India Must Wargame the Emergent WTO

As India prepares for the upcoming 14th Ministerial Conference in Cameroon, the Joint Statement Initiatives at the WTO will take centre stage. These are plurilateral agreements currently in discussion, where all 164 WTO member countries need not join. Consensus of all member countries is not required. These club-like arrangements if accepted, will mark a fundamental shift in how and what trade rules will be set at WTO in coming years.  The US has put its full weight behind plurilaterals, which the EU backs and promotes.

India has opposed all such plurilaterals and does not participate in any of the ongoing negotiations. India must wargame the emergent WTO as it is being pushed into uncharted territory, and take clear-eyed decisions in self-interest.

Plurilaterals
The e-Commerce (90 countries) and the Invest Facilitation for Development (128 countries) agreements, both developed in plurilateral format, in face of the strong objections by India, have stabilized the texts, and are ready to be signed.

Trade & Environmental Sustainability Structured Discussions (TESSD) are still in discussion/ negotiating phase moving towards policy frameworks in trade and climate intersections. Dialogue on Plastic Pollution, close to Indian interests and action, is forging ahead. MSME- and gender-related plurilaterals, significant to Indian small businesses, are moving on to sharing best practices and guidelines.

Services Domestic Regulation rules have already been operationalised. India had opposed these vigorously, but 70 agreeing members found a way out of the current consensus requirement by voluntarily offering flexibilities to all WTO members.

India’s Opposition
Since their inception in 2017, India has consistently and vociferously opposed plurilaterals and Joint Statement Initiatives, or JSIs, on the grounds that they are contrary to the letter and spirit of the WTO. JSIs risk creating a system where a subset of members can ‘negotiate new rules among themselves and subsequently multilateralise them’. This can pressurise non-participants and may ‘erode policy space available to developing countries’.

Most importantly, India insists that issues of interest to developing countries that have already been mandated for resolution by the entire membership of WTO, such as  public stockholding for food security, domestic support for poor farmers, flexibilities in TRIPS for emergency situations like COVID, large subsidies to farmers  and fishers of rich countries flexibilities, and many more, must not be abandoned to generate agreement on areas of interest and domination of a few rich members.

Developing Countries
India’s principled opposition has not been able to halt or diminish the JSIs.  Several developing countries, including Brazil, Indonesia and Egypt have joined plurilaterals. They have used the platform creatively, ranging from active engagement and rule-shaping; to participating selectively while retaining policy flexibility; to limited engagement. China has chosen to be an active participant, shaping rules from within.

India has effectively negotiated many related issues in its own FTAs, especially with the EU. For instance, ‘no customs duties on electronic transmissions’, EU’s standard template in its FTAs, was successfully removed from the India-EU BTIA. Equally significant was India’s ability to include the common-but-differentiated-responsibility metrics and related flexibilities, key to developing country interests and absent from EU’s FTAs, in the Trade and Sustainable Development text. India has agreed to the most expansive gender chapter in the India-UK CETA.  

Would JSIs be a valuable platform to add to the developing country weight around these concerns and build coalitions to effectively navigate an emergent WTO?

Club Culture
In view of the recent beeline of WTO champions to sign up so-called ‘trade agreements’ with the US flouting the most basic WTO principles, India must weigh how long members would be patient to India’s  consensus concerns. Will a two-thirds of the membership reverse years of hard work, for a single opponent, however powerful or emerging? A few quick years on, could WTO members advance with the plurilateral agreements, irrespective of whether India continues to oppose? 

As plurilaterals evolve into greater rule making, India must weigh the cost to its businesses having to abide by multiple standards. India may find itself in a position where it would retain de jure regulatory sovereignty but must adapt to rules in whose design it had little or no say.

India must assess such eventualities with a clear-eyed self-interest lens and determine whether it would be more useful to participate in the climate related and other plurilaterals, where work has yet to crystallize and some negotiating room remains. India has taken many steps in environmental agenda and must not sit out of the decision making, for principles which seem to be fading away in the real world.

An Opportunity
The recent AI summit has demonstrated India’s muscle to drive the agenda when it decides to energetically participate in emerging commercial and technology areas. India  shifted the focus to economic and social development, domestic capability for public services and businesses, and sovereignty  in the AI world otherwise overshadowed by hi-tech MNCs and rich country domination. While contesting attempts to undermine multilateralism, India must also wargame a plurilateral trading world, and pathways to protect its trading and investment interests. The result may well steer India into a calibrated strategy that balances the preservation of policy space with the need for robust engagement, driving the agenda in WTO plurilateral.