Daily Current Affairs

A new global vision for G20 (GS Paper 2, International Organisation)

Context:

• While India has taken a clear view of the role of the G20, there is concern that the agenda, themes and focus areas which India will set for 2023 lack vision.
• The G20 plays an important role in shaping and strengthening global architecture and governance on all major international economic issues.
• It recognises that global prosperity is interdependent and economic opportunities and challenges are interlinked. The challenge is to craft new approaches to overcome the acute global discord.

 

Focus area:

• However, according to the Ministry of External Affairs, in 190 meetings, India will strengthen international support for priorities of vital importance to developing countries in diverse social and economic sectors, ranging from energy, agriculture, trade, digital economy, health and environment to employment, tourism, anti-corruption and women empowerment, including in focus areas that impact the most vulnerable and disadvantaged.
• Without specificity, India has lost a chance to nudge the G20 and regional organisations towards its focus areas.

 

Collaboration not commitments:

The fractured world makes trade-offs, the essence of current multilateralism, difficult and suggests a new model of international cooperation:

• First, multilateral commitments on aid and trade are faltering. Governance in a world that is steadily becoming more equal needs institutional innovation.
• This is because the role of the United Nations and the World Trade Organization in securing cooperation between donor and recipient country groups is losing centrality. There are now three socio-economic systems; the G7, China-Russia, and India and the others and they will jointly set the global agenda.
• Second, Ukraine’s long shadow, rival finance, the expanding influence of the trade and value chains dominated by the U.S. and China, and the reluctance of developing countries to take sides in the strategic competition as they have a real choice requires fresh thinking on the nature and form of collaboration from the G20.
• Third, the primary role of the G20, which accounts for 95% of the world’s patents, 85% of global GDP, 75% of international trade and 65% of the world population, needs to be reoriented to prevent a clash of ideas to the detriment of the global good.

 

Common concerns:

• India should seek collaboration on limited focus areas around science and technology, building on resolutions of the United Nations General Assembly (UNGA) and other multilateral bodies.

 

New Conceptual frame:

1. First, the presumed equality that are all in the same boat, recognised in the case of climate change, needs to be expanded to other areas with a global impact redefining ‘common concerns’.
2. Second, emerging economies are no longer to be considered the source of problems needing external solutions but source of solutions to shared problems.
3. Third, the BRICS provides an appropriate model for governance institutions suitable for the 21st century where a narrow group of states dominated by one power will not shape the agenda.

 

Vienna Declaration on Human Rights 1993:

• The starting point should be building on the global consensus in the Vienna Declaration on Human Rights 1993 reaffirming the indivisibility of all human rights.
• There is a growing recognition of economic and social rights for example, in the 2030 Agenda for Sustainable Development. Ensuring adequate food, housing, education, health, water and sanitation and work for all should guide international cooperation.
• Principles of common but differentiated responsibilities for improving the quality of life of all households can guide deliberations in other fora on problems that seem intractable in multilateralism based on trade and aid.

 

Employment & Environment:

• Second, the global agenda has been tilted towards investment, whereas science and technology are the driving force for economic diversification, sustainably urbanising the world, and ushering the hydrogen economy and new crop varieties as the answer to both human well-being and global climate change.
• Innovation supports dematerialising production and consumption and moving towards renewable sources of energy. The shift in lifestyles in the post-war period created urban jobs in services and retail that made up for the losses to high productivity manufacturing, and climate change.
• A forum to exchange experiences on societal benefits and growth as complementary goals would lead to fresh thinking on employment and environment.

 

Digital-information-technology revolution:

• Third, harnessing the potential of the digital-information-technology revolution requires redefining digital access as a “universal service” that goes beyond physical connectivity to sharing specific opportunities available.
• For global society to reap the fruits of the new set of network technologies, open access software should be offered for more cost-effective service delivery options, good governance and sustainable development.

 

Space:

• Fourth, space is the next frontier for finding solutions to problems of natural resource management ranging from climate change-related natural disasters, supporting agricultural innovation to urban and infrastructure planning.
• Analysing Earth observation data will require regional and international collaboration through existing centres which have massive computing capacities, machine learning and artificial intelligence.
• Open access to geospatial data, data products and services and lower costs of geospatial information technology facilities do not require huge financial resources.

 

Public health:

• Fifth, public health has to learn from the COVID-19 fiasco with infectious diseases representing a market failure.
• A major global challenge is the rapidly growing antimicrobial resistance which needs new antibiotics and collaboration between existing biotechnology facilities.

 

Strategic thinking:

• Sixth, overriding priority to development suggests avoiding strategic competition. Countries in the region will support building on the 1971 UNGA Declaration designating for all time the Indian Ocean as a zone of peace and non-extension into the region of rivalries and conflicts that are foreign to it.
• Lastly, a Global Financial Transaction Tax, considered by the G20 in 2011, needs to be revived to be paid to a Green Technology Fund for Least Developed Countries.

 

The new U.S. Bill on climate action

(GS Paper 3, Environment)

Why in news?

• Recently, the U.S. Senate approved a Bill titled the Inflation Reduction Act (IRA) 2022, with a simple majority of 51 to 50.
• Vice President Kamala Harris cast her tie-breaking vote to aid the approval after the Senate was evenly divided.
• The bill is a scaled-down version of President Biden’s Build Back Better Act (BBBA), which failed to get approval from the Senate. The IRA has a special focus on climate, healthcare, and tax provisions to address inflation.

What are the climate change provisions?

• The Bill marks the largest American investment aimed toward making the U.S. a leader in clean energy. It includes packages worth $369 billion for the clean energy transition.
• It provides a tax deduction to low and middle-income households to go electric and seeks to lower the energy bills of American households. It also aims to bolster the domestic production of heat pumps and critical minerals.
• For disadvantaged low-income communities and tribal communities, the Bill provides funding to benefit from zero-emission technologies which reduce greenhouse gas emissions, enhance climate resilience, and mitigate risks from extreme heat.
• The Bill provides significant investment in renewable energy through heavy tax credits for wind and solar energy projects and electric vehicles.
• Additionally, the Bill imposes a tax on the largest and most profitable companies in order that they pay their fair share, without levying any taxes on households with income less than $40,000 per annum. It also imposes a fee on methane leaks from oil and gas drilling.
• At the same time, the Bill also aims at more investments in fossil fuels. It seeks to expand oil and gas drilling, with the federal government offering land for onshore and offshore drilling as a prerequisite for developing renewable energy. Thus, it handcuffs the expansion of oil and gas with renewable energy development.

 

Why does the U.S. want to invest in addressing climate change?

• The U.S is currently facing extreme climate threats. This includes heatwaves, wildfires, cyclones, floods, and hurricanes that have become frequent and intense in the past few years.
• The ongoing floods in Kentucky triggered by heavy rainfall and the wildfires in California induced by dry lightning have become a major concern for the country. There is a link between extreme weather events and climate change.

 

Build Back Better plan:

• Additionally, President Joe Biden has also undertaken certain climate commitments. Climate action has been a priority since he came into office.
• In 2021, he committed to the new ambitious target of cutting emissions by 50-52% below 2005 levels by 2030 and signed a new methane deal to curb methane emissions from the oil and gas industry. He introduced the Build Back Better plan which was a multi-trillion deal with key provisions for climate change.
• In May 2022, the Biden administration revoked the Alaska oil and gas drilling lease sales in the backdrop of soaring fuel prices, a move that is consistent with its climate commitment.

 

How does the Bill help the U.S. achieve its climate targets?

• The Bill being the largest-ever investment in addressing the climate crisis in U.S. history, will help the nation get closer to its climate target of reducing 50-52% emissions below 2005 levels by 2030.
• The investments in the Bill could reduce greenhouse gas emissions by 31 to 44% by 2030.
• The Bill can help the U.S. compete with China in terms of renewable production as China is a leading producer of solar energy. It can also facilitate the creation of domestic jobs.
• Thus, the Bill can prove to be a turning point for global climate action as the U.S. is one of the largest emitters of greenhouse gases globally. However, it does not address any issues of global climate finance which is a major impediment to global climate action.
• It is a mere step toward achieving the climate target agreed upon in the Paris Agreement, where Article 2 states global temperature should be limited below 2°C.
• Even though the Bill is not enough to address the climate crisis, such historic initiatives by global leaders in greenhouse gas emissions can be a benchmark for other large emitters to push their climate action programmes.

 

Have similar climate packages been announced by other countries?

• In May 2022, Japan announced its ‘Invest in Kisida’ plan which aims for a $1.1 trillion investment to bolster the Japanese economy.
• As part of the plan, the country aims to transition to clean energy and achieve 46% reduction in greenhouse gas emissions by 2030. In June 2021, the European Union (EU) proposed a similar ‘Fit for 55’ plan to reduce emissions by 55% by 2030.
• The plan is expected to become law soon. Being the largest emitters, both the U.S. and the EU can play a significant role in taking responsibility for historical emissions.

 

WTO’s changing landscape and India

(GS Paper 3, Economy)

 

Context:

• A total of 164 member countries of the WTO forged a nail-biting finish to the 12th Ministerial Conference (MC-12) in June 2022.
• The previous two ministerial conferences (Nairobi in 2015 and Buenos Aires in 2017) had demonstrated growing fissures between WTO members.
• The dispute settlement system has also been dysfunctional since 2019, owing to the United States’ blocking of members to the WTO’s appellate body, and this only exacerbated concerns about its relevance. MC-12, therefore, was a breath of fresh air and a crucial reaffirmation for the WTO.

 

What is the WTO and the Ministerial Conference?

• The World Trade Organization is the only international organization that deals with the rules of trade between countries. Founded in 1995, the WTO is run by its 164 members, and according to its rules, all decisions are taken through consensus and any member can exercise a veto.
• Its aim is to promote free trade, which is done through trade agreements that are discussed and signed by the member states. The WTO also provides a forum for countries to negotiate trade rules and settle economic disputes between them.
• The Ministerial Conference is the WTO’s top decision-making body and usually meets every two years. All members of the WTO are involved in the MC and they can take decisions on all matters covered under any multilateral trade agreements.

 

Outcome Document:

• In the outcome, there are important pathways for effective intervention to ensure fair and equitable rules in a rapidly evolving global economic landscape, where “free trade” is increasingly qualified with resilience, security, and domestic capacity.

 

WTO Reform:

• MC12’s “Outcome Document” emphasises the need for WTO’s reform, including reviving its dispute settlement function. It also notes the interlinkages of environment and sustainable development with the multilateral trading system.
• India will need to forge alliances with other developing countries to ensure that these discussions account for “sustainability” for all, with due regard for the balance of rights and obligations under multilateral environment agreements.
• This is particularly relevant in the context of the EU’s carbon border adjustment measures which mandate imported products to meet the same level of emission norms that the EU implements. UK and Canada may follow suit.
• Such measures disregard multilaterally agreed rules of different emission norms based on the state of development and aim at protecting the competitiveness of the importing country’s domestic industry, these need to be effectively addressed in the WTO’s rules on trade and sustainability.
• In a recent submission to the General Council, India, with several other developing countries, pointed out that “WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances”, and that any reform must be premised on principles of inclusivity and development.
• This is particularly relevant for the design of trade rules governing subsidies which have traditionally allowed substantial policy space for developed countries’ industrialisation and agriculture, but constrained that of developing countries.

 

TRIPs waiver decision:

• The TRIPs waiver decision was perhaps MC12’s most anticipated and most contentious one. While the decision’s limited intellectual property (IP) waiver for Covid-19 vaccines was a compromise over India and South Africa’s original proposal, it includes the commitment that members will decide on the waiver’s extension to Covid-19 diagnostics and therapeutics by December 2022.
• Another MC-12 declaration, focusing on response to Covid-19 and other future pandemics, highlights the need for building on lessons learned and ensuring preparedness for any future pandemics, including on intellectual property and technology transfer.
• Working with like-minded countries to ensure a meaningful way forward to implement this would be critical for any real preparedness.

 

PSH:

• A permanent solution for public stockholding (PSH) for food security purposes has eluded India and other developing countries since 2015. Nevertheless, the limited protection offered by the Bali Peace clause of 2013 continues to protect our PSH programmes.
• In the run-up to MC-12, more than 80 developing countries agreed on a proposal for a permanent solution; it is important to carry that forward to make it a reality.

 

Food Security:

• On food security, MC-12 saw a decision on the supply of foodstuffs to the UN’s World Food Programme for humanitarian purposes, but not on government-to-government (G-to-G) arrangements for export of foodstuffs from PSH stocks to respond to a food security crisis.
• However, an MC-12 declaration on emergency responses to food insecurity mandating accessibility and affordability of food for those who need it presents a window of opportunity to work towards the latter.

 

Moratorium on customs duties:

• WTO members have, since 1998, maintained a moratorium on customs duties on electronic transmissions. India and South Africa have raised concerns about the resulting revenue loss.
• A 2019 UNCTAD study highlighted that developing countries, as the net importers of digitalised products, are losing tariff revenues (~$10 billion in 2017) due to the moratorium.
• The OECD has, however, argued that the moratorium is important for growing consumer welfare and export competitiveness. While the moratorium was extended for two years, it is important to marshal data on the pros and cons of any further extensions.

 

Fisheries subsidies:

• A historic new agreement to address fisheries subsidies for illegal, unreported, and unregulated fishing activities, demonstrated the ability of WTO to address environment and sustainability issues.
• Several elements relating to subsidies that contribute to overfishing/overcapacity have been left open for a later date.
• Work is therefore needed on two fronts: a clear domestic strategy for fisheries management while ensuring adequate protection for traditional livelihood fisheries, and preparing for equitable rules at the WTO for overfishing and overcapacity, while safeguarding our interests as a developing nation.

 

Way Forward:

• India also needs a coherent strategy to harmonise its stand under its bilateral FTAs and the WTO, so that one does not undermine the other. India’s FTAs with the UK, EU, and others, will venture into areas such as labour and environment.
• These would need to ensure that the crucial balance achieved in multilateral environmental agreements (e.g., the UNFCCC) or the ILO conventions are not compromised.