Recent developments at the World Trade Organization (WTO) have put India’s Special and Differential Treatment (SDT) status under the spotlight. China’s announcement to forego SDT in future WTO talks signals a shift in global trade expectations. This move, amid US tariff pressures, raises questions about India’s reliance on SDT benefits as it grows economically. India faces heightened scrutiny to recalibrate its trade policies while protecting its vulnerable sectors.
About Special and Differential Treatment (SDT)
SDT provisions grant developing countries trade flexibilities. These include higher tariff limits and longer timeframes to implement WTO rules. SDT aims to protect weaker economies from sudden market shocks. India has used SDT since joining the WTO in 1995 to shield its agriculture and industry.
India’s Agricultural Subsidies and WTO Rules
Agriculture employs nearly half of India’s workforce. The country uses subsidies like Minimum Support Prices (MSP) to support farmers and food security. Under WTO’s Agreement on Agriculture, subsidy limits differ for developing and developed nations. India’s subsidies often exceed the 10% cap on trade-distorting support, inviting criticism from developed countries. India uses Article 6.2 exemptions to justify input subsidies to low-income farmers.
Challenges from Developed Countries
Developed nations provide large farm subsidies, often hidden in Green Box categories exempt from limits. They criticise India’s subsidy programmes while protecting their own. The US and Cairns Group have challenged India on alleged market distortions. India must balance defending its subsidies with WTO compliance.
Potential Impact of Losing SDT Status
If forced to drop SDT, India could face subsidy cuts of 20-30% over a decade. This may reduce rural incomes by 10-15% and increase food price volatility. Malnutrition risks could rise, affecting millions. India’s Public Distribution System (PDS) that feeds 800 million people depends on these subsidies.
Strategies for India’s WTO Engagement
India should lead efforts to extend WTO’s peace clause protecting MSP and PDS until 2030. It can push for removal of export subsidies by developed countries. Transitioning input subsidies to Green Box measures like research and climate resilience aligns with WTO rules and India’s net-zero goals. Updating outdated reference prices can reduce reported subsidy breaches.
Leveraging E-commerce and Services
India’s services sector forms 55% of GDP and offers trade leverage. Joining plurilateral e-commerce talks can secure tariff-free access to key markets. Expanding digital platforms like ONDC will empower small businesses globally. India must negotiate data localisation and consumer protection flexibilities.
Phasing Out Non-Core SDT and Enhancing Competitiveness
India should gradually reduce tariff protections in non-essential sectors to gain market access. It can use Green Box funds to improve infrastructure like cold storage, boosting exports without breaching WTO limits. Protecting vulnerable groups through targeted SDT exemptions remains crucial.
Intellectual Property and Public Health
India must maintain TRIPS flexibilities such as compulsory licensing for public health. It can align with stricter IP rules in less sensitive sectors to gain trade concessions. Increasing investment in biotech innovation will reduce dependence on generic exports while ensuring affordable access.
Proposing a Tiered SDT Framework
India can advocate a tiered SDT system based on per capita income or sector strength. This approach allows protection of critical sectors like agriculture while encouraging gradual integration into global trade norms. India’s democratic setup limits rapid policy shifts but supports measured reforms.
Questions for UPSC:
- Critically discuss the role of Special and Differential Treatment in promoting equitable global trade and its challenges in the context of emerging economies like India.
- Analyse the impact of agricultural subsidies on food security and rural livelihoods in developing countries. How do WTO rules influence these subsidies?
- Examine the significance of digital trade and e-commerce negotiations in the World Trade Organization. What are the implications for developing countries?
- Point out the importance of intellectual property rights flexibilities under the TRIPS Agreement for public health. How can developing countries balance innovation and access?
