The WTO’s Ministerial Conference (MC)- UPSC Current Affairs
In today’s edition of our Current Affairs Dialog box, we will discuss The WTO’s Ministerial Conference. Navigate through the blog to understand the topic in detail and enhance your UPSC CSE Preparation Online.
For Prelims: Economics; International Organisation
For Mains: Important International Institutions, Agencies and their structure and mandate.
The WTO’s 12th Ministerial Conference (MC12) took place from 12 to 17 June 2022 at WTO headquarters in Geneva. The Conference was co-hosted by Kazakhstan. It was originally scheduled in June 2020, but the conference was postponed due to the COVID-19 pandemic.
About the Conference
The Ministerial Conference (MC) is at the very top of WTO’s organisational chart. It meets once every two years. This year’s conference (MC12) took place in Geneva, Switzerland.
- Unlike other organisations, such as the IMF or World Bank, WTO does not delegate power to a board of directors or an organisational chief.
- All decisions at the WTO are made collectively and through consensus among member countries at varied councils and committees.
Major Issues discussed in MC12
- Food grains export prohibitions: Countries including India are banning export of food grains such as wheat. There are apprehensions that such measures will further worsen the food crisis in poor countries.
- Subsidies for Fishery: Many countries are providing subsidies for overfishing and unsustainable fishing industries. India vouched for putting limits on such subsidies.
- E-commerce: Unlike physical trade of goods and services, e-commerce buying and selling has no mechanism of imposing custom duties. Due to the digital divide, this unregulated trade works in favour of developed countries and causes huge losses to underdeveloped and developing countries.
- Patent Relaxations: COVID19 Pandemic affected everyone across the globe. However, due to scientific advancements and availability of financial resources, developed countries were able to find out vaccines earlier than poorer countries. Now, since these medical inventions are protected under patent laws, LDC and developing countries are not able to reproduce them causing a huge impact on innocent populations.
Key Takeaways from MC12
- Negotiators agreed that member countries would not impose export prohibitions or restrictions on foodstuﬀs purchased for humanitarian purposes of the WFP. However, member countries can adopt measures for ensuring domestic food security.
- The central premise of the agreements was to ensure availability, accessibility and aﬀordability of food to those in need, especially in humanitarian emergencies.
- It instituted a programme to come up with measures to help LDCs (least developed countries) and NFIDCs (Net Food Importing Developing Countries) enhance their domestic food security and bolster agricultural production.
- There would be no limitation on subsidies granted or maintained by developing or least developed countries for ﬁshing within their exclusive economic zones (EEZ).
- India successfully managed to carve out an agreement on eliminating subsidies to those engaged in illegal, unreported and unregulated ﬁshing leading to overfishing.
- Overﬁshing refers to exploiting ﬁshes at a pace faster than they could replenish themselves.
- Declining ﬁsh stocks threaten to worsen poverty and endanger communities that rely on aquatic creatures for their livelihood and food security.
Electronic Transmission (ET)
- Member countries agreed to extend the current moratorium on not imposing customs duties on electronic transmission (ET) until MC13 scheduled to take place in December 2023.
- Majority of the countries which includes the US, the UK, Australia, China and Japan among others, had sought an extension of the moratorium, with India and South Africa being in opposition.
- Broadly, ETs consist of online deliveries such as music, e books, ﬁlms, software and video games. They diﬀer from other cross border ecommerce since they are ordered online but not delivered physically.
- The data from the UN Conference on Trade and Development submitted that extending duty free market access due to the moratorium resulted in a loss of $10 billion per annum globally, 95% of which was borne by developing countries.
- Developing countries are at a disadvantaged position due to lack of digital advancements.
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- Member countries agreed on authorising the use of the subject matter of a patent for producing COVID19 vaccines by a member country, without the consent of the rights holder. Further, it asks member countries to waive requirements, including export restrictions, set forth by WTO regulations to supply domestic markets and member countries with any number of vaccines.
- Several LDCs have suffered in their efforts to combat the now nearly three-year-old pandemic, owing to factors such as a stressed balance of payments situation, diﬀerent levels of development, ﬁnancial capabilities and varying degrees of import dependence on those products.
- Within the next six months, members are expected to decide on increasing the scope of the agreement to cover the production and supply of COVID19 diagnostics and therapeutics as well.
In brief, the World Trade Organisation (WTO) is the only international organisation dealing with the global rules of trade.
Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
The WTO came into being in 1995. It is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War.
Location: Geneva, Switzerland
Established: 1 January 1995
Created By: Uruguay Round Negotiations (1986-94)
Membership: 164 Members Representing 98% Of World Trade
The WTO has 164 members, accounting for 98% of world trade and 25 observer states.
WTO’s secretariat is based in Geneva, Switzerland. Decisions are made by the entire membership.
This is typically by consensus. A majority vote is also possible, but it has never been used in the WTO.
The WTO’s top-level decision-making body is the Ministerial Conference, which meets usually every two years.
Below this is the General Council (normally ambassadors or heads of delegation based in Geneva but sometimes officials sent from a member’s government) which meets several times a year in the Geneva headquarters.
The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.
At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council
The WTO’s overriding objective is to help trade flow smoothly, freely and predictably.
It does this by:
Administering WTO trade agreements
Acting as a forum for trade negotiations
Settling trade disputes
Reviewing national trade policies
Building the trade capacity of developing economies Cooperating with other international organisations
Basic Principles of the WTO Agreements
Principle of MFN (Most-Favoured-Nation) Treatment
Principle of National Treatment
Principle of General Prohibition of Quantitative Restrictions
Principle regarding Tariffs as Legitimate Measures for the Protection of Domestic Industries
Some Important WTO Agreements
Uruguay Round negotiations (1986- 94)
The Uruguay Round created new rules for dealing with trade in services and intellectual property and new procedures for dispute settlement.
Through these agreements, WTO members operate a non- discriminatory trading system that spells out their rights and their obligations.
The Marrakesh Agreement, for implementation of Uruguay negotiations and establishment of the WTO, and its annexes (including the updated GATT) has become the WTO’s umbrella agreement dealing with specific sectors relating to goods and with specific issues such as product standards, subsidies and actions taken against dumping.
Some other agreements related to Goods are;
Agreement on Agriculture (AOA) (Came into force in 1995)Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures (Came into force in 1995)Agreement on Trade-Related Investment Measures (TRIMs) (Came into force in 1995)Trade Facilitation Agreement (TFA) (Came into force in 2017)
Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad enjoy the same principles of more open trade that originally only applied to trade in goods.
These principles appear in the General Agreement on Trade in Services (GATS). (Came into force in 1995)
WTO members have also made individual commitments under the GATS stating which of their service sectors they are willing to open to foreign competition, and how open those markets are.
The WTO’s Intellectual Property Agreement (TRIPS) contains rules for trade in ideas and creativity. (Came into force in 1995)The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs and undisclosed information such as trade secrets – “intellectual property” – should be protected when trade is involved.
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