How WTO is failing the developing countries

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Sanghnomics is a weekly column that tracks down and demystifies the economic world view of the Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.

The role of the World Trade Organisation (WTO) and its director general is under the scanner as the 13th Ministerial Conference of the World Trade Organization in Abu Dhabi, United Arab Emirates failed to reach consensus on most of the issues.

Swadeshi Jagaran Manch (SJM), a Rashtriya Swayamsevak Sangh(RSS) inspired organisation has pointed out several lacunae especially regarding the role of the DG of WTO. In a discussion held on March 11 this year in New Delhi to assess the outcome of WTO talks in Abu Dhabi, members of SJM pointed out that Director General of WTO,  Ngozi Okonjo-Iweala has been crossing limits of her constitutional role.

Constitutionally, the Director General is an international civil servant and her role is only to facilitate the negotiations, without bias. However, DG had been pushing, sometimes even pressurising the member countries to sign the agreements, for which they were not inclined. Her actions earned her a lot of criticism from different quarters, and more explicitly from the civil society organisations.

SJM members also expressed their concern about the diminishing role of civil society in WTO. It was quite apparent that the WTO secretariat was not interested in listening to the concerns raised by the civil society organisations. They were not allowed to press their demands.

Custom Duties On E-Transmission

The WTO conference was scheduled to take place from 26 to 29 February 2024. Since consensus could not be reached among the members of different countries on different issues, this conference was extended for two more days till March 2.  Despite extension, a consensus could not be reached and the conference ended without conclusion regarding various important issues except one .

It is noteworthy that  despite intense opposition from majority member countries, the tariff moratorium on e-products was extended. However, this too came with a rider as the final Ministerial Declaration included the para “Members also agreed to maintain the current practice of not imposing customs duties on electronic transmissions until the 14th Session of the Ministerial Conference (MC14) or 31 March 2026, whichever is earlier. The moratorium and the Work Programme will expire on that date.”

Since 1998, WTO members have periodically agreed not to impose custom duty on electronic transmissions of digitisable goods which is also known as ‘moratorium on electronic transmission’. The decision was taken at that time in the backdrop of  e-commerce being in its nascent stage and its full potential in increasing the trade was yet to be assessed.

However, this moratorium is helping developed countries and tech giants to monopolise the digital sector. The surging trend in digitisation of a greater number of products, especially the increasing percentage of 3D printing of manufactured goods is causing substantial loss of tariff revenue for developing countries and India in particular.

Fisheries Subsidy Agreement

One of the major issues before the members was fisheries subsidy agreement. Though, the real issue is the depletion of fisheries and other ocean resources and endangered future availability of the fish for the mankind on sustainable basis; however, the issue had been shifted to the ratification of the Agreement by two third of the membership of WTO, pushing the issue of disciplining the real culprits of depleting ocean resources, that is, developed countries, to the backburner.

It is no secret that the developed countries are responsible for depleting ocean resources that after exhausting their own waters, their big vessels, with the support of the subsidies given by their respective governments, are exploiting deep sea resources in distant waters. According to data from OECD Fisheries Subsidy Estimates (2014-16) and the FAO yearbook, Fisheries and Aquaculture Statistics, 2016, Denmark provides subsidy of $75,578 per fisherman, Sweden $65,979, New Zealand $36,512, UK $2,146, and India provides subsidy of hardly $15 per fisherman. Therefore, the developed countries need to commit withdrawal of subsidies for their deep sea fishing activities.

However, the measures adopted by the World Trade Organization for this purpose are not going to solve the problem, it will rather harm the livelihood of the small fishermen of the world. Due to the continuous decrease in availability of fish, the livelihood of people living in coastal areas has been adversely affected and their poverty is increasing.

The issue of disciplining fisheries subsidies had first come up at the Doha Ministerial Conference in 2001. Some members demanded that subsidies that contribute to overfishing and overcapacity in the oceans should be banned. It also called for the elimination of subsidies that contribute to illegal, unreported and unregulated (IUU) fishing. Members adopted the Fisheries Subsidy Agreement at the 2022 ministerial conference in Geneva, but it can be implemented formally, only if ratified by two-thirds of WTO members. Although it was ratified by some members at the 2024 Abu Dhabi conference, there were wide differences among WTO members on several key issues, including the definition of harmful subsidies, especially in the context of distant waters fishing by vessels of developed countries. Due to differences on limiting the subsidy being given, a consensus could not be reached in Abu Dhabi.

In this regard, the Indian delegation forcefully raised the issue of protecting the interests of 50 crore fishermen of the world, including India, and placed a condition that this agreement should not be taken forward until a decision is taken on subsidies for fishing in distant waters, impacting the catch by traditional fishermen. It also argued that countries should be allowed to subsidise fishing in their exclusive economic zones (EEZs), for the next 25 years. Since developed countries were not ready for either of these demands, this agreement did not move forward.

Earlier Sanghnomics columns can be read here. 

Arun Anand has authored two books on the RSS. His X handle is @ArunAnandLive. Views are personal, and do not represent the stand of this publication.