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WTO’S LANDMARK DEAL

24th June, 2022

RSTV

PERSPECTIVE: WTO’S LANDMARK DEAL

 

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Context

  • World Trade Organisation (WTO) concluded its 12th Ministerial Conference (MC). A series of deals were finalised relating to the temporary waivers on Covid-19 vaccines, a moratorium on e-commerce trade, food security and limiting harmful fishing subsidies.
  • It will be considered historic, as the 164-nation body was able to seal a package of trade agreements, after a gap of nine years.
  • These deals were approved at the 12th ministerial conference of WTO for a ground out over days of round-the-clock talks, and include pledges on health reform and food security, and were agreed upon after intense negotiations over five days.

What are the WTO and the Ministerial Conference (MC)?

  • The World Trade Organization is the only international organization that deals with the rules of trade between countries.
  • Founded in 1995, the WTO is run by its 164 members, and according to its rules, all decisions are taken through consensus and any member can exercise a veto.
  • It aims to promote free trade, which is done through trade agreements that are discussed and signed by the member states.
  • The WTO also provides a forum for countries to negotiate trade rules and settle economic disputes between them.
  • The Ministerial Conference is the WTO’s top decision-making body and usually meets every two years. All members of the WTO are involved in the MC and they can take decisions on all matters covered under any multilateral trade agreements.
  • The WTO’s 12th Ministerial Conference was held in Geneva from 12-17 June. It was supposed to end on 15 June, but with intensifying negotiations, the conference was extended by two days.

WTO Director-General (DG) talked about the new sense and the newfound cooperation among the countries at a time when the world is facing a lot of insecurities in terms of food & energy and the war between Russia and Ukraine and the fact that after nine-long years package of deals have been signed which DG describes as a win-win situation.

Can the 12th MC be seen as one of the most successful in recent history?

  • After the 2013 Bali Meet in which the trade facilitation agreement and the public stockholding issue were harvested there has hardly been any progress in the subsequent two MCs.
  • The recent agreement in the 12th MC kept an eye on the recent developments in the world; food security, vaccine security and inequities which have cropped up after the covid-19 pandemic and a few other issues have also been addressed.
  • Yet, there is still a lot of divergence of views which prevailed. However, under the given circumstances these deals could be considered significant development as the faith of 164 nations in multilateralism has been emphasised.

At the beginning of the conference, there was little hope because of the kind of differences that prevailed over the issues that were to be discussed but 164 nations finally came together.

Does this meeting reinvigorate the importance of the WTO and what are the most positive tangible outcomes?

  • The biggest takeaway is the fact that there’s been a tangible deal on the table.
  • Countries have tried to reach a consensus on some very tricky issues and there were questions about the continuous role of the WTO trading system.
  • So, such instances will give a huge boost to the multilateral trading system.
  • This meeting is proved to be a significant package, though some compromises have been made to reach a deal. Yet, it is very reasonable from India’s point of view because of some issues which India had been pushing like the IPR waiver for Covid vaccines. There’s also likely to progress in the other areas on the IPR paper.
  • There’s been agreement on therapeutics, and fisheries, so there are a lot of tangibles outcomes of this deal and it’s going to boost the whole global trading system.

The deals were very important from India’s perspective as India took the lead as far as trips waiver is concerned. India even compromises to increase the availability of vaccines for developing countries.

What kind of agreement has been reached and how significant is it for countries who are earlier not being able to have access to affordable vaccines against 19?

  • WTO members agreed to temporarily waive intellectual property patents on Covid-19 vaccines without the consent of the patent holder for 5 years so that they can more easily manufacture them domestically.
  • This advantage is under open licensing IPR this will help most African nations to avail the accessibility and affordability of Covid-19 vaccines.
  • India’s situation is different as far as the vaccine is concerned. But IPR waiver for vaccines will also help India economically.
  • With the waiver, India would be able to produce mRNA vaccines, and India can further help African countries by exporting a set of vaccine consignments.
  • As far as Covid drugs are concerned, the majority of new drugs India has with open licensing are well stocked as at present there is not much demand for those.
  • India-USA agreement for pandemic preparedness has provided India money as well as technology which India can also share with others without restrictions.

Which countries are set to gain the most from this kind of agreement that's been achieved by 164 member countries?

  • South Africa is more or less self-sufficient in covid-19 vaccines. The countries in western and eastern Africa will be benefitting out the most.
  • Many of the South American countries (except Brazil), as well as some of India’s neighbours like Bangladesh, Indonesia, Thailand and Sri Lanka, will be benefitted from this deal.

A lot of countries will gain from this India-led proposal on the trips paper. India will be able to establish soft diplomacy in the various global forums.

There have been certain compromises, so will this reduce the scope of the proposal that was originally floated?

  • Two aspects were originally proposed by India and South Africa.
    • First, temporary IPR waiver for 3 years or 5 years or till the pandemic will last.
      • What is agreed upon is some tweaking of the compulsory license provisions that a country earlier used to have this provision that it could produce medicines or vaccines under the compulsory license, provided the bulk of it was used domestically.
    • Second, adequate remuneration should not be insisted upon by the patent holder.
  • The above two major provisions have been relaxed in terms of vaccines in a recent meeting.
  • However, India will not be benefitted directly from this deal as India earlier made it very clear that it is fighting on behalf of developing countries which did not have adequate or no capacity at all.
  • As far as therapeutics and diagnostics are concerned, WTO members will have to get together and negotiate it within six months. But going with the nature of WTO meetings is time-consuming.

India has called this meeting a spectacular success, as India was able to defend its stance on fisheries and food subsidies.

What was India’s role in the negotiation process? Though stiff opposition, how does India manage to defend its stance?

  • There have been several compromises in the deal on all sides.
  • Several concerns raised by India on fishing, some of them taken on board:
    • Developed countries that dole to give large tools for fishing were also harming the environment. So, there has been an agreement to reduce subsidies which lead to overfishing.
  • This deal was important because the talks had been going on for many years and now the agreement is that flexibilities have been given to countries about investigations which member countries themselves would be able to carry out in illegal fishing and so on.
  • But there are likely to be more talks on fishing subsidies to come out with a more comprehensive agreement for a crackdown on fishing subsidies and that is likely to happen only in 2023 so there will be a lot of progress.
  • India has been criticizing this deal and was able to protect its interest because India does not carry out large-scale industrial fishing. The subsidy that it gives is minuscule compared to what is given by developed nations so in some ways some things have been achieved in the deal.

What India was supposed to be in this draft agreement, had certain provisions which India was not agreeing to, but the negotiations have taken place and drafted too.

What is the kind of compromise that has taken place to bring all 164 countries together or at par?

  • The WTO passed a multilateral agreement that would curb ‘harmful’ subsidies on illegal, unreported and unregulated fishing for the next four years, to better protect global fish stocks. Since 2001, member states have been negotiating the banning of subsidies that promote overfishing.
  • Basically, there are several instances where India differed in the past:
    • India was with the other members on this that no subsidies should be given for fishing.
    • India also maintained that no subsidies should be given for overfishing of depleted stocks.
    • Another point where India differed was about building up its fishing infrastructure in the exclusive economic zone (EEZ).
  • The western countries and countries like Japan, China, South Korea, etc. have already built up their fishing fleets. Hence, the ban on subsidies will not have an impact on already-fishing subsidised infrastructure countries but it would hit countries like India and Indonesia which were at the forefront of this fight because both want to build up their fishing infrastructure for marine fishing.
    • India, in this regard announced Pradhan Mantri Matsya Sampada Yojana (PMMSY) with a total outlay of Rs.20,000 crores.
  • That is why India in the 12th MC asked for 25 years because the stiff resistance put up by India, Indonesia and a few other countries has been deferred. So, there would be negotiations to get a comprehensive fishery subsidies agreement. To the extent, India has managed to secure its interest for the time being.

As pointed out the interest of India and other countries is secured. Indian concern is, that what has been agreed upon because there is a reduced scope on the TRIPS waiver will do more harm than good and going forth to make it more comprehensive. A lot of other negotiations will have to sail through especially keeping in mind those countries which have been hit hard most by the pandemic because of you know in not access to the vaccines.

What negotiation building up for the next WTO MC?

  • In the case of India, the vaccine scenario is different from drugs. India can manufacture drugs within 34 months of the drug being out and that is why major pharma companies are giving open licensing to India for domestic use only.
  • If the case of vaccine, it is a little complex. Here, the company not only need to transfer technology but also needs to waive IPR and also the capacity to manufacture.
  • Another part over here is the raw material, India gets it from whether EU nations or the USA. However, this raw material had all clamped and India’s capacity to manufacture in large amounts was hampered.
  • The supply chain mechanism is another issue which is expected to be discussed in the next MC. The pandemic and the Russia-Ukraine war exposed the vulnerabilities in the supply chain mechanism.
  • The next meeting would also be seeking cooperation and collaboration among countries like India, China and countries in the West, to fill in gaps around the world. To help themselves and others.

The package of deals which are being held as landmarks can only take care of the short-term benefits for people across the world but will have far-reaching impacts and will have tangible outcomes that have been envisioned. A lot of other coordination and a lot of other scopes have to be broadened in that aspect.

Where do these deals going forward have the kind of tangible outcome?

  • The package of deals has been agreed upon after a long haul of nine years and WTO agreements very seldom take place within a short period.
  • However, this could be considered as an opening door for TRIPS waiver related to medicines and diagnostics. This will be a huge benefit for a country like India which can manufacture these in a short span.
  • Negotiations are expected within the next six months concerning medical devices and diagnostic tools.

The WTO has sent out a strong message by approving this package of deals, but what’s important is that in the face of the pandemic and geopolitical crisis, these are just some short-term benefits. The World Trade Organization (WTO) massive reforms.

What kind of reforms are expected in the 27-year-old trade body?

  • A lot has been achieved in the 12th MC; the agreement after nine years is the biggest takeaway in the multilateral trade body. But a lot needs to achieve in coming meetings.
  • One of the key issues all members would like to address is the rulebook of WTO. What should be done, how should be done and why should be done, are the major controversial questions being raised by various members of WTO’s MCs.

Conclusion

  • In light of the global food shortages and rising prices caused by the war between Ukraine and Russia, the group’s members issued a declaration on the importance of trade in global food security and that they would avoid bans on food exports.
  • All members agreed to continue the long-standing moratorium on customs duties on e-commerce transmissions until the subsequent Ministerial Conference or until March 31, 2024, depending on whichever comes first.
  • The waiver agreed by the WTO was criticized by advocacy groups for being narrow in scope, as it did not cover all medical tools like diagnostics and treatments. “This agreement fails overall to offer an effective and meaningful solution to help increase people’s access to needed medical tools during the pandemic as it does not adequately waive IP on all essential COVID-19 medical tools and it does not apply to all countries,” said Christos Christou, international president of Doctors Without Borders.
  • As per India’s Commerce Minister Piyush Goyal, India is 100% satisfied with the outcome.

https://sansadtv.nic.in/episode/perspective-wtos-landmark-deal-17-june-2022

https://t.me/+hJqMV1O0se03Njk9

 

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