World Trade Organization

Trade Protection Measures under WTO

                WTO allows member countries to adopt certain measures to protect their domestic industries from the influx of cheap imports. The Anti-dumping duty, as well as the Countervailing duty, are both instruments used by member countries to safeguard their domestic industry from the competition with low-cost imports.

Anti-Dumping Duty

                When a country exports goods at low prices compared to its own domestic market and sometimes even lower than production cost with the intention to harm domestic producers of the importing country, the importing country can impose an anti-dumping duty to counteract the influence of low priced imports. Hence they help in levelling the playing field and ensure equal competition between domestic and imported products

Countervailing Duty

                A countervailing duty is also imposed on low-cost imports but here the subsidies provided by the exporting countries (tax or credit) are the enablers for selling the products at low cost in the importing country. Countervailing duties negate the advantage of subsidies for exporters and level the playing field between domestic producers and exporters.

Dispute Settlement Process

Member nations of the WTO when they are unable to bilaterally resolve disputes regarding matters of trade, they seek the help of WTO to act as an intermediary to help resolve or settle the dispute.  The disputes may be regarding environmental protection, animal welfare and food safety (Sanitary and Psyto-Sanitary Measures), Tax Evasion, Money Laundering, renewable energy subsidies etc.

WTO has its own dispute settlement institution which is called the Dispute Settlement Body (DSB). The DSB comprises of all members of the WTO and is a political body found by Dispute settlement understanding- a set of rules that govern this process.

DSB has provided a platform for developing and LDCs to take developed countries to court and thus has been seen as a great leveller considering its independent and autonomous functioning solely based on the framework of rules.

Procedure of Resolution

                Initially, the country whose measure was being challenged could walk away without accepting the results of the resolution, this right of the losing party was eliminated in the Uruguay round of negotiations.

                Post the Uruguay round, DSB can establish panels, adopt reports of panels and reports of the Appellate Body unless there is a consensus against it which must be unanimous from all members.

Important Legislations, notes by UPSC Topper Ravisankar Sarma 

GS-2 Strategy By Upsc Topper Ravisankar Sarma

Appellate Body

                AB is a body comprising of 7 individuals that function out of Geneva. It hears appeals from reports issued by panels established by the DSB. AB is vested with the power to uphold, modify or reverse the legal findings and conclusions of a panel. Its reports are binding on all parties to the dispute, that is no party can walk away from it.

                AB should ideally rule upon an appeal by 60 days which is extendable to 90 days. However, delays in resolving disputes often lead to countries being forced to look for solutions outside the WTO. The poorer countries are most affected in such a scenario eventually deterring many countries from bringing their disputes to WTO.

                The US has so far refrained to participate in the appointment of judges to the AB which substantially weakens the DSM. Any weakening of the DSB is detrimental to developing countries as judicial measures outside WTO would be mostly in advantage to developed countries.

Shifting Paradigm of World Trade

                Once the US and the UK were the key players in the global trade dynamic. With new incumbent administration in both countries adopting protectionist measures, the paradigm of world trade may be shifting to developing countries of East – Russia, China and India. The weakening of EU and the withdrawal of the US from WTO proceedings is indicative of such a shift.

International Economic Institutions

TRADE FACILITATION AGREEMENT

• Came into reckoning during Bali 2013 Ministerial Conference
• Developed countries agreed to allow developing countries to continue with unlimited amber box subsidies till 2017 when a permanent solution is reached
• Developing countries in return had to sign trade facilitation agreement
• In Feb 2017, WTO member countries including India ratified the agreement at WTO

Features

• TFA targets smoothening of trade with increased transparency, efficiency and predictability at ports, faster clearance procedures and improved appeal rights for traders are to be addressed by countries
• Helps in lowering trade costs of member countries as well as reducing the time taken for exports and imports
• Concurrent with India’s own policy initiatives of introducing Single Window Clearances and improving Customs clearances in ports

INDIA’S CONCERNS AT WTO

Trade Facilitation in Services: Similar to TFA in goods movement, India seeks to bring about an exhaustive framework that deals with the movement of people or services across borders. India is keen to reach a common consensus due to its overwhelming capability in the service sector as compared to the goods exchange

Agricultural Subsidies: Under the Doha Development Round, developing countries were allowed to provide amber box subsidies only till 2017 in the 2013 Bali Summit in an agreement called the ‘Peace Clause’ between developed and developing countries.

                The peace clause protects countries from using publicly procured food stock for food security purposes beyond stipulated limit of 10% from WTO disputes for an indefinite period.

                However, a permanent solution was not reached till 2017 and India hence advocates a permanent solution to the issue of amber box subsidy provision of developing countries and withdrawal of export subsidies from developed countries (prescribed by Nairobi Summit by 2018 for developed countries and by 2023 for developing countries)

Fisheries Subsidies: Domestic subsidies provided to local fisherman folk have faced opposition from WTO members voicing concerns of discriminatory market access to domestic and foreign fishery products. India aims to protect its domestic fisheries industry particularly the small scale and local industries to facilitate coastal community development.

Friends of E-Commerce for Development:

 At the Buenos Aires Summit, a new binding agreement on e-Commerce which proposes for ICT, logistics and payment solutions has been put forward by Latin American countries and Nepal, Pakistan and Sri Lanka. India and African nations oppose the agreement pointing out that it would affect sustainability of e-Commerce in developing countries.

Regulation of ICT: The aforementioned countries want regulation of telecommunication, computer and related services and relevant distribution services. India maintains that this would affect sovereign rights of countries.

Eg: National Cyber Security policy encourages use of open standards for interoperability and data exchange among different products and services

Safeguarding Domestic Industries: The FoeC group would also venture into non-discrimination of domestic and foreign goods facilitating cross-border trade movement. India has however safeguarded its own industries by providing preferential treatment and incentives.

Localization of Servers: Servers holding data requisite for e-Commerce transactions can be located in any country. India wants servers holding data of its own customers to be in India so as to assert greater control over it

Capacity Building of SMEs: Expand capacities and technical skills of enterprises, policymakers and individuals to harness e-commerce – Remove barriers for SMEs. Bringing market-driven standards to e-commerce may thus hurt new e-commerce players in India

Cost-Effective Payment Solutions: FoeC also aims to provide LDCs and developing countries consumers with easy, safe and affordable payment solutions with great interoperability and universal connectivity.

Challenges for WTO / Why it is declining?

• Unable to arrive at Common Ground: WTO ministerial conferences have not been able to set a multilateral trade framework that is acceptable for. As it is a consensus-based body, decisions have not been forthcoming due to continuous disagreements – between developing and developed countries, an issue on agriculture and subsidies, trade facilitation etc
• Regional Trade Blocs or FTAs: Several countries have been forming regional trade blocs or signing FTAs which undermines WTO’s objective of evolving a global free trade regime where all countries receive equal treatment from each other regarding the movement of goods and services
• US administration’s non-cooperative nature: US has consistently called for better protection of its own national interest at WTO which has stalled its progress and proceedings on several issues

United Nations Security Council

                UNSC is UN’s council that deals with issues of international security and peace. It consists of 5 permanent members of U.S, U.K, France, China and Russia and 10 non-permanent members that are elected each year

Powers of UNSC

1. Establishment of Peacekeeping operations
2. Authorizations of international sanctions
3. Passing binding resolutions on other countries
4. Authorization of military action

Need for Reform in UNSC

1. Privileged membership of a permanent nation
2. Veto system that exists with permanent countries
3. Regional misrepresentation with No country from Africa in UNSC
4. UNSC and UNGA relationship
5. Need for enlarged council and changed global order from the time of formation