Context:

The recently concluded meeting of the G20 working group on trade and investment focused on the important issue of WTO reform.

What’s the Change in the Approach?

• Economic Interdependence: Earlier the “trade policy is foreign policy”. 
  • The world then valued economic interdependence with the belief that interdependence would deter security confrontation. 
  • The WTO, created in that era, was aimed at legalizing and policing economic interdependence. 
• Geoeconomic Considerations and Securitisation: Today’s world is dominated by geoeconomic considerations and heightened securitisation of international economic relations. 
• Unilateralism: The pursuit of unilateralism in international economic relations, especially by developed countries like the US, is on the rise with scant regard for WTO law.
• Subsidies: Economic policies such as industrial subsidies and local content requirements are at the forefront.
• Security: Forgotten WTO rules like security exceptions now occupy center stage.
• Confrontation: There is a deliberate effort to weaken trade multilateralism in favor of external plurilateral alignments keeping the big power confrontation in mind. 

The push for WTO reforms from G20’s “middle powers” such as India, Indonesia, Brazil and South Africa:

• Strengthening Special and Differential Treatment (SDT) Provisions:
  • SDT provisions aim to provide special rights to developing countries.
  • Only 21% of SDT provisions oblige developed countries to provide differential treatment.
  • Need to enhance the effectiveness of SDT provisions.

• Paralysis of the WTO Appellate Body:
  • The appellate body has been inactive since 2019 due to the US’s lack of engagement.
  • Efforts required to persuade the US to change its position or revive the appellate body without US participation.

• Shift from Consensus-Based Decision-Making to Plurilateral Discussions:
  • Consensus-based decision-making in the WTO has slowed down.
  • There has been a shift away from this principle toward plurilateral discussions on select issues such as investment facilitation. 
    • Forcing plurilateral agreements on non-willing members will accentuate the trust deficit between developed and developing countries.

• Addressing the Transparency Gap in the WTO:
  • Lack of transparency in terms of notification requirements within the WTO.
  • Member countries have an obligation to notify trade-affecting laws and regulations, but compliance is poor.
  • Poor compliance increases trade costs, particularly for developing countries.

Conclusion:

Trade multilateralism might be out of fashion, but remains of vital salience for countries like India. Hence, India, under its Presidency of the G20, should work with others to drive the WTO reforms agenda aimed at making trade multilateralism inclusive.

News Source: The Indian Express