluminium that may eventually hit its own industry, economy and employment opportunities for US youth.

WTO may not remain relevant given that either US would walk out of the organisation or key stakeholders would lose patience in this rule-based trading regime that lost its focus as many non-trade and investment issues got included. There has been a further challenge to it given that the US blocked all appointments, and the disputes settlement body (DSB) at has turned rudderless and ineffective. Following the blockade over six months, the DSB has had no chance to settle disputes that are piling up dime a day.

Seeking reforms was a ploy by US to subvert the WTO action plan and not allow it to move forward on trade issues that are a priority for countries like India. For instance, agricultural exports and food security issues were flagged as a priority for WTO that could be taken up for resolution. Though the US had agreed to the Bali package under president Obama, Trump reversed the call and we are back to square one. Food security issues cannot be compromised by India to indulge the US and European countries and distort global food prices. Nirmala Sitharaman as commerce minister was widely credited for linking trade facilitation agreement to finding a permanent solution for food security issues flagged by India in August 2014. In effect, since there was no solution to food security issues, trade facilitation agreement is a big no for India.

US trumping up subsidies by India in various forms is essentially a diversionary tactic given that most such dole outs were life sustaining policy measures undertaken by New Delhi. In fact, India’s subsidised food grains were meant for the poor and vulnerable sections unlike the dole outs offered by US administration to its rich farmers.

Hence, the impasse on most issues continue unresolved while the time is ticking fast for both developing and under-developed countries as well as WTO to have a rule-based trading regime with special and differential treatment built-in as an instrument of natural justice.