12TH WTO MINISTERIAL CONFERENCE

WHY IN THE NEWS?

Recently, the WTO’s 12th Ministerial Conference (MC12) took place in the month of June 2022 at WTO headquarters in Geneva. Ministers across the globe reviewed the functioning of the multilateral trading system, made general statements, and the future work of the WTO. All the 164 member nations met and made important remarks on issues that can be termed as “Geneva Package”.

BIRTH OF WTO

• The WTO’s creation on 1 January 1995 marked the biggest reform in the field of international trade. The Uruguay Roundconducted from 1987 to 1994 resulted in the formulation of the Marrakesh Agreement which established the World Trade Organization (WTO).
• From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for world trade and witnessed some of the highest growth rates in international commerce. 
• The “GATT”, the predecessor of the WTO mainly dealt with trade in goods only.
• However, World Trade Organization deals with not only the goods, but also services, investments, movement of people, and intellectual property rights.
• The WTO’s membership has expanded to 164 members, representing over 98% of international trade. India is one of the founding members of the World Trade Organization.
• From the early days of the Silk Road to the creation of the General Agreement on Tariffs and Trade (GATT) and to the creation of WTO, trade has played an important role in supporting economic development and promoting peaceful relations among nations.
• The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade across the globe.
• The World Trade Organization acts as a forum to negotiate trade rules, conduct trade in a fair manner, and provide a level playing field for all countries. Therefore, it provides a platform for settling economic disputes among themselves.
• The ultimate goal of WTO is to ensure that trade flows as smoothly, predictably, and freely as possible.

WTO MINISTERIAL CONFERENCES

The Ministerial Conference is the highest decision-making body of the WTO and usually meets every two years. The WTO’s first Ministerial Conference was held in Singapore in December 1996.

Important ministerial conferences

1. Ministerial conference 1

• Singapore Packages 1996

2. Ministerial conference 4

• Doha Round: The Doha Round was launched in 2001 to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules.

3. Ministerial conference 9

• Bali Packages: New trade facilitation agreement, Simplified customs procedures, Agreements on food security.

4. Ministerial conference 10

• Nairobi package 2015

5. Ministerial conference 11

• Buenos Aires 2017: Lack of consensus from developed countries. For instance, the US’s reluctance in solving issues of the WTO’s Appellate Body.
• Thus, no concrete decisions were made in MC 11.

6. Ministerial conference 12

• Kazakhstan was originally scheduled to host MC12 in June 2020 but the conference was postponed due to the COVID-19 pandemic.
• Finally, the postponed MC12 was recently held in Geneva which was co-hosted by Kazakhstan.
• Ministers from across the world attended MC12 at Geneva which led to an outcome called the “Geneva Package” 2022.

MC12-GENEVA PACKAGES

1. Agriculture and Food security

• Normally, countries can impose export restrictions on their agriculture production. It was during the Ministerial Conference 9 at Bali in 2013 which allowed a Peace clause that continued exemptions for developing countries to stockpile agricultural products to protect against food shortages in the country.
• At MC12, a Ministerial Decision was taken on exempting the purchase of food items from export prohibitions or restrictions for the United Nations World Food Programme humanitarian needs. This decision is necessary to meet the growing hunger crisis across the world.

WHY?

• To address food shortages and soaring food prices on account of the Covid-19 pandemic and the Ukraine-Russia war.
• To ensure that the most vulnerable people can access emergency food aid.
• To solve acute Hunger and malnutrition faced by certain countries.

EXEMPTIONS

• Humanitarian Exemption: Even now, countries can impose export restrictions to ensure their domestic food security.

INDIA’S CONCERNS

• MC12 took no decision on India’s demand to export subsidy-backed food grains procured through National Food Security Act 2013 and Public Distribution System as it is said to be against WTO rules and regulations.

• No assurances from WTO for India’s Public stock-holding program to ensure food security.

2. Fisheries

• Curb Harmful subsidies: The agreement prohibits support in the form of harmful subsidies for next four years in illegal, unreported, and unregulated (IUU) fishing.  
• Bans overfishing: To protect global fish stocks by eliminating over-exploitation beyond their rate of replenishment. The package also took the decision to restrict overcapacity and overfishing by ending subsidies for fishing on the unregulated high seas.
• Recognizes the rights of fishing communities: Around 260 million people depend on marine fisheries for their livelihood. Recognizing their rights ensures the development of fishing communities.
• No limitation: There is no limitation on subsidies granted by developing and Least developed countries for fishing in their Exclusive Economic Zones (EEZ).

IMPACT

• Environment sustainability- Removing unwanted subsidies helps in the replenishment of the fish population which stabilizes the marine ecosystem.
• Welfare of the fishing community – The recognition of their rights helps them to lead a dignified life which benefits their future generation too.
• Lip service- The environmental experts stated that curbing subsidies for four years without complete removal will not result into a comprehensive solution.

IMPLICATION FOR INDIA

• Aligned with India’s demand – Government of India demanded not to impose subsidy restriction within Exclusive Economic Zones since a vast number Indian population depends on marine resources. India opinioned to curb subsidies beyond Exclusive Economic Zones. Thus, the MC12 decision on subsidy limitation beyond EEZ favours India.
• Economic wellbeing – The decision empowered the Indian government to provide more incentives for fishing activities which ultimately improves the economic status of fishing community.

3. Moratorium on e-Commerce work program

• Countries agreed to maintain their current practice of not imposing customs duties on electronic transmissions. The electronic transmissions under this moratorium include electronically ordered and electronically delivered products and services such as software, music, e-books, video games, etc. However, the online ordered and physically delivered products doesn’t come under this category.
• The moratorium will remain in effect until MC13, to be held by the end of 2023 or until 31 March 2024 whichever is earlier.
• This moratorium since its adoption in 1998, helped in preserving the environment for the global digital economy and millions of businesses and jobs were dependent on it.

INDIA’S STAND

• Initially, India was reluctant to participate in talks on electronic transmissions since the country was not much comfortable in trading electronic transmissions. India opinioned that by not knowing the intricacies of this sector, joining the talks will only help developed countries. Moreover, the rules framed may not be in favour for developing countries and least developed countries. However, India has joined the talk now.

WHY DO DEVELOPING COUNTRIES DEMAND TO IMPOSE CUSTOMS DUTIES?

• Sovereign right- It was the sovereign right to impose tax by the developing and least developed countries for the import of electronic transmissions but WTO stands against their demand.
• Disparity- The majority of e-commerce transactions are concentrated in developed countries. The contributions from developing countries are minimum in electronic transmissions. So there exists a wide disparity between developed and developing countries.
• Economic loss- Developing countries incur a loss of around 10 billion dollars per annum for custom-free imports where the products enter the domestic market with no customs duties.
• Dumping-Domestic industries will be adversely affected due to the dumping of products at low prices from developed countries.

4. Covid-19 Vaccine protection

• Waiver: The conference agreed on the waiverof certain requirements under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) concerning the use of compulsory licenses to produce COVID-19 vaccines only.
• Provided a relaxation for five years: Those countries producing vaccines up to 2027 need not p ay any royalty to original manufacturers.

CONCERNS

• Not comprehensive- The waiver requirement doesn’t include therapeutics and diagnostic tools which are widely demanded by the countries for their growing importance in the present scenario such as Covid 19, the prevalence of Non-Communicable Diseases, etc.
• Delayed decision: The agreed waiver has come too late whereas India and South Africa started demanding the waiver much earlier.
• Logistics: Lack of proper logistic facilities such as required cold storage facilities is a major concern for developing and least developed countries.

IMPACT

• Vaccine equity: Waiver of intellectual property rights on Covid-19 vaccine can diversify the production and ensure the availability of enough vaccines at the global level.
• Business ethics: The decision would act as a shock against the rich pharmaceutical companies who tried to profiteer the pandemics. The current decision of the waiver, demands a more ethical perspective from the business community towards humanity.

IMPLICATION FOR INDIA

• India on signing the agreement can produce any vaccines without paying royalties to manufacturers until 2027. Manufactures must also transfer their technologies to India.

• The procedure of some vaccines such as Moderna, MRNA vaccines etc., are very complex and its logistics is very difficult. The requirement of cold storage even minus temperature and the deliverance of vaccines within short period with no wastages are major concerns.

• India being hub of pharmaceuticals could produce new medicines and diagnostic kits, if waiver of IPR on diagnostic tools and therapeutics are provided.

WTO REFORMS DEMANDED BY THE MEMBERS

• Appellate mechanism: Deadlock in appointing judges to the WTO Appellate Body to be rectified to strengthen dispute settlement mechanisms.
• Trust deficit: Inclusive and transparent working process to bridge the trust deficit between developed and developing countries.
• Holistic approach: Waiver on IPR covering diagnostic tools and therapeutics needs to be considered. The decision to appoint a committee for monitoring the said IPR exemption needs to be timely executed.
• Deliberations: Negotiations and discussions to solve differences of interests between the member nations. It promotes the utility of multilateral institutions at the global level.

CONCLUSION

It is high time to make structural changes to the working of WTO to meet the changing needs of 21^st century. The need of the hour is to better implement Geneva packages and its decisions without fail, to ensure a level playing field for the global trade ecosystem. 

QUESTION

Food security is a key concern for developing countries like India.How far do you think the recent12^th WTO meeting addressed this concern?(250 Words, 15 Marks)