Ankita Tyagi & Rakshit Tyagi | 18th July 2023
As the G20 president, India faces a significant opportunity to enhance global institutions like the World Trade Organization (WTO) by addressing the divergences between developed and developing nations. This endeavour has the potential to be one of India’s most notable accomplishments of the 21st century. To achieve this, it is crucial to understand the key contentious issues between countries. In an increasingly interconnected and interdependent world, multilateralism serves as a crucial framework for fostering dialogue, negotiation, and collective decision-making on various political, economic, social, and environmental issues.
A holistic overview of challenges
The WTO needs to bridge imbalances and gaps, including issues related to market access, tariffs and subsidies, special treatment, negotiating capacity, capacity building, and dispute settlement between developed and developing countries. Addressing these challenges is crucial for fostering a more equitable and inclusive global trading system.
• Market access: Developed countries have more open markets while developing countries face barriers to accessing developed markets.
• Tariffs and subsidies: Developed countries maintain higher tariffs and subsidies, making it difficult for developing countries to compete.
• Special treatment: The WTO provides special provisions for developing countries to address their unique challenges.
• Negotiating capacity: Developed countries have more resources and expertise for effective negotiations, giving them an advantage.
• Dispute settlement: Disputes between developed and developing countries can be complex, with developing countries facing challenges in navigating the process.
Major issues between India and the WTO
There are a few disputes between India and WTO that need to be addressed:
a. The Agreement on Agriculture includes a “peace clause” that allows countries to exceed subsidy limits for food security programmes without facing WTO retaliation. India invoked this clause after breaching subsidy caps for rice farmers, raising concerns from other countries about market distortions and unfair advantages.
b. Under the TRIPS agreement, developing countries raise concerns about the limited access to affordable medicines, the need for technology transfer, protection of traditional knowledge and biodiversity, enforcement challenges, flexibilities and special treatment, and balancing intellectual property rights with public interest. They seek measures to address these issues and ensure fair and equitable outcomes. Developing countries stress the significance of maintaining flexibilities and special provisions within TRIPS. These provisions enable them to tailor their intellectual property systems to suit their specific developmental needs, taking into account their economic and technological limitations. Developing countries also consistently highlight the need to strike a balance between safeguarding intellectual property rights and promoting public health, education, and access to essential goods and services. They argue for the recognition of the social and economic aspects of intellectual property rights.
New challenges with digitization
Cross-border data flows have become increasingly important in the digital age, enabling the exchange and storage of information across borders. However, there are several challenges associated with it such as unequal access to technology and internet connectivity creates a digital divide between countries. This divide can hinder the participation of developing nations in cross-border data flows, exacerbating economic and social disparities. Addressing these challenges requires international cooperation, the development of common standards and frameworks, and promoting trust and transparency in cross-border data flows.
• Sui generis framework
With the digitalisation of all sectors, economies are all about data and its flow across borders. In digital economies, access to data is of crucial importance and must be available for all which poses significant risks on legal and technical fronts. As AI integration in various sectors is bringing another set of challenges, a guiding framework needs to be drafted and implemented encompassing various factors.
In view of legal cases and decisions legal frameworks are still evolving but a lot needs to be done. A sui generis framework is of critical importance which will provide guidance on harmonising basic rules and regulations on the access, collection, use, monetisation, etc. of personal and non-personal data for unhindered cross-border data flow.
• Data monetisation
Various comprehensive data protection frameworks have been implemented and proposed by various jurisdictions (personal data, as data that identifies a person or makes a person identifiable, through data protection rules, fore.g., the General Data Protection Regulation in the EU or India’s Draft Digital Personal Data Protection Bill, 2022. The necessity to recognise data monetisation as an aspect of enforceable legal rights is currently unmet and unregulated. To develop the frameworks, more discussions with stakeholders are required. There is also discussion about whether monetisation will fall under the purview of intellectual property or another kind of rights.
It is now widely acknowledged that sharing data will generally foster innovation in the service of society and in light of numerous objectives of general interest. Legal frameworks that encourage voluntary data sharing should, therefore, be supported, especially those that deal with licensing. Legislators have begun to pass new data access and use rights legislation in cases where data holders refuse to release data in order to control markets, particularly aftermarkets. This is done in an effort to make data more widely accessible.
• Liberalisation of trade
Traditionally, the movement of service professionals across borders has been regulated by individual countries’ immigration policies and agreements between nations. The WTO’s General Agreement on Trade in Services (GATS) provides a framework for countries to negotiate the liberalisation of trade in services, including the temporary movement of service providers. The GATS encourages member countries to ease restrictions on cross-border trade in services, including the temporary movement of service professionals, such as business people, consultants, and other skilled workers. Right now the WTO does not have the authority to determine immigration policy for individual countries. It is primarily concerned with promoting free trade and reducing barriers to international commerce.
That being said, the WTO has recognised the importance of services trade, including the movement of service professionals across borders. In fact, the General Agreement on Trade in Services (GATS), which is a WTO agreement, specifically addresses the issue of the movement of natural persons for the purpose of providing services.
WTO should work with the member countries to facilitate the temporary entry of professionals from one place to another, The GATS agreement must be revised to make it a compulsory law for all the member countries and not just a framework. The agreement must consider the professionals not as immigrants but as service providers, Manpower for services should come under the liberal regime. This will help the global economy to grow at a tremendous pace.
How G20 can play a crucial role in revitalising WTO?
As G20 is mix of developed and the developing world as well as a global forum for economic cooperation it can play a crucial role in advancing WTO reforms. Here are some potential actions that the G20 could take:
1. Supporting multilateralism: The G20 can reaffirm its commitment to multilateralism and the rules-based trading system. This could include a joint statement by G20 leaders at a summit, stressing the importance of the WTO and the need for reforms to strengthen it.
2. Prioritising WTO reforms: The G20 can prioritise WTO reforms as a key agenda item at its meetings. This could involve setting up a working group or task force to identify specific areas for reform and developing proposals for action.
• Addressing dispute settlement: The G20 can address the issue of dispute settlement in the WTO, which has been weakened due to the United States (US) blocking the appointment of new judges to the WTO’s Appellate Body. The G20 can urge the US to lift its blockage and work towards finding a solution.
1. Addressing trade imbalances: The G20 can work to address global trade imbalances, which ordinarily contribute to trade tensions and undermine the functioning of the WTO. This could include initiatives to reduce trade barriers and promote trade liberalisation.
2. Promoting sustainable development: The G20 can promote sustainable development through trade, which can help to address social and environmental issues. This could include initiatives to promote fair trade and sustainable production practices.
Overall, India can play a critical role in advancing WTO reforms by providing political leadership and promoting cooperation among its member countries. By working together, the G20 can help to ensure that the WTO remains a key institution for promoting global economic growth and development.
World Trade Organisaion, G20 and T20, Digitalisation, Data Monetisation
This article, co-authored by Ankita Tyagi with Rakshit Tyagi was published on the T20 website. For the original article, please head to https://t20ind.org/research/towards-reformed-multilateralism1/.