Topic 1 : WTO’s existential crisis
Introduction: Amidst media hype, the 13th biennial ministerial meeting of the World Trade Organisation (WTO) ended without significant accomplishment. The WTO member countries could not agree on how to solve several issues staring at the international community.
Major let down by recent ministerial meeting of WTO
1. Solution of Public Stockholding programme
- The public stockholding (PSH) programme is the sovereign right of countries, the WTO rules throw a spanner in the works.
- One of the central objectives of the WTO is to cut trade-distorting domestic subsidies.
- There are limits to the subsidies a country can provide, such as minimum support price (MSP).
- The WTO rules provide that this price support will be assessed using an average price of the base years 1986-88, which is more than three-and-a-half-decades old.
- It thus becomes challenging for countries like India to pursue PSH programmes using the instrumentality of MSP.
- This issue is significant as the farmers of Punjab have hit the streets again demanding a legal guarantee to MSP.
- While countries agreed upon a peace clause in 2013, which provides some legal immunity to India’s MSP policy, it is insufficient.
- Conscious of this, India has been negotiating hard for a permanent solution.
- But the recent ministerial meet came a cropper on this.
- It seems the US and other agricultural exporting nations, also known as the Cairns group, have, again, succeeded in blocking any meaningful movement on this issue.
- India must continue striving for the PSH solution.
- But it will also have to think of new ways to support farmers, such as augmenting existing income support schemes like the Pradhan Mantri Kisan Samman Nidhi that are WTO-compatible.
2. Solution to the subsidy for overfishing
- The next important issue on which the ministerial failed is regulating subsidies given by the industrialised world to their industrial shipping fleets indulging in overcapacity and over-fishing (OCOF).
- OCOF has led to a substantial depletion of fishing stock posing a grave threat to the marine environment.
- India has been demanding binding rules to rein in these subsidies, with a transition period for developing countries to implement these rules.
- But, once again, the richer countries prevailed by ensuring that no rules were adopted.
3. The dysfunctioning of the Dispute Settlement Body
- Another major letdown has been the failure to make any significant headway toward solving the crisis affecting the dispute settlement mechanism (DSM).
- Hailed as a feather in the WTO’s cap, the DSM has been paralysed since 2019 due to the US blocking the appointment of the members to the Appellate Body (AB) — the second tier of the two-tier DSM.
- While WTO member countries have reiterated their commitment to having a well-functioning DSM by the end of 2024, the writing on the wall is clear.
- The US will not allow the restoration of the AB as it existed till 2019.
- The most significant proof of this is how the developed countries led informal and non-transparent negotiations on dispute settlement last year.
- Perplexingly, the talks focussed, not on the dysfunctionality of the AB, but on other issues that perhaps don’t need critical attention.
The effort to de-judicialisation of global trade by USA
- India, one of those demanding the restoration of the body, must understand the US game plan — the de-judicialisation of trade multilateralism.
- The WTO was created when the neoliberal consensus emerged after the Cold War and the collapse of communism.
- This period saw not just the legalisation of international relations (countries subjecting themselves to international law) but also its judicialisation (the expansion of international courts and tribunals that dominate decision-making in place of national actors).
- De-judicialisation, as Daniel Abebe and Tom Ginsburg define it, is the reverse phenomenon where countries weaken international courts to take back decision-making power.
- This is what the US seems to be doing with the WTO’s dispute settlement.
- It has wrested control from the AB to unilaterally respond to the geo-economic challenges that a rising China presents.
Conclusion: This ministerial deepened WTO’s existential crisis. It shows that trade multilateralism is beset with problems, pushing the world to higher levels of uncertainty and volatility.
Topic 2 : The Bhutan model
Introduction: Prime Minister Narendra Modi’s visit to Bhutan last week underlines the special importance of the Himalayan Kingdom for India’s foreign policy.
The significance of the current visit and the looming China question
- The urgency of the visit, as well as its many substantive outcomes, relate to the ghost in the room during PM Modi’s talks with the leadership in Bhutan — China.
- The economic rise of China and its growing political assertiveness over the last few decades has allowed Beijing to contest India’s natural primacy in the Subcontinent.
- With China’s economy now more than four times larger than India’s, Beijing’s capacity to deploy financial resources in South Asia has become much bigger.
- Even when China’s economy was weaker than India’s, Beijing focused on strategic economic cooperation with the Subcontinent.
- As the world’s second-largest economy and neighbour to the subcontinent, China’s economic salience in South Asia is now powerful and enduring.
China’s appeal has increased in India’s neighbourhood
- China’s wealth has generated a variety of tools to enhance its political and diplomatic clout in other nations.
- Beijing’s influence and operations to capture critical elements of the elites and set favourable narratives have been visible all around the world.
- It is no surprise that India’s smaller neighbours find it hard to resist these pressures.
- Nowhere are they more consequential than in Bhutan, nestling in the sensitive eastern Himalayas, where the frontiers of Bangladesh, India and its north-eastern provinces, Nepal and Tibet converge around the sensitive Siliguri Corridor.
- China-controlled Tibet’s Chumbi Valley on the western flank of Bhutan is positioned like a dagger down the throat of the narrow Siliguri Corridor that connects India’s mainland with its north-eastern provinces.
- China’s growing activity in this region led to serious military tensions between Delhi and Beijing in Bhutan’s disputed Doklam plateau during the summer of 2017.
Why Bhutan is important for India?
- Bhutan is India’s most steadfast South Asian partner in the subcontinent, and it has no formal diplomatic relations with China.
- Yet Beijing has been mounting relentless pressure on Thimphu for a favourable border settlement and demanding a bilateral relationship equal to that with Delhi.
India’s realist foreign policy vis-à-vis China
- As External Affairs Minister Subrahmanyam Jaishankar puts it, India had long neglected the nature of China’s growing South Asian challenge in the name of building good relations with Beijing.
- Delhi is now realistic enough to recognise that it can’t sustain its historic primacy over South Asia by mere fiat.
- It also knows it can’t keep China, the world’s second most powerful nation, out of the Subcontinent.
- Delhi’s focus now is on offering deeper economic cooperation to its neighbours, treating them as sovereign equals, and developing mutually beneficial security cooperation.
- PM Modi’s visit to Bhutan is about translating that framework into concrete reality.
- The joint statement issued after the PM’s visit said, “Bharat for Bhutan and Bhutan for Bharat is an abiding reality of the region”.
- Delhi and Thimphu backed up this claim with strong commitments to greater consultation and coordination on security issues and building transformative economic connectivity, both physical and digital.
Conclusion: Although each of India’s relations with its neighbours has a unique complexity, getting Bhutan right could provide a productive template for the rejuvenation of India’s rocky relations with other neighbours.