Food Stock-Holding, E-Commerce Tax On WTO Meet Agenda

Relevance: GS2 - Important International institutions, agencies and fora- their structure, mandate. GS3 - Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

(Source: Financial Express, 10/23/2023)

Click here for Daily Current Affairs

Why in the news?

Recently, senior officials from WTO member countries met in Geneva to review the progress made on decisions of the WTO Ministerial Council and discuss reforms in the WTO.

Highlights of the WTO Meeting

• The two-day meeting of WTO member countries, held in Geneva, is a precursor to the WTO Ministerial Conference scheduled to be held in Abu Dhabi in February 2024.
• Objective: Officials of the WTO member states will address specific problems that must be addressed at the 13th ministerial conference.
  • It will review the status of progress made on the decisions of the previous ministerial conference (2022 in Geneva) and discuss the reforms required in the global trade regulating body.
• Trade Negotiations Committee: The officials will also be participating in the Trade Negotiations Committee of the WTO General Council.
• Summary document: This document will mention the action taken and the political guidance or instruction provided.

What is the agenda of the meeting?

• Agriculture: The meeting is expected to provide guidance on agriculture negotiations focussed particularly on addressing the challenge of food security faced by countries across the world.
• India and other developing countries have demanded a permanent solution to provisions such as public stockholding and government purchases at administered prices.
• According to the developing countries, these provisions are a building block of food security superstructure.
• However, larger food exporters have claimed that food security can be achieved by eliminating food subsidies that distort the general price framework.
• Peace clause: At the Ministerial Meeting in Bali in 2013, member countries had agreed on a peace clause that would allow them to carry on with their domestic support programmes.
  • It states that no country would be legally barred from food security programs for its own people even if the subsidy breached the limits specified in the WTO Agreement on Agriculture.
  • However, this is a temporary provision that developing countries have demanded be made permanent.
  • The earlier Peace Clause or Article 13 of the WTO Agreement on Agriculture stated that domestic support measures and export subsidies of member countries that were legal under the provisions of the Agreement could not be challenged by other members on grounds of being illegal under the provisions of other WTO agreements.
• Taxes on cross-border e-commerce: India has called for the halting of the moratorium on taxes on cross-border trade via e-commerce.
  • Member countries had agreed on the moratorium in 1988, and it has been subsequently extended every two years.
  • India has stated that the exponential growth of the e-commerce sector has made it necessary for the sector to be taxed as it could generate significant revenue for the government.
  • According to India, the Council for Trade in Goods, Council for Trade in Services, Council for TRIPS and the Committee for Trade and Development should take up discussions on e-commerce as per their respective mandates.
  • According to a report by Allied Market Research, the global cross-border b2c e-commerce market is projected to grow to $7938.2 billion by 2031 from $784.6 billion in 2021, at a CAGR of 26.2%.
  • A joint report on the taxation of cross-border trade via e-commerce prepared by the WTO, IMF, World Bank, UNCTAD, and OECD will be released in November 2023.

WTO

• The World Trade Organisation (WTO) is the sole international organization that deals with international trade rules.
• It is headquartered in Geneva, Switzerland.
• Treaty basis: It was established in 1995 following the culmination of the Uruguay Round of talks through the “Marrakesh Agreement”.
• Membership: The World Trade Organisation (WTO) has 164 countries as members including the EU, Hong Kong, Macau, and Taiwan.
• India is also a member of the WTO.
• Objectives:
  • Establish the rule of law in international trade.
  • Ensure free and fair trade.
  • Maintain transparency and predictability in international trade.
  • Contribute to the development of developing countries.
• Hierarchy:
  • The Ministerial Conference, which is made up of all member states and meets twice a year, is the highest decision-making body of the organization.
  • The General Council is the next major decision-making body of the WTO and handles all the daily work between Ministerial Conferences.
  • Although the General Council’s membership is similar to that of the Dispute Settlement Body and the Trade Policy Review Body, they differ in terms of their term of reference.

Functions

• Administering WTO trade agreements: The WTO agreements cover products, services, and intellectual property.
  • Governments are required to make their trade policies open by alerting the WTO about laws in place and actions enacted and reporting on their trade policies on a regular basis.
• Forum for trade negotiations: It acts as a forum for trade negotiations by providing a framework for structuring agreements and offering dispute resolution services.
• Handling trade disputes: WTO also operates as a dispute resolution body at which members can file complaints against other members.
  • Formal hearings are held to achieve a resolution.
• Monitoring national trade policies: In case of disputes between members, the WTO monitors national trade policies using trade reviews and status reports of members.
• Technical assistance and training for developing countries: The WTO’s special initiatives assist poor nations in improving their capacity to engage in free trade with developed countries.
  • They are also incentivized to assist them transition to free trade with other countries through some agreements.
• Cooperation with other international organizations: It cooperates with others on issues of mutual concern and participates as an observer in some fora.

Conclusion

• Food security challenges due to environmental crises and geopolitical challenges like the conflict between Russia and Ukraine have underlined the necessity of a global agreement on agricultural and food subsidies.
• Developing and developed countries have also differed in their opinions on other topics such as taxation of e-commerce.
• The WTO can play a critical role in addressing such challenges due to its global mandate, wide membership, and dispute resolution structure.

To learn more about the WTO, click the link.

FAQs

MCQs

Question: In the context of which of the following do you sometimes find the terms ‘amber box, blue box, and green box’ in the news? (2016)

(a) WTO affairs

(b) SAARC affairs

(c) UNFCCC affairs

(d) India-EU negotiations on FTA

Question: Consider the following statements: (2017)

1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
3. TFA came into force in January 2016.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Question: Which one of the following countries has been suffering from decades of civil strife and food shortages and was in the news in the recent past for its very severe famine? (UPSC CSE 2023)

(a) Angola

(b) Costa Rice

(c) Ecuador

(d) Somalia