Does WTO have a future?

India still has a stake in rules-based dispute resolution

The World Trade Organization (WTO) will hold a ministerial-level meeting next month in Buenos Aires. When the world’s trade and commerce ministers gather in the Argentine capital on December 10, India will once again have a major role to play. In recent years, it has moved away from its role as a “spoiler” in such multilateral forums to acting in a more constructive and forward-looking manner. However, at least one of the issues that will likely be discussed at the ministerial conference impinges upon a major domestic political priority: The protection of the tenuous livelihoods of Indian farmers through the massive public procurement programme. The government’s purchases of foodgrain in particular are seen as a threat to various WTO rules against market distortions. After many years of wrangling, an uneasy truce seems to have been established, with a “peace clause” under which developing countries’ public stockholding of such agricultural products will not be challenged in the WTO’s formal dispute resolution mechanism. India wants to make this permanent, but agreement on this is elusive. Many other developing countries, in fact, fear the effect on global prices if India exports a fraction of its massive stocks of grain.

While these issues will hog the headlines in India, the larger crisis of purpose at the WTO should not be forgotten. Many fear that the Doha “development” round of trade negotiations, conceptualised as a way of prioritising the poorer countries’ concerns, is dead. It has certainly been overtaken by events: First by the proliferation of “plurilateral” trade agreements that bring together a large number of partners in giant regional trading blocs, and then by the political backlash against globalisation in the West exemplified by the new and aggressive approach to commercial relations under United States President Donald Trump. Given that these are the competing currents that are sweeping through the global economy today, where does that leave the WTO? Some argue that the multilateral organisation is a dinosaur, yet another product of the vanished post-World War II global order that is no longer sustainable. Others assert that the United States’ retreat from global leadership means that no structure such as the WTO can survive, since any such structure requires the support of a global hegemon.

However, it is important to note that multilateral rules continue to be in India’s own interest. It is one of the few spaces where weaker powers – and, given its poor global competitiveness, the Indian economy is undoubtedly one of the weaker ones when it comes to trade – are able to temper the excesses of stronger ones. Careful empirical research has shown that the WTO’s dispute resolution process is, in fact, effective in reducing the extent and duration of disagreements over trade. Mr Trump may threaten to ignore WTO rulings, but the point behind such rulings is to allow for painful retaliations that are multilateral in nature and subject to rules-based escalations so that an overall trade war is avoided. The nature of this dynamic is eternal, and does not rely on one or another transient approach to world trade or globalisation. In Buenos Aires, India must push for a re-commitment to the WTO, and to the principles of the Doha development round.