With increased protectionism demonstrated by the Donald Trump-led government in the US and Brexit keeping the EU pre-occupied, the fate of the next ministerial meet of the WTO in Buenos Aires looks fuzzy. The saving grace for the WTO, in these times of uncertainty, is the active Dispute Settlement Mechanism which ensures that the WTO still stays relevant for its members. In an e-mail interview with BusinessLine , Srividhya Ragavan , Professor of Law, Texas A&M School of Law, an expert on intellectual property rights and international trade, talks about the changes taking place at the WTO and where India stands in the various trade disputes it is engaged in. Excerpts:
The WTO@20 conference organised in New Delhi recently marked the WTO’s 20th anniversary. Do you see a change in the trade agenda for the globe?
The WTO is going through interesting times. When the organisation was first established, the underlying assumption was a world order where developed countries would export knowledge capital, which in turn would prompt a trade cycle which would open up new markets such as developing countries.
During the first decade of the organisation, developing nations such as India and China, in an attempt to resist some of the harshest effects of the trade regime, such as lack of flexibilities for access to medication, pushed the world trade agenda into its next orbit by exporting what they had — talent.
The unleashing of talent capital from the developing world challenged the wisdom that knowledge capital flowed only from the developed to the developing world. It resulted in the emergence of attractive markets like India, China and also gave these countries the confidence to graduate into informed participants of the trade agenda.
It has caused fundamental shifts in thinking from the other side of the aisle.
From being the champions of free trade, the developed nations such as the UK and the US are realising that free trade is not free after all. It means competition. Brexit, the fate of the TPP, President Trump’s rise and his rhetoric against trade all show that the world is sending a message on trade.
It also signifies to the WTO a shift in bargaining parities and the need to readjust to the new realities of the globe.
India and the US are fighting at the WTO over wide-ranging issues such as H-1B visa restrictions, mandatory domestic procurement in state programmes, steel subsidies and restrictions on poultry. Do you see a distinct change in the US approach under the Trump administration?
These disputes arose much before the elections. The role of the United States Trade Representative under the US Trade Act is to determine areas where US trade is affected adversely and report to Congress.
But the US has traditionally used the Special 301 process to unilaterally exert pressure while treading a careful line.
The Obama administration established the position of a Chief Trade Negotiator essentially to further some of the trade interests of the US. The Trump administration has no reason to pedal back on the approach. If anything, President Trump has made his “America First” agenda clear. Much of his rhetoric is against trade especially if it affects American interests. It is not necessarily bad for India. It will force countries like India to engage more and in an appropriate manner.
In the case of H-1B visas, the Trump regime is considering further restrictions even as India has been gearing up to file a dispute at the WTO against the visa fee hike selectively brought about by the Obama administration. Do you think the present high fee regime and the fresh restrictions could be challenged successfully at the WTO?
The H-1B visa dispute raises two questions. The first relates to numerical commitment of the US under the General Agreement on Trade in Services (GATS).
India is correct in asserting that the US has committed to a total of 65,000 high-skilled workers. But, a bilateral agreement reached separately with Singapore and Chile commits for about 7,000 visas to these countries excluding visa extensions for citizens of these countries. The US Homeland Security takes these visas from the overall 65,000 available visas. It affects Indian employers directly. Thus, the question is whether the US violates its overall visa commitment.
The second relates to an increase in visa fees which has more than doubled in the past few years thus debilitating the movement of high-skilled workers. How India will fare in these disputes will depend on how it can bolster its legal arguments with supporting facts especially relating to conditions laid out in the Schedule of Specific Commitments such as wage parity and whether disparate treatment was meted out to Americans in the form of lay-offs.
The office of USTR is constantly engaged on these issues, which I do think provides the US with an edge. The Indian Government seems more reactionary in its approach. While India has the expertise, I do think that the periodical shuffling in government results in loss of expertise every few years, leaving India back in square one every time.
India has asked for a WTO panel against US states that have mandatory sourcing in their renewable power programme. Since the WTO has already ruled against India’s solar energy programme, do you see this dispute serving any purpose?
I think developing countries such as India should use the WTO system effectively. After all, even countries like Antigua have successfully taken on more powerful nations such as the US at the WTO. India has adequate expertise to take a challenge to the WTO but it needs to bolster the framework to support legal arguments with adequate facts in the form of empirical data.
Unfortunately, there has been a lack of research to examine why India fails in a WTO dispute when it does. The lacuna results in losing an opportunity to learn from one loss.
The WTO DG was recently in India to meet industry and policymakers to discuss the agenda for the Buenos Aires ministerial. What should India’s focus be?
Yes, given the diminishing perceptions of trade globally, the DG visited India as part of an agenda to stress the importance of trade. I think trade is important for development. That said, I teach trade laws. It is hard for me to convince a student who has lost successive jobs to Indian software engineers, on the importance of trade and how it is globally relevant when his life has taken a turn for the worse. In all, for years, academics have said that global benefits notwithstanding, local effects will matter for people to be convinced about the benefits of trade.
The WTO is now in a position where it is forced to acknowledge and work towards viable solutions for addressing local issues such as access to medication, the unemployment created from globalisation, distortions from agricultural subsidies and effect on agrarian societies and more.
Each of these areas is important for India to focus on in addition to services, in which India is active and should continue to remain so. Agriculture has been begging for reform since the inception of the WTO.
It was a return commitment for instituting patent protection by developing countries. Yet, it remains in the to-do list of negotiators. Recent developments have been encouraging but merely a step in the right direction.
Is India on a strong wicket legally when it says that it too should get the benefit of special safeguard measures at the WTO to protect its farmers just as many developed countries already have?
Personally, the most desirable outcome would be to see a long term solution to reduce distortions in agricultural trade while also instituting adequate safeguard measures to protect developing and least developed countries. But, that is difficult to achieve as witnessed by the history of the WTO on agriculture negotiations. The importance of mid-west to the US election is just one example of how hard it is for governments to take a global stand knowing that it will affect their local standing. Given that, India is rightfully asking for the best second option for its own benefit. India should also use the inability of developed nations to fulfil promises in the area of agriculture to bargain or sustain the flexibilities to ensure access to medication.
Nobody is officially talking about expanding the scope of the TRIPS yet at the WTO, but there are pressures on countries like India at the bilateral and regional level. What should be India’s strategy in dealing with it?
India should not succumb to those pressures. After all even the US and the UK have placed their national interests ahead of trade alliances as witnessed by the latest elections in the US and the Brexit vote in the UK. I am not saying that India should shun trade. Every country has gained distinct benefits from the trade regime and India is no exception. This is however, a time to reflect on India’s global standing, local realities and negotiate trade terms that advances India’s national objectives and development. I do like the Regional Cooperation Agreements — regional alliances are essential for both India and China to do well in a world where the space for doing well seems to be opening up given the current trade sentiments in the US and Europe.