Paper praise not enough for WTO

Last week, trade ministers of 17 countries, including China and India, met in Delhi and reaffirmed the pre-eminence of the World Trade Organization (WTO) as the global forum for setting trade rules. They urged all WTO members to address without delay the challenge in filling of vacancies in the appellate body, while continuing to discuss other issues on the functioning of the dispute settlement mechanism. They talked of the need to provide adequate policy space to developing countries in supporting farmers through correcting the asymmetries and imbalances.

The meet was held even while the trade war between the United States and China was escalating. After the latest unilateral action by the US government to raise import duties on Chinese goods (estimated at around $200 billion), China retaliated by raising tariffs on US-origin goods worth $60 billion. The US has invoked national security concerns and threatened to raise tariffs on more Chinese goods worth around $325 billion. The trade talks between the two countries, for all practical purposes, have hit a dead end, though US President Donald Trump expressed hope that a deal would still be possible.

Last year, on the argument of national security, the US imposed tariffs on import of aluminium and steel products from many countries, including India. Some retaliated and others have not. For example, India has held off retaliatory action, in the hope that the US will delay withdrawal of tariff concessions to Indian-origin goods under the Generalized System of Preferences. The US also has tried to block the sale of oil by Iran, imposing sanctions. New worries have emerged after Iran’s announcement that it will not honour some parts of the earlier agreement to limit its nuclear enrichment activities, and the US government announcement to call back non-essential staff from Iraq and send more troops to the region.

Last week, President Trump signed an executive order that would let the US ban telecommunications gear from foreign adversaries. 

Their commerce department said it would add China’s Huawei Technologies to a list of entities engaged in activities contrary to US interests. Sale or transfer of American technology to Huawei might get restricted, thereby hampering its activities, since it relies on some US tech companies for chips. That might hurt the latter, too. Trump also talked of a plan to establish a visa system to prioritise immigrants, based on criteria such as education, English language ability and high-paying job offers.

Thus, the US is making its own trade rules to suit its convenience, ignoring the WTO discipline by merely invoking national security exceptions. It has also not bothered to help the WTO dispute settlement mechanism by appointing members to the appellate body. Given the context, the joint declaration of trade ministers of mostly developing countries is unlikely to be of any significance.

Beside, the leading economies at the Delhi meet, India and China, are facing several accusations of having fallen foul of the WTO disciplines. India’s export subsidy and farm subsidy policies are under a scanner at the body. Last week, Japan also filed a complaint against India’s high import duties on mobile phone parts. So, their swearing by multilateralism lacks much credibility.

Email: tncrajagopalan@gmail.com