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How India — not China — will steal the show at upcoming trade conference

With just two weeks to go before the 12th ministerial conference of the World Trade Organization (WTO), known as MC12, the United States and other members are busy trying to manage expectations, mostly downward. And while much of the conversation centers on what to do about China, no country has done more to set the tone for MC12 than India, and not for the better.

India’s trade policy is fascinating. It’s a blend of old-school tariffs and state-of-the-art protectionism. A 2020 Trade Policy Review conducted by the WTO finds India at a crossroads, looking to shore-up manufacturing while promoting services and agriculture. The country has set the goal of boosting its share of global exports to 3.5 percent, and is liberalizing its foreign direct investment regime to get there. Yet, India’s emphasis on “self-reliance” isn’t helping. Its tariff regime is highly volatile, many of its standards and technical regulations are confusing and its push to “localize” foreign firms is self-defeating. It’s as though, for domestic political reasons, India is locking in the past despite its future economic plans. 

Reflecting this tension, India, often with South Africa, has been lobbing bombs at the WTO in the run up to MC12.

First, there was the waiver on various forms of intellectual property to fight COVID-19, under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Called the “TRIPs waiver,” this three-page proposal was long on preamble and short on detail. The second draft didn’t clarify much, but capitalized on the unexpected support the first draft received from the United States. The waiver proved a useful distraction from India’s tariffs on pharmaceuticals, as well as on all 13 inputs needed to make a vaccine. Europe’s opposition to the waiver stands in the way, but this push back is exactly what India and South Africa wanted to foment, driving a North-South wedge in the MC12 talks.

Keep in mind that, since 2016, India has been busy upgrading its intellectual property laws, joining various World Intellectual Property Organization treaties and investing more in knowledge-intensive industries. Against this backdrop, the TRIPs waiver is no more in India’s interest than it is in the global economy’s, quite apart from the fact that it won’t work. 

Then came the encore performance: a challenge to the legality of “plurilateral” deals at the WTO. These are smaller deals among a subset of the members, a “coalition of the willing,” as it were. These plurilateral deals have been a lifeline for the WTO, allowing the institution to chalk up legislative wins that would otherwise be nearly impossible among 164 veto-wielding members. This put the WTO on its heels at a time when the other function of the institution — dispute settlement — is in doubt because the U.S. refuses to unblock the Appellate Body.

The irony here is that India is a party to the original Information Technology Agreement and an observer to the Government Procurement Agreement, both plurilaterals. Moreover, it’s hard to imagine India diversifying its services exports unless the Trade in Services Agreement is successful. 

India then took aim at the fisheries talks. The new director-general of the WTO, Ngozi Okonjo-Iweala, has been keen to deliver on these talks at MC12. The issue is over-fishing and the subsidies that contribute to it. By all accounts, there has been real progress in these talks, but India wants more latitude as part of a “special and differential” treatment for developing countries. This is widely seen as unproductive. But, like the TRIPs waiver and its opposition to WTO plurilaterals, India wasn’t looking for buy in. The point was to set the tone for MC12.

Then, just days ago, India and South Africa came out against the WTO’s moratorium on e-commerce customs duties. This, too, should have been low-hanging fruit for MC12. But India and South Africa aren’t having it. They insist the moratorium unduly hurts developing countries. The six-page document says rich countries dominate e-commerce, and that poor countries can’t do without the tariff revenue. This is regrettable. There’s no moral high ground to claim, and so India and South Africa simply call for a more careful study of the issues.

There’s a lot at stake in MC12. And while talk of China will invariably grab the headlines, the reality is that India is already the star of the show. It can continue to peddle its narrative of protectionism, or it can pivot at MC12 and help strengthen the WTO, which India’s economy will desperately need by the time MC13 rolls around.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University. Follow him on Twitter @marclbusch.

Tags China Foreign direct investment India International trade law Protectionism TRIPS Agreement Waiver from certain provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19 World Trade Organization WTO

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