Moneycontrol Pro Panorama | WTO lives to fight another day

Source: Reuters

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The World Trade Organisation (WTO) appears to have acquired a new lease of life by getting member countries to sign off on a number of trade measures. In recent years, it appeared to have lost its relevance as nations went about taking actions that they said were in national interests, taking a populist stance. This round of talks saw these divisions nearly scupper the final agreement, but eventually sense prevailed.

Whether the WTO can actually reclaim its position at the global trade table at a time when geopolitical tensions have risen, an inflationary crisis is brewing and a global recession is blowing in the wind, will be known eventually. Much depends on how these decisions are implemented and viewed by countries who may get adversely affected. But it’s important to have an impartial organization that can bring countries together for a greater good.

It comes at a time when there is a question mark on globalisation. China’s stringent lockdown policies and unpredictable policy turns and COVID lockdowns around the world brought into spotlight the vulnerability of global supply chains. COVID-19’s sharp edge may have been blunted, but the economic aftereffects continue to affect global industry. Read what Vatsala Kamat has to say about the continuing effect of semiconductor shortages on India’s auto industry.

Russia’s invasion of Ukraine was another big blow that has hit global energy and food supply chains. Germany, for instance, has decided to keep its coal plants open for longer, as Russia’s natural gas supplies are tapering. That’s not a good sign for climate change watchers, but short term energy security is taking precedence over longer term priorities at this juncture.

Leaders of affected countries and global corporations are responding by evaluating decisions that will see them undo decades of established trade lines. This includes bringing back manufacturing activities within the border, or to take them to nearby countries or to friendlier nations and so on. Is the world of trade as we know it about to end? Here’s a contrarian view from a large player in the global supply chain, republished from the FT (free to read for Pro subscribers).

The WTO meeting was of particular importance for India because of two items on the agenda—vaccines and fisheries—that had implications for the country. In today’s edition, Subir Roy dissects the implications of the trade agreement. On vaccines, “if Africa is living with very low levels of vaccination and has little vaccine manufacturing capacity of its own, then Indian vaccine manufacturers will now be able to export vaccines to African countries and not fall foul of global intellectual property rights regulations.”

But this waiver comes with a time limit. India relented on some of the tough stands it took initially and in those areas, it has had to make a compromise. The WTO members also go back with a huge unfinished agenda. While they may pat themselves on the backs at being able to sign an agreement, a lot now depends on their execution at the ground level.

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Ravi Ananthanarayanan
Moneycontrol Pro