WTO Current Affairs - 2019

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India finds OECD’s STR Index faulty

India has found problems with the current methodology adopted by the Organisation for Economic Cooperation and Development (OECD) under its Services Trade Restrictiveness Index (STRI) to rank countries.

Key Highlights

  • About: A study commissioned by Indian Ministry of Commerce found that OECD index, the STRI has a several problems associated with it, which also includes some significant design issues that render the index impractical for use.
  • Issues: As per India the outcomes of STRI are biased and counter-intuitive.
  • The initial work suggests that there are both empirical and theoretical inconsistencies in STRI’s methodology.
  • The data generated by OECD’s methodology seems to have been through arbitrary procedures and reflects being bias towards developed country.
  • It shows Indian services sector as highly restrictive in areas such as FDI.
  • Impractical: For instance, STRI seems to show the services sector in India as one of the most restrictive in world, particularly in policy areas like foreign entry, FDI etc. This is astonishing as since 1991, following the LPG reforms the one area that has seen maximum liberalisation in India is Foreign Direct Investment (FDI).
  • India’s Approach: India is trying to build a consensus around adopting a new method of measuring trade restrictiveness in services sector. For this India approached several developing countries during recently-concluded WTO Ministerial talks held in New Delhi. It has also approached South Africa, Indonesia, China, Turkey and Brazil.
  • India’s Argument: Unlike manufacturing trade which has a well-documented system of classification of commodities, the problem in services, is that for a long time there was not any way to find that whether a country’s service trade policies were restrictive.
  • Also, even if it was ascertain as restrictive it was not known that what to do about it since services trade is usually regulated by domestic regulations and not border tariffs.

About STRI

  • It was launched in 2014, by The Organisation for Economic Cooperation and Development (OECD).
  • It purpose is to rank countries based on their services trade policies.
  • STRI (computed by OECD) is now available for year 2018. It includes a total of 45 economies (with 36 OECD and the rest non-OECD) and 22 sectors. These countries and sectors undertaken represent more than 80% of global trade in services.

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India to host WTO Ministerial Meeting of Developing Countries

India will be hosting a World Trade Organisation (WTO) Ministerial meeting of developing countries in New Delhi on 13-14 May 2019. The aim is to discuss various challenges being faced by multilateral rules-based-trading system.

Key Highlights of Meeting

  • Participants: includes
  1. Six Least Developed Countries (LDC), namely Benin, Bangladesh, Central African Republic (CAR), Chad, Uganda, Malawi.
  2. Sixteen developing countries, namely Turkey, Indonesia, Malaysia, South Africa, Argentina, Brazil, Egypt, Guyana, Jamaica, Kazakhstan, Guatemala, Nigeria, Oman, China, Saudi Arabia, Barbados.
  3. Director-General (DG) of World Trade Organization (WTO), Roberto Azevêdo.
  • The two-day meeting will be an interaction between participants in order to provide an opportunity to Ministers to discuss various issues and the way forward.
  • Purpose: The meeting is an effort to bring developing countries and Least Developed Countries (LDCs) together on one platform and to share common concerns on various issues affecting WTO and also working together in addressing these issues.
  • Significance: The meeting is being held at a time when multilateral rules-based-trading system is facing serious challenges. In recent times, there has been an increase in unilateral measures and counter measures by member nations, further leading to deadlock in key areas of negotiations and stand-off in Appellate Body. This is threatening the very existence of Dispute Settlement Mechanism of WTO and impacting WTOs position as an effective multilateral organisation. This current scenario has given rise to demands from various quarters to reform the WTO.
  • Importance: Meeting will provide an opportunity to LDCs and developing countries to build consensus on how to move forward on WTO reforms, at the same time preserving fundamentals of multilateral trading system (MTS) enshrined in WTO.
  • The key discussions will also be about at getting a direction on how to constructively engage on various issues (both institutional and negotiating) in WTO, in the upcoming WTO’s Twelfth Ministerial Conference which will be held in Kazakhstan in June 2020.

About Least developed countries (LDCs)

  • They are low-income countries facing severe structural limitation to sustainable development. LDCs have low levels of human assets and are also, extremely vulnerable to economic and environmental shocks.
  • Currently there are 47 countries designated as LDCs by United Nations (UN). The LDC status is reviewed every three years by Committee for Development (CDP).
  • CDP uses three criteria to identify LDCs –
    1. Gross National Income (GNI) per capita
    2. Human Assets Index (HAI)
    3. Economic Vulnerability Index (EVI)

Month: Categories: National

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