WTO: Global Trade Body, at existential risk (GS II, GS III)

WTO: Global Trade Body, at existential risk (GS II, GS III)

CONTEXT: The World Trade Organization (WTO), the global trade body — is facing a serious crisis of existence . 

ABOUT: The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. It officially commenced operations on 1 January 1995, replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948. The WTO is the world’s largest International economic organization, with 164 member states representing over 96% of global trade and global GDP. 


America’s stance w.r.t. WTO→ America feels that the WTO has not served its interest by failing to control China’s rise and constantly dragging the U.S. in several trade related disputes.

  1. The policy of the USA led to the crippling of the Appellate Body (AB) of WTO.  The U.S. has blocked the appointment of AB members and due to rise in vacancies, it has stopped functioning.

  2.  Moreover, the U.S. has stalled the proposal to establish an alternate appellate arbitration mechanism to address the pending crisis.

RESULT→ Countries now do not usually comply with the WTO panel decisions

  1. Despite a clear mandate to find the solution for the public stockholding       for food security purposes as declared in the 2015 Nairobi ministerial  meeting, it failed.

For Countries like India that use Minimum Support Price (MSP)- backed mechanisms to procure foodgrains. They find some reservations with WTO rules, i.e. if MSP is higher than the external reference price, the budgetary support will distort the trade and is subject to an overall capping. 

According to them, in order to support the farmers and provide food to the poor at subsidised rates, India may breach this WTO capping. 

  1. The WTO member countries continue to disagree on the need of waiving the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 related medical products.

  2. The WTO is close to signing a deal on regulating irrational subsidies for fishing leading to the overexploitation of marine resources by countries like China.

  3. The stalemate at the WTO has led to the emergence of mega plurilateral trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — a treaty between 11 countries. 

Another one is the Regional Comprehensive Economic Partnership (RCEP) agreement between Asian economies and countries. These plurilateral agreements fragment the global administration on International trade but marginalise such groupings.

TO CONCLUDE: In Spite of its flaws, the WTO is the only platform where developing countries like India(not party to any mega plurilateral trade agreements), can push for evolving an inclusive global trading order that responds to the systemic imbalances of extant globalisation. What is at stake is the future of trade multilateralism and not just an institution called WTO. It is the high time such Institutions should be restored to its popularity and focus on the objectives, for which it was created.

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