India recently concluded its seventh Trade Policy Review (TPR) session at the World Trade Organization (WTO) in Geneva, Switzerland. This important mechanism falls under WTO’s monitoring function and involves an examination of member countries’ trade and related policies. The TPR aims to improve adherence to WTO rules. India’s last TPR took place in 2015.
Appreciation for India’s Continued Development
India received praise for various initiatives such as the introduction of the Goods & Services Tax in 2016, its efforts in implementing WTO’s Trade Facilitation Agreement, and role in promoting “Ease of Doing Business” in the country. Additionally, the country also saw an improved ranking in the “Trading across Borders” indicator under the Ease of Doing Business Report.
The Trade Facilitation Agreement (TFA) aims to simplify customs procedures, making trade quicker, easier, and cheaper. The appreciation extended to India’s steps towards liberalizing its Foreign Direct Investment (FDI) regime and the country’s National Intellectual Property Rights Policy, 2016.
Concerns Regarding India’s Trade Policy
Despite these positive developments, concerns were raised that India’s trade policy has largely remained unchanged since the previous review. The country still relies heavily on trade policy instruments like tariffs, export taxes, minimum import prices, import and export restrictions, and licensing.
Such instruments are used to manage domestic demand and supply requirements, protect the economy from extreme domestic price fluctuations, and ensure the conservation and proper utilization of natural resources. However, frequent changes to tariff rates and other trade policy instruments have created uncertainty for traders.
India’s Request for a Permanent Solution to Food Security
The ongoing pandemic has highlighted the importance of food and livelihood security. This situation prompted India to urge for a permanent solution to Public Stock Holding (PSH) for food security.
Public Stockholding is a policy tool used by governments to procure, stockpile, and distribute food when needed. Presently, public distribution programs of developing countries are included under trade-distorting Amber Box measures that require reduction commitments of WTO.
India, along with other developing countries, is demanding that the programs for food security purposes be exempted from the subsidy reduction commitments of WTO. India has repeatedly insisted upon a permanent solution for the public stockholding issues.
About the Trade Policy Review Mechanism
The Trade Policy Review Mechanism (TPRM) was an early outcome of the Uruguay Round. It serves as the main transparency instrument of the WTO, providing chances for collective evaluation of individual members’ trade policies and practices.
The objectives of the TPRM include facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of Members’ trade policies and examining the impact of a Member’s trade policies and practices on the multilateral trading system.
The TPRM operates through the Trade Policy Review Body, which is essentially the WTO General Council, consisting of the WTO’s full membership and operating under special rules and procedures.
The TPRM allows members to scrutinize the overall trade and economic policies of a country. The trade policies of developing countries are reviewed every four years, while developed ones are reviewed every two years. The mandate of the TPRM has been expanded to cover services trade and intellectual property, and all WTO Members are subject to review under the TPRM.