India, South Africa and 43 countries of the African Group have raised concerns at a proposal by the US, the EU and Japan that requires member countries to increase their funding to the World Trade Organization (WTO) if they introduce or increase subsidies for domestic industry without reporting to the organisation.

The proposal also prohibits defaulters from presiding over WTO bodies and allows other countries to not answer questions posed by them.

“The proposal has evoked a strong response from many developing countries and they have opposed these sanctions and onerous provisions,” said an official aware of the details.

Based on a US submission last December, the proposal has been made “acknowledging the chronic low level of compliance with existing notification requirements under many WTO agreements” and is aimed “to strengthen and enhance transparency and improve the operation and effectiveness of notification requirements”.

The US, which introduced the proposal at the meeting of the WTO Council for Trade in Goods last week, said there ought to be consequences for members failing to meet transparency obligations as a lack of notifications on traderelated policies hinders the functioning of the organisation.

While Costa Rica and Argentina have sponsored the proposal, it found interest from 37 seven other countries, some of which highlighted the need to consider capacity constraints of developing and least-developed countries.

“The proposal is impractical given the asymmetry in resources and more so because proponents have induced punishments.

This goes against developing countries. While there is merit in transparency, one must not forget the given difference in endowment,” said another person in the know of the development.

The proposal has suggested designating a country as an “inactive member” if it fails to notify till three years of the notification deadline .

“If such an action is being planned against those who don’t notify then we need punitive action against countries who are blocking the appointment of judges at the WTO. This is a way to divert attention from more urgent issues facing the multilateral trading system,” said an expert on WTO issues.

Source : Financial Express