India and US spar over WTO benefits for developing nations. Here's why

Topics WTO India

India hit back at the United States at the World Trade Organisation on Wednesday, after the Donald Trump administration repeated its threat to dismantle all special and and differential treatment (S&DT) to developing countries in current and future trade agreements. An US presidential memorandum to this effect has now been rejected by India, which has spoken on behalf of 51 developing and least developed countries.

What are the special and differential treatment provisions at WTO?

The agreements on which the World Trade Organisation is based include special provisions which give developing countries special rights and which give developed countries the possibility to treat developing countries more favorably than they would other WTO Members. These special provisions include, for example, longer time periods for implementing Agreements and commitments or measures to increase trading opportunities for developing countries. These provisions are referred to as “special and differential treatment” (S&D) provisions.

What does this involve?

The provisions provide longer time periods for implementing agreements and commitments and measures to increase trading opportunities for developing countries. It also has provisions requiring all WTO members to safeguard the trade interests of developing countries. Finally, it provides for commitments from richer nations to support developing countries to help them build the capacity to carry out WTO work, handle disputes, and implement technical standards. The WTO Secretariat has made several compilations of the special and differential provisions and their use. 

What is the story so far?

At the 4th WTO Ministerial Conference in Doha, the Committee on Trade and Development was mandated to examine these provisions. But the critical nature of the issue meant that a mechanism to review and analyse its implementation could not be arrived at until the Bali Ministerial Conference in December 2013.

Now, in a move to end the benefits enjoyed by developing countries including India, US President Donald Trump has directed his administration to change rules to prevent “self-declared developing countries from availing themselves of flexibilities” in global trade. Trump has said that nearly two-thirds of the members of the WTO have been able to avail themselves of special treatment and to take on weaker commitments under the WTO framework by designating themselves as developing countries.

What is New Delhi's stand?

Safeguarding the S&DT agreement is one of India's key objectives at the WTO. The S&DT debate has seen richer nations increasingly voice their opposition towards developing countries continuing to enjoy special provisions such as longer time periods to implement agreements and commitments, and clauses to safeguard their trade interests, among others. Growing opposition to the provisions saw the government take up the issue at a mini ministerial organized in May, earlier this year at New Delhi. "In view of the wide diversity in the level of development among WTO membership, there is need for sufficient flexibilities. Just to cite one specific instance, India still has over 360 million poor and as of end-May 2018, it had 73 million people in extreme poverty," the Federation of Indian Chambers of Commerce and Industry (Ficci) has said, arguing that the provisions can't be simply wished away.

Why are they important?

Developing economies also believe that removing the provisions would be a stepping stone for richer economies led by the US to sideline other development-based issues of importance to them, such as a permanent solution to agricultural stockpiling for the purpose of food security. Instead, richer nations led by the European Union, Japan, Canada and the US, have consistently pushed for newer issues such as investment facilitation, and rules for small and medium enterprises, promoting gender equality, and most importantly, e-commerce.

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