WTO MC14, Why It Could Be a ‘Turning Point’ for Trade and What’s at Stake for India
The World Trade Organization’s 14th Ministerial Conference (MC14) began in Yaoundé, Cameroon, on Thursday at a time when the trade body faces a crisis of relevance. On the agenda are reforms aimed at bringing back predictability to global trade rules that have been effectively torn up by the Donald Trump-led US administration. WTO Director-General Ngozi Okonjo-Iweala has dubbed the conference a “turning point ministerial” at a time when its trade dispute settlement powers have been rendered dysfunctional, with successive American administrations blocking the appointment of judges to the WTO’s dispute settlement body. The stakes for India are high, as the outcomes of this conference could shape the country’s trade policy space for decades.
The US is pushing for radical reforms that challenge the foundational principles of the WTO. One such reform is rethinking the most-favoured nation (MFN) principle, which ensures non-discriminatory trade practices among members. Another is incorporating plurilateral agreements into the WTO architecture, which is seen as a contrast to the long-established consensus-based decision-making that has given every member, large or small, an equal voice. These proposals are deeply concerning for developing countries like India, which have historically relied on the WTO’s inclusive framework to protect their policy space.
India’s stance at MC14 is primarily focused on preserving policy space, driven by its relatively low share in global trade but large scope for future growth. A section of international trade experts believes that this stance stems from previous experience, such as India’s agreement to the Information Technology Agreement-1 (ITA-1) in 1996. At that time, participants, including India, agreed to completely eliminate tariffs on IT products covered by the agreement. While India benefited from the IT boom as a services exporter, it missed out on pushing for the manufacturing of IT products within the country. The lesson learned was that tariff elimination without a corresponding domestic industrial base can lock in patterns of dependency that are hard to reverse.
A key issue dividing developing and developed nations at MC14 is the e-commerce moratorium. The moratorium on customs duties on electronic transmissions—a blanket term for services ranging from streaming to e-books—has been renewed every two years since its inception in 1998. India has been opposing the WTO’s proposal to impose a moratorium as it will undermine its ability to collect revenue from digitally delivered services in the future. India, Indonesia, and South Africa have argued that the moratorium fundamentally disadvantages nations lacking advanced digital industries. While revenue considerations have been a key ground for India’s stance, as digital trade grew from less than $1 trillion in 1998 to over $16 trillion by 2025—with digitally delivered services alone representing 56 per cent of global services exports—preserving policy space has also been a key consideration.
Previously, India and South Africa have emphasized in their joint submissions to the WTO that this is not just a revenue issue but a policy space issue. The Delhi-based think tank Research and Information System for Developing Countries (RIS), in a report earlier this month, said developing nations will need to expand their digital skills and infrastructure to become competitive in the digital age. “Developing nations are still having difficulty building their information and communications technology infrastructure and increasing their internet accessibility, while developed nations are investing enormous sums of money in digital technologies like robotics, AI, big data analytics, and 3D printing,” the report said. To lock in a permanent moratorium now, before developing countries have built their digital capacities, would be to repeat the mistake of ITA-1.
On the first day of the ministerial conference, Commerce Minister Piyush Goyal called on WTO members to work towards making the WTO’s dispute settlement system fully functional. The current dysfunctional mechanism, with the Appellate Body non-functional since December 2019 after the US blocked new appointments, has deprived countries of receiving effective redressal. “The automatic and binding dispute settlement system must be restored,” Goyal said. Without a functioning dispute settlement system, the WTO loses its ability to enforce its rules, and the security and predictability that members rely on evaporates.
Goyal also said there is a need for a careful reconsideration of further extension of the moratorium on customs duties on e-commerce. India’s position is that the moratorium should not be made permanent, and that developing countries must retain the right to levy customs duties on electronic transmissions. The digital economy is still evolving, and the revenue potential from digital services is only beginning to be understood. To give up that right permanently, without knowing what it might mean for future development, is a step India is not willing to take.
The agriculture issue remains central to India’s WTO agenda. India’s key demand is that public stockholding for food security be treated as WTO-compliant. The major problem lies in the WTO’s flawed subsidy formula, which uses 1986-88 reference prices and inflates India’s support estimates by seven to eight times, pushing it artificially close to breaching limits. The United States and the European Union are not interested in correcting the formula and oppose broad exemptions, citing trade distortion risks. This leaves India with only a temporary “peace clause” since 2013—a fragile protection that must be renewed periodically. With some countries seeking to reopen past commitments and positions sharply divided, prospects for a breakthrough at MC14 are slim.
The debate over special and differential treatment (SDT) highlights a deeper fault line in the WTO. In 1995, developing countries accepted stricter rules on intellectual property and services in return for flexibilities such as longer transition periods and policy space. That bargain is now under strain. The US and the EU argue that large emerging economies should no longer receive such benefits and want SDT limited mainly to least-developed countries. India counters that development gaps remain wide and that removing SDT without revisiting the original bargain would make the system more unequal. The dispute goes to the heart of fairness and legitimacy.
Plurilateral agreements are emerging as a systemic challenge to the WTO. India opposes them, arguing that they undermine consensus-based rulemaking by allowing a subset of countries to negotiate deals that are later brought into the WTO. This lets advanced economies push their priorities while sidestepping issues critical to developing countries, such as farm subsidies and special and differential treatment. The risk is a two-tier system dominated by a few. At MC14, India faces pressure not to oppose the Investment Facilitation for Development (IFD) pact, which could set a precedent for the adoption of more plurilateral deals. Having blocked it with South Africa at MC13, India may now stand alone as South Africa’s position appears to be shifting, under pressure from other African countries linked to China’s Belt and Road Initiative.
For India, the challenge at MC14 is to protect policy space and build effective coalitions in an increasingly divided system. India cannot rely on the old alliances; the shifting position of South Africa on the IFD pact is a warning that coalitions are fragile. India must therefore focus on its core interests: protecting its right to maintain food security stocks, preserving the right to tax digital trade, and preventing the WTO from becoming a forum where only the powerful make the rules. The outcome of MC14 may not be a breakthrough, but it will set the terms of debate for years to come. Continuity—not breakthrough—is the most likely outcome: extensions, more talks, and few decisions. But even continuity, in a system under such strain, is a kind of victory.
Questions and Answers
Q1: Why has WTO Director-General Ngozi Okonjo-Iweala called MC14 a “turning point ministerial”?
A1: She called it a turning point because the WTO faces a crisis of relevance. Its dispute settlement powers have been rendered dysfunctional, with the US blocking appointments to the Appellate Body since 2019. The conference aims to bring back predictability to global trade rules that have been “effectively torn up” by the Trump administration.
Q2: What is the e-commerce moratorium, and why is India opposing its permanent extension?
A2: The moratorium, renewed every two years since 1998, bans customs duties on electronic transmissions. India opposes making it permanent because it would undermine its ability to collect revenue from digitally delivered services in the future. India, Indonesia, and South Africa argue it disadvantages nations lacking advanced digital industries.
Q3: What lesson from the 1996 Information Technology Agreement-1 (ITA-1) influences India’s stance at MC14?
A3: Under ITA-1, India agreed to eliminate tariffs on IT products. While India benefited from the IT boom as a services exporter, it missed out on pushing for domestic manufacturing of IT products. This experience taught India that tariff elimination without a corresponding domestic industrial base can lock in patterns of dependency that are hard to reverse.
Q4: What is India’s position on the restoration of the WTO’s dispute settlement system?
A4: Commerce Minister Piyush Goyal called for the restoration of an “automatic and binding dispute settlement system.” The current mechanism is dysfunctional, with the Appellate Body non-functional since 2019 after the US blocked new appointments. Without a functioning system, the WTO cannot enforce its rules, undermining the security and predictability that members rely on.
Q5: What are the key fault lines dividing developing and developed countries at MC14?
A5: Key fault lines include:
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Agriculture: India wants public stockholding for food security recognized as WTO-compliant; the US and EU oppose broad exemptions.
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Special and Differential Treatment (SDT): Developed countries want SDT limited to least-developed countries; India argues development gaps remain wide.
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Plurilateral agreements: India opposes them as they undermine consensus-based rulemaking and risk creating a two-tier system dominated by a few.
