WTO Reforms and the Role of India

World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala stressed the urgency of reforms, indicating that the status quo is untenable. The 14th Ministerial Conference (MC-14) in Yaounde, Cameroon is set to focus on WTO reforms. February has been designated as the reform month at the WTO, where members are expected to develop a work plan for the reform process post MC-14.

Immediate Triggers for Reform

• E-commerce Moratorium: The moratorium on Customs duties on electronic transmissions is due to expire with MC-14's conclusion. Most WTO members advocate for a permanent moratorium for digital economy predictability.
• Investment Facilitation for Development Agreement (IFDA): Members seek its integration into the WTO rulebook via Annex 4 of the 1994 Marrakesh Agreement. A significant barrier is objections to plurilateral agreements and the consensus-based decision-making process at the WTO.

Historical Context and Challenges

In its three-decade history, the WTO has largely dealt with implementation issues and the Doha Development Agenda. Its effectiveness has been hindered by the U.S. blocking appointments to the Appellate Body and US-China trade frictions.

• Only two successful agreements in the past 30 years: trade facilitation and fisheries subsidies.

Transformation in Global Trade

Global trade has evolved with the emergence of Global Value Chains (GVCs) and trade in parts and components. This necessitates complementary developments in global trade rules.

Free Trade Agreements (FTAs) and Plurilateral Agreements

• FTAs have facilitated GVC-led trade, while plurilateral agreements have not seen similar success in addressing 21st-century trade issues.
• Plurilateral agreements could be integrated into the WTO rulebook through Annex 4, requiring consensus among all members.

India's Position on IFDA and Plurilaterals

India opposes the inclusion of IFDA in Annex 4 due to perceived inconsistencies. The IFDA, formally supported by 128 of 166 WTO members, aims to facilitate FDI flows, particularly to less developed countries, without altering existing market access or investor protection commitments.

Systemic Implications and India's Strategic Positioning

Incorporating IFDA into the WTO framework holds systemic significance amid global trade uncertainties. India should reconsider its opposition, especially given declining net FDI inflows, and adopt a forward-looking stance on plurilateral negotiations, focusing on transparency and inclusivity.

Conclusion

For systemic revival and relevance, India must evolve its trade policy positions at the WTO and engage constructively in plurilateral agreements. Embracing flexibility and a proactive mindset will be crucial for India's trade strategy in the 21st century.