Linking of WTO reforms by developed countries with S&DT(special and differential treatment) unfair: Piyush Goyal

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Recently, India’s Commerce and Industry Minister Piyush Goyal suggested that the WTO must ensure that the rules are seen for every country. The WTO must ensure that it works transparently. Without naming any country, the minister said that the developed nations are pressurizing the WTO to work only in their favour. The minister said that India, unlike many other countries, has been 100% transparent with every decision of the government.

Disclaimer: This is his words, not my words. So this is what he is saying.

The minister also said that the developed nations should not expect similar treatment to be given to developing nations or the poor income nations. The minister said that if a country has $600 as a per capita income, the country cannot be treated on the same lines as another country having $60,000 as a per capita income. So there has to be a different parameter for dealing with countries in the WTO.

Now this gives us a chance to look at the working of the WTO and what is a fight between the developing and the developed nations.

Firstly understand this, as per the WTO, there is no definition of developed or developing nations. A government is free to decide whether or not they want to be a developing nation or a developed nation. So if the government of India tomorrow stands up and says that we are now a developed nation, there is no one who can stop India from doing that.

So why do we say we are a developing nation?

Because if we consider ourselves as a developing nation, then we get certain preferential treatment from the WTO. For example, if the WTO says that we should cut down on the taxes, then the developed nations have to do it as soon as possible. Developing nations get a little more time to implement those policy changes. That is why we prefer being called a developing nation as compared to a developed nation.

You would have noticed recently when Donald Trump was a US president, he had raised objections about India and China, still calling themselves a developing nation and taking advantage of the WTO rules, but we are free to do that.

Another interesting fact here is that India is a blend country. 

Now, what do you mean by a blend country?

I’m sure all of you would have known about the World Bank Group. The World Bank has multiple components out of which I will discuss two (i.e) IBRD (International Bank for Reconstruction and Development) and IDA (International Development Association). Now, both of these arms of the World Bank give loans to the countries. The difference is that the countries that are the poorest in the world get loans from IDA. On the other hand, the countries which are not that poor, take loans from the IBRD. Obviously, the rate of interest of IDA is much lower.

Now, the World Bank says that IDA will be giving loans to those countries that have a per capita income of $1145 or lower than that. If a country has a per capita income higher than this, then their loan will be given by the IBRD at a higher rate of interest.

Now let’s take the case of India. India’s per capita income is more than this number, but when we have to take a loan from the World Bank, we say, No, no, no, we still will take a loan from the idea. Why?

Because see, we are still very poor. So although our per capita income level is above the IDA parameter, but we still take loans from the IDA and some loans from the IBRD also. Why?

Because we want to take advantage of our status as a poor or a developing nation. So India, in that sense, is a unique country where we are the Vishwa Guru in the morning, but in the evening time, we want to be a poor country in the world so that we can take loans had a lower rate of interest as compared to the others. That is why India is called a blend country. Blend country means those nations which actually take loans from both arms and it’s not that India is the only one. There are some other countries also that are in this particular category.

There is one more issue about the WTO that you need to understand. WTO has a body called the WTO appellate body. Under this, decisions taken by the WTO can be appealed by the governments. This appellate body is usually a seven-member body, and it requires a minimum of three members to hear any case. However, since the end of 2020, this body has had zero members. Why?

Because the US believes that the WTO is not working in our interest. So the US has stopped the appointment to this body. Since 2020, it has had zero members, meaning that it has not had any meetings and the US has not allowed the appointment of any new member. So all the appellate cases are still pending here. The US is like that kid, you know, who wants a cricket bat, but I will not allow anyone else to play if you don’t play by my rules.

Now, can the US do that?

Yes, it can. Why?

Not because the US has the most power in WTO. But because the law is, the WTO works on the basis of consensus. So all the decisions of the WTO will be taken when every country agrees to that and if the US says no, the countries who are scared of the US won’t put a lot of pressure. That is why, since 2020, this body has had zero members. In fact, it has not been working since 2019, when only one member was available. But in 2020, even that single member’s tenure got over. Since then, it has had no members, so you can see WTO has become a punching bag for the countries who just want to push it according to their requirements.

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Hi, I am Vishnu, and I have been a blogger for more than 2 years now; and I will provide some knowledgeable current international news to my readers.


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