WTO: The rich boys club

In 2003, India’s delegation to the World Trade Organization’s Ministerial summit was led by Arun Jaitley, then Commerce Minister. Other members of the delegation included Dr Bibek Debroy as India’s accomplished trade economist. I was among the editors who were covering the summit, getting a front-row view of India’s aggressive negotiations at the Ministerial.

The Cancun Ministerial summit was a turning point for WTO and its rich developed backers. The various frameworks for discussions including TRIPS (intellectual property rules) and TRIMS (services trade rules) tilted severely against developing countries. In the garb of equitable trade, the US and the EU had framed rules that were fundamentally against the interests of developing countries. The patent rules for pharmaceutical companies allowed them to evergreen their patents in perpetuity. While EU offered agriculture subsidy of a billion dollars a day for their farmers, it opposed food subsidy offered by India and other countries.

The EU and the US wanted the developing countries to lower trade barriers to improve access to their products. But when developing countries sought market access in the developed world, they put up non-trade barriers with unrealistic quality and sanitary conditions.

Many experts saw this effort for what it was. A neo-colonial effort to intimidate and overwhelm developing economies. The commerce ministry under Jaitley worked closely with domestic industry bodies to ensure that India did not back down. In fact, Brazil, India, China, and other countries ensured that the EU and the US did not have their way. The Ministerial summit collapsed marking the rise of economic importance of developing countries. Kenya accused the  WTO of manipulating negotiations to benefit rich countries at the cost of poor.

A similar scenario played out at Buenos Aires. Over 14 years after the Cancun collapse, the WTO does not seem to have learnt its lessons. The rich countries led by the US continued to browbeat developing countries. In Buenos Aires, the US arrived with a mandate to slow globalisation that was hurting it. After China’s entry into the WTO and its dominance in manufacturing, the US and the EU have turned against globalisation. They are increasingly looking for ways and means to stem the growth of developing economies. In Cancun, they tried to bring in issues of trade facilitation, transparency in government procurement and competition with an eye on prying open developing markets.

In Buenos Aires, a similar approach was visible. The US opposed efforts of countries like India to have high grain stockholding for food security. India’s Commerce Minister Suresh Prabhu did not relent on his demand for differential treatment for developing countries. India also opposed changes in e-commerce rules. Currently, there is no customs duty on global electronic transactions. Developed countries want to raise duties to create barriers for companies from developing markets.

The pattern established between the various WTO meetings between Cancun and Buenos Aires is clear. Developed countries want to set rules that allow them to dominate emerging markets. In the last decade, the improved manufacturing strength in India and China has rebalanced the economic equation of the world. Seen as a representative of rich countries, WTO does not enjoy credibility in emerging markets.

Rich countries are now openly nationalistic since they now have to face competition from emerging markets. Their love for free markets and open trade has been mauled by the rising economic strength of poor countries. When rich countries can’t compete on their own terms, they get upset. Now that they can’t manipulate WTO to force open new markets, they block all deals.

At the World Economic Forum’s Davos summit in January 2017, it was India and China that spoke for increased globalisation. A recent survey by YouGov of 20,000 people in 19 countries underlines this. They were asked, “Overall, do you think globalisation is a force for good or bad for the world?”

The results are insightful. The countries that were keen on globalisation are Vietnam (91 per cent), Philippines (85 per cent), India (83 per cent) and Thailand (76 per cent). The ones least interested in globalisation were those who have most benefited from it so far. These include France (37 per cent), US (40 per cent), UK (46 per cent) and Australia (48 per cent).

The new champions of globalisation and increased world trade are no longer in Europe and in the US. The champions reside in developing countries like India. In recent times, many regions of the world have created their own local trading blocs that are working better without the suffocating attitude of the WTO. The East African Community, ASEAN and even SAARC are working on trade pacts that are far more rooted in regional sensitivities than what the WTO preaches.

The WTO should understand now that it will have to stop being an apologist for rich countries. Until it is able to earn the trust of developing economies, the WTO’s effort to improving global trade will not be successful. The WTO can earn this trust only by championing the cause of countries where the bulk of humanity lives.

The writer is an economic analyst and author of Kranti Nation: India and The Fourth Industrial Revolution