While the WTO does poorly in the areas of negotiations and dispute settlement, there is an area where it carries on gamely. That is the field of trade monitoring. To do this in full measure, the WTO provides for a Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement establishing the WTO) which entails periodic review of the trade policies and practices of WTO Members. While Members like US and EU must subject themselves to this review every two years, countries like India must undertake this every four years. On 21 and 23 July the WTO carried out this mandated trade policy review of India. It was the eighth such review of India.
The stated objective of the trade policy review is to contribute to
improved adherence by all WTO Members to rules, disciplines and commitments made under the Multilateral Trade Agreements and, where applicable, the Plurilateral Trade Agreements, and hence to the smoother functioning of the multilateral trading system, by achieving greater transparency in, and understanding of, the trade policies and practices of Members. Accordingly, the review mechanism enables the regular collective appreciation and evaluation of the full range of individual Members’ trade policies and practices and their impact on the functioning of the multilateral trading system. It is not, however, intended to serve as a basis for the enforcement of specific obligations under the Agreements or for dispute settlement procedures, or to impose new policy commitments on Members. This last mentioned point is important. The recommendations are purely advisory in nature and are not legally binding on the countries concerned. This is something the Indian delegation to the Uurguay Round of negotiations (of which I was a part) fought hard. US and EU argued for legally binding recommendations. We resisted and prevailed. Yet, the value of this exercise is important and countries will be well advised to note what other trading partners think of its trade policies and practices.
The Secretariat report acknowledges the ambition of India to become Viksit Bharat by 2047. It also notes that to attain high-income economy status by 2047, India will need to sustain real GDP growth (as opposed to nominal growth) of 8 per cent annually till then. The World Bank has come up with revised criteria recently for classification of countries as low-income, high-income etc but uses Gross National Income (GNI) not GDP (Gross Domestic Product). For the uninitiated, GNI equals GDP plus net income received by a country from abroad. The World Bank basically divides countries into (a) low income (less than $ 1135 GNP per capita); (b) lower-middle income ($ 1136 – 4495 GNP per capita); (c) upper-middle income ($ 4496 – 13,935 GNP per capita); and (d) high-income, more than $ 13,395 GNP per capita. The very first thing we should be clear is what we mean by Viksit Bharat? Do we mean more than $ 13,395 GNP per capita? For India, in 2025, the difference in GDP per capita and GNP per capita is marginal ($ 2702 versus $2760) so we need not concern ourselves with it too much. But it will be seen from the above that upper-middle income status has a very wide range from $ 4496 to $ 13,935 GNP per capita. There is little doubt that India will soon move into this bracket, certainly by 2030. But whether we can go beyond GNP per capita of $13,395 and become a high-income country is moot at this point. It might be useful for the NITI Ayog to come up with a quantitative target of say $ 10,000 GNP per capita by 2047 to denote Viksit Bharat. Even for this, India must get to a $15 Trillion economy by 2047, no mean feat. NITI Ayog could also combine this with a Gini coefficient target specific for India to ensure that growth achieved is inclusive.
Back to the Trade Policy Review of India at the WTO. A lot of positive comments were made by WTO Members. Member participation was high, denoting the level of importance attached to India in the global economy. About 1090 written questions were received from 44 WTO Members. It was acknowledged that India is an increasingly important pole of global demand. A number of countries cited their rapid increase in bilateral trade with India. Several least-developed countries thanked India for preferential access to its market and requested that India’s duty-free, quota-free access be extended further. India’s digital public infrastructure, predictably, came in for praise. Members also urged India to continue its wide-ranging reform agenda even while seeking further information on the transparency and effectiveness of a broad range of trade-related measures undertaken by it.
On the question of plurilateral negotiations at the WTO (also called Joint Statement Initiatives) which India has hitherto declined to join, a number of Members, both developed and developing, encouraged India to consider participating in arrangements such as the Investment Facilitation for Development Agreement and the interim arrangement for Electronic Commerce. It is clear that India will have to take a call on this important issue, sooner rather than later. The fact that India’s non-participation in plurilateral negotiations is causing concern even among countries of the Gobal South is something that India has to factor in while taking a final decision in the matter.
In terms of flak received, WTO Members raised issues of transparency and predictability about India’s trade measures. In particular, Members raised points about tariff changes, unexpected export restrictions, complex licencing arrangements, lengthy investment approvals and a lack of regulatory certainty. It was suggested by many that there needed to be greater outreach by our authorities to trading partners on proposed measures before their entry into force. Our WTO notification record was highlighted as an area where there could be further improvement.
Numerous questions were raised about India’s standards, technical regulations and Quality Control Orders. In particular, further clarifications were sought by Members on consultation procedures, reasons for delay in conducting factory visits, lack of clear implementation timelines, alignment with international standards, simplified conformity assessment requirements and more recognition of foreign labs and certification bodies. WTO Members highlighted the burden delays placed on their exporters and the importance of transparency, proportionality and predictability.
Agriculture got a fair share of its questions and concerns. India’s minimum support prices, input subsidies, public stockholding programmes, import licencing and export restrictions on products such as wheat, rice, sugar and onions were all raised. Also highlighted were sanitary and phytosanitary measures relating to the availability of underlying risk assessments and realted methodologies. This is a matter of some concern. Despite valiant efforts by the Indian delegation in Geneva and our capital-based negotiators, there is relative lack of understanding in Geneva of how unfair the Agreement on Agriculture is towards countries like India. Food security for India is non-negotiable and yet this is not sufficiently understood and appreciated by our trading partners, especially those which are developed and who have had a field day subsidising their own agriculture until recently. No one said the WTO is fair, so welcome to the real and tough world of trade negotiations!
Questions were also raised about our Production-Linked Incentive schemes as also with our FDI policies and investment screening procedures. We need to satisfy our main trading partners in this regard.
On the plus side, Members welcomed the significant increases recorded in patent filings from India, expanded use of digital filing and progress in digitalization of customs and border procedures.
While India need not attach equal weight to all the questions and comments above, concerns expressed about lack of transparency, predictability, proportionality and investor-friendly trade measures must be taken seriously. After all, India has signed a number of FTAs in the recent past and if the fruits of those have to be reaped by us, we need to put in place a trade policy regime that is fit for purpose. The Ministry of Commerce has its work cut out.
Dr Mohan Kumar is a former Indian trade negotiator and is at present Dean/Professor at OP Jindal Global University. Views are personal.
Diplomacy and Geopolitics 