‘Developing nation’: India for voluntary forgoing of benefits

The special and differential treatment allows developing countries longer time frames to implement commitments and greater flexibilities in adopting measures to improve their presence in global markets.

Amid persistent attacks by the US on countries, including China and India, for “self -designating” themselves as developing nations at the World Trade Organization (WTO) to enjoy special and differential trade benefits, New Delhi has rooted for a policy of voluntary forgoing of such a status.

India has also called for expeditiously restoring the almost disfunctional Appellate Body of the WTO for dispute resolution, without diluting its core features. The US has blocked the appointment of judges, thus crippling the WTO’s appellate mechanism. In its recent submissions with the WTO, India has also stressed that any reform agenda must be “development-centric, preserving the core values of the multilateral trading system and strengthening the provisions of special and differential treatment” for poor and developing countries in both existing and future agreements.

Meanwhile, India’s seventh Trade Policy Review (TPR) at the WTO concluded in Geneva on Friday. The TPR is a mechanism under the WTO in which members’ trade and related policies are examined by the trade body with an aim to improve adherence to its rules.

“The premise that developing country Members, who consider themselves in a position to do so, may voluntarily decide to forgo the S&DT (special and differential treatment ) in current and future negotiations appears to be a more acceptable solution,” India has said in its submission in November.

US President Donald Trump had expressed disappointment with the WTO for allowing nations that, he believed, were actually rich to “self-designate” themselves as developing countries to grab assorted benefits. His administration had sought a review of this policy, among others.

The special and differential treatment allows developing countries longer time frames to implement commitments and greater flexibilities in adopting measures to improve their presence in global markets.

For instance, developing countries are allowed to provide considerably larger input subsidies and minimum price support (they can offer product-specific farm subsidies up to 10% of the value of production, against 5% for developed countries, although the latter enjoy other flexibilities). Further, developing countries will continue to provide indirect export subsidies, covering internal transport and marketing, until 2023, five years after the deadline for elimination of all forms of export subsidies.

At the meeting, India stressed that S&D treatment for all developing and least developed countries is a core principle of the WTO that needs to be preserved. “While some developing members may have made progress, the gaps in the levels of development still persist and have even widened in some areas,” it said. Further, new divides, especially in the digital and technological spheres, have become more pronounced.

As FE has reported, analysts say while the US demand for a change in the status quo has some merit, as some of the richest countries — such as Singapore, South Korea, Saudi Arabia, Brunei, Hong Kong and Qatar — and the world’s largest goods trader, China, claim to be developing to enjoy certain benefits, targeting India in the same breath is disingenuous by any stretch of imagination. This is because in several indicators of development, such as per capita income, poverty, undernourishment, hunger, farm employment and adoption of B2C e-commerce, India still lags even some of these developing nations.

India also highlighted that the resolution of the impasse in the Appellate Body must precede other reforms, as “there is little incentive in negotiating new rules in the absence of an independent and effective guarantor of those rules”.

Any agenda for reform must also preserve the multilateral character of the WTO, including consensus-based decision making. “In order to be widely acceptable, discussions on WTO reform should be premised on the principles of inclusivity and equity,” India said.

A good starting point for the reform agenda would be the elimination of unequal and trade-distorting entitlements of developed countries in the Agreement on Agriculture. According to a paper submitted with the WTO earlier by India, China and others, the US’ domestic support per farmer was $60,586 in 2016, 267 times of India’s ($227), although Beijing’s support ($863) was almost four times of New Delhi’s. Massive subsidies have led to huge competitive advantage of farm products of developed countries in the global market. While agriculture accounts for less than 2% of the total employment in the US, it is as much as 44% in India and 20% in China.