WORLD TRADE ORGANISATION (WTO)
1. Context
2. World Trade Organisation (WTO)
- WTO is an international organization set up in 1995 by replacing the General Agreement on Trade and Tariffs (GATT) under the Marrakesh Agreement.
- It is the only global international organization dealing with international Trade between nations.
- Its HQ is located in Geneva, Switzerland.
- Currently, WTO has 164 members and India is a founding member of WTO.
- Currently, the head (Director-General) of WTO is Ngozi Okonjo-Iweala.
3. Objectives of WTO
- To formulate and implement rules for international trade.
- To provide a platform for negotiating and monitoring further trade liberalization.
- To provide a platform for the settlement of disputes.
- Providing assistance to the developing, least-developed, and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.
- To cooperate with the other major economic institutions (like the UN, World Bank, IMF, etc.) involved in global economic management.
4. Important trade agreements of WTO
- Agreement on Agriculture (AoA),
- Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights),
- Agreement on the Application of Sanitary and Phytosanitary Measures (SPS),
- Agreement on Technical Barriers to Trade (TBT),
- Agreement on Trade-Related Investment Measures (TRIMS),
- General Agreement on Trade in Services (GATS) etc.
5. Geoeconomic Shift and the Need for WTO Reforms
- Over 50 years ago, Richard Cooper argued that "trade policy is foreign policy," emphasizing the value of economic interdependence to deter security confrontation.
- Today, the world is characterized by heightened securitization of international economic relations and a shift towards geoeconomic considerations, challenging the belief in economic interdependence as a deterrent to security issues.
- The WTO, established to legalize and monitor economic interdependence, faces challenges due to unilateralism in international economic relations, particularly by developed countries like the US, who show little regard for WTO law.
- Economic policies such as industrial subsidies and local content requirements have resurfaced, forgotten WTO rules like security exceptions are gaining prominence, and efforts to weaken trade multilateralism in favor of external plurilateral alignments are being made.
- Jeffrey Schott argues that expecting the G20 countries, especially the developed ones, to reform the WTO for the better is naïve, as a weak WTO aligns with the US foreign policy objective of strategic rivalry with China.
- Schott suggests that middle powers like India, Indonesia, Brazil, and South Africa should take the lead in pushing for WTO reforms to address the current challenges.
- Developing countries should prioritize four critical areas for WTO reform, with special attention on preserving the principle of special and differential treatment (SDT), which provides special rights to developing countries and obligates developed countries to treat them more favorably.
6. Key Areas for WTO Reforms
Strengthening Special and Differential Treatment (SDT): Lawyers Vineet Hegde and Jan Wouters highlight that only 21% of SDT provisions in WTO agreements obligate developed countries to provide differential treatment to developing countries. Efforts should focus on giving more enforceability to SDT provisions.
Reviving the Appellate Body: The WTO's appellate body has been paralyzed since 2019 due to the US's indifference. Other G20 countries need to either convince the US to change its stance or revive the appellate body without US participation to restore the WTO's dispute settlement mechanism.
Balancing Consensus and Plurilateral Discussions: With consensus-based decision-making in the WTO proving slow, there has been a shift towards plurilateral discussions on specific issues. While plurilateral agreements offer opportunities for rule-making, there is a need to establish a multilateral governance framework that incorporates key principles of non-discrimination, transparency, and inclusivity.
Addressing Transparency Gap: The WTO lacks transparency in terms of notification requirements. Members have a poor record of notifying laws and regulations affecting trade, leading to increased trade costs, particularly for developing countries. Efforts should be made to improve compliance with notification obligations.
Importance of Trade Multilateralism: Despite current trends, trade multilateralism remains crucial for countries like India. India, as the G20 President, should collaborate with other nations to drive the WTO reforms agenda, promoting inclusive trade multilateralism.
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For Prelims: World Trade Organisation (WTO), General Agreement on Trade and Tariffs (GATT), Trade-Related Aspects of Intellectual Property Rights (TRIPS), and General Agreement on Trade in Services (GATS). For Mains: 1. Discuss the key areas for reforms in the World Trade Organization (WTO) and their significance for promoting inclusive trade multilateralism. (250 Words) |
Previous year Questions
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1. In the context of the affairs which of the following is the phrase "Special Safeguard Mechanisms" mentioned in the news frequently? (UPSC 2010) A. United Nations Environment Program B. World Trade Organization Agreement C. ASEAN-India D. Free Trade G-20 Summits Answer: B 2. Consider the following statements: (UPSC 2017) 1. India has ratified the Trade Facilitation Agreement (TFA) of the WTO 2. TFA is a part of WTO's Bali Ministerial Package of 2013 3. TFA came into force in January 2016 Which of the statements given above is/are correct? A. 1 and 2 only B. 1 and 3 only C. 2 and 3 only D. 1, 2 and 3 Answer: A 3. In the context of which of the following do you sometimes find the terms 'amber box, blue box, and green box' in the news? (UPSC 2016) A. WTO affairs B. SAARC affairs C. UNFCCC affairs D. India-EU negotiations on FTA Answer: A |
Source: The Indian Express
