Economic
Highlights
New Delhi, 18 June 2018
Changing WTO
HAS IT OUTLIVED LIFE?
By Shivaji Sarkar
World trade is changing fast and in a unilateral
direction. The US President Donald Trump is deciding the course. He raises the
pitch, shouts at his G7 colleagues, reprimands India and to the surprise of all
flies in to Singapore long before the talks were to begin with Supreme Leader
of North Korean President Kim Jon Un and waves olive branch to the enemy number
one.
No one knows what denuclearisation Kim has
done. A war that had begun in 1953 certainly has come to an end. The supposed
unpopular Trump has done what a popular former US President Barack Obama could
not do. He used his tariff hike against China, South Korea and Japan to kowtow
his line, help him in negotiations with Kim and the ultimate solution. Would it
also force China to change its tack in South China Sea? Not unlikely.
The White House is likely to use the summit to frame Trump as a
daring peacemaker as he heads into troublesome midterm elections. He is
emerging as the biggest negotiator and at his terms. It puts all multilateral
dialogues including World Trade Organisation in the shadow.
Is the US undoing what the Dunkel Draft, Marrakesh agreement and
GATT replacement had done to establish
World Trade Organisation (WTO) on January 1, 1995? The US had many
reservations. It had never agreed to many issues, including on agriculture,
pollution and now steel.
India has benefited from the multilateral organisations be it
GATT, WTO or others. It has effectively used WTO to impose anti-dumping duties
on exports from China, Malaysia, Korea, Thailand, South Africa and the US.
After the March hike on duties on steel and aluminium by Trump,
India moved the WTO for 100 per cent duties on 20 products like almonds,
apple and specific motorcycles imported from the US from next month.
India hoped if it hit the small
farmers there it would pressurise the US government. Trump instead of rolling
back the duties on steel hit out at India at G7 meet in Canada. He said, “This isn’t just G7.
I mean, we have India, where some of the tariffs are 100 per cent. A hundred
per cent. And we charge nothing. We can’t do that.” He even went out to
threaten to stop doing trade with countries “who are being unfair” to the US.
He was specific and asked why India should levy 100 per cent tariff on Harley
Davidson imports and zero on Indian bike exports to the US.
India never faced such situation before. It
has to invent new strategies. It
has certainly put New Delhi in a piquant situation. Trump has projected India as
the highest beneficiary of American largesse. It was sharper than what Obama did
to stop Indian ingress in the Silicon Valley. Trump did not leave anyone. He was
caustic with Canada, France and Germany. The world’s richest country is today
non-accommodative.
India has to look for a new strategy. It is
the largest beneficiary of the US generalised system of preferences (GSP). It
allows 3,500 Indian products, including chemicals, textiles, engineering, gems
and jewellery, access to US markets at zero or very low tariffs. Through GSP,
India exports $5.6 billion every year.
Trump has questioned Indian swadeshi and
sought the relevance for “Buy American”. He says, “Fair trade is to be called
Fool trade if it is not reciprocal”. An answer to this is not easy to find.
Every country wants to increase its access to the richest US. Trump’s shrill
cry that the US is the piggy bank for everyone has now made the world rethink.
India’s immediate concern is not merely
Trump’s ante but its exports, rise in current account deficit (CAD) to $13
billion or the trade gap that has risen to 1.9 per cent of GDP from 0.6 per cent.
The rise in oil price, fall in rupee value
and not so bright other activities are a matter of concern. India is not in a
position to make sharp criticism as French President Emmanuel Macron did at G7
after Trump left for Singapore, “international co-operation could not be dictated by fits of
anger and throwaway remarks”. Or make a remark like German Chancellor Angela
Merkel who said, “Mr
Trump's decision to reject a joint communique was “sobering” and “depressing”.
But finally at G7 there was a
joint communiqué. So Trump disagrees to agree. This possibly is his winning
style. India has to learn from it. It is just not making friends that
international diplomacy is but also calling a spade a spade.
Trump has successfully done
that to shed his image of being a war monger as Macron would like to say but to
extract the maximum from the world community. It is a different negotiating
process.
The world has to realise that 23-year-old
WTO has seen many changes since 1995. The voice against GATT was being raised
before 1970s. The WTO may have outlived its life. It cannot be a mere distress
resolving mechanism for the downtrodden. The world may have to rethink how to
maintain multilateral organisations, not only for dispute resolution but also continuing
the dialogue.
Trump has exhibited that he can
blow hot or cold but he takes to a solution -- of course that is to his liking.
He is shrill but gets to his point through negotiated settlement as did with
Kim and nobody knows that he has really given up his nukes. Kim has been sharp
enough to agree to talk and get away with it.
This is the new world
diplomacy. Countries would have to adapt to the new situation. As the world
economy is in turmoil, conflicts are natural. However, these cannot turn into a
bloody brawl. Diplomacy is becoming sharper, subtler and swift. The WTO may
have to be replaced or renegotiated but simultaneous dialogues – track two or
three diplomacy – have to continue.
The world with NAFTA, ASEAN,
EU, BRICS and SCO is becoming more regionalised. Swadeshi is the global
theme causing conflict and regional comfort.
The world is integrating and ghettoised. Interests are overlapping.
There has to be more give and take. The countries who understand it would be
the winner. Changing the tack, however, is a must, including for India for
leading the process of world integration and progress.---INFA
(Copyright, India News & Feature Alliance)
|