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Economy

India, US combine to stymie WTO ministerial meeting

Washington's blocking of appellate body appointments may worsen trade rows

Indian activists protest the World Trade Organization's ministerial conference at the hotel where the meetings were being held in Buenos Aires on Dec. 12.   © Reuters

BUENOS AIRES/GENEVA -- The World Trade Organization ended its latest ministerial conference on Wednesday with no declaration in its first such meeting since U.S. President Donald Trump took office.

Although no major deal had been expected, member states failed to agree even on minor proposals, many of which were blocked by India. This was the first time WTO was unable to publish a ministerial statement since 2011, when arguments between developed and developing countries led to an impasse.

WTO Director-General Roberto Azevedo expressed frustration after the conference, saying, "We have to bear in mind that multilateralism doesn't mean that we get what we want," adding, "I think we need to do some real soul searching."

There was no progress on minor agenda points, such as cutting fishing subsidies, which many observers were optimistic about before the conference began. "The sad reality is that we did not even agree to stop subsidizing illegal fishing," said EU Trade Commissioner Cecilia Malmstrom, afterward. Agreeing to scrap such subsidies had been seen as primarily an environmental issue, and one that had a better chance of bringing members together, in contrast to actual moves to free up trade.

U.S. Trade Representative Robert Lighthizer, left, and Mexican Economy Minister Ildefonso Guajardo talk at the WTO ministerial conference in Buenos Aires on Dec. 11.   © Reuters

Intransigent India, churlish China

According to diplomatic sources, India staunchly defended its payments to farmers and fishermen, arguing that they are crucial to maintaining food security and protecting the poor. "India didn't even pretend to listen in order to make some progress in discussions," one diplomat told the Nikkei Asian Review. Since WTO deals are agreed by unanimous consensus, India's refusal to budge meant no action was taken on the issue.

For years India has guarded its right to maintain government stockpiles of grains, purchasing commodities from farmers at prices far above world market levels. India won a temporary exemption from action under the WTO's dispute-settlement body in past ministerial meetings, and has since pushed to make the exemption permanent in exchange for agreeing to other deals.

Diplomats said China, which often clashes with the U.S. over trade, stayed out of the spotlight, for better or worse. Chinese Commerce Minister Zhong Shan said in a speech that economic globalization is an irreversible trend that drives world growth, indirectly criticizing U.S. President Donald Trump's trade nationalism. China even announced plans to offer extra funding to support the accession of least developed countries to the WTO, in a move aimed at raising its profile within the body.

WTO Director General Roberto Azevedo repeatedly warned of the dangers of protectionism at the world trade body's latest ministerial meeting. (Photo by Naoyuki Toyama)

American sniper

The U.S. also contributed to the logjam. U.S. Trade Representative Robert Lighthizer returned to Washington before the conference was over, calling the WTO dysfunctional. The U.S. traditionally lobbied members before ministerial meetings, pushing them to wrap up negotiations. Its lack of leadership showed this time around as discussions bogged down.

In an effort at damage control, Hiroshige Seko, Japan's trade minister, said the U.S. was "not isolated," but admitted: "It was difficult for member countries to agree on specific matters."

We have to bear in mind that multilateralism doesn't mean that we get what we want.

WTO Director-General Roberto Azevedo

The U.S. is casting doubt on the WTO's dispute-settlement mechanism as well. The appellate body, the WTO's de facto supreme court, has vacant positions that the U.S. has blocked members from filling. There are now just four jurists available to serve on the appellate body's three-judge panels. The normal number is seven.

The Trump administration complains that the dispute-settlement body is biased against the U.S. and is holding up the appointment of an incoming judge to drive home the point. With the term of another judge from Mauritius set to end in September, the appellate body's membership could fall to just three. That might paralyze it, and would certainly add to its backlog of cases.

The temptation would be for countries to take matters into their own hands, adding to international friction and possibly even setting off full-scale trade wars.

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