• UGI USER
  • Mar 26, 2024
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WTO HOBBLING WHEN THE WORLD NEEDS IT

Syllabus:

GS 2:

  • Important International institutions, agencies and fora- their structure, mandate.

Focus:

  • Recently, the 13th Ministerial Conference (MC13) of the World Trade Organization took place in Abu Dhabi, UAE.
Source:- WTO

 The 13th Ministerial Conference of the World Trade Organization (WTO) in Abu Dhabi concluded with minimal achievements, highlighting the organization’s challenges in addressing global trade issues amid economic nationalism and geopolitical tensions. This article delves into the root causes of the WTO’s struggles, including the shift away from multilateralism, the crisis in its dispute settlement mechanism, development concerns, and the impact of trade protectionism.

The WTO Ministerial Conference:

Overview:

The WTO Ministerial Conference gathers representatives from member countries of the World Trade Organization (WTO), functioning as its highest decision-making body. Typically held biennially, it serves as a pivotal forum for shaping the organization’s agenda and activities.

Source:- WTO

Objectives:

  • Setting the agenda for WTO activities and negotiations.
  • Engaging in discussions and negotiations on various trade-related topics such as market access, subsidies, and dispute resolution.
  • Formulating policies aimed at enhancing global trade and economic cooperation.
  • Facilitating agreements among member countries on trade rules and regulations.
  • Potential outcomes include agreements or declarations guiding member countries’ trade policies.
  • Developing action plans to tackle specific challenges identified during the conference.

Key Outcomes of WTO’s 13th Ministerial Conference:

  • Accessions:
    • Endorsed accession of Comoros and Timor-Leste, bringing WTO Membership to 166 countries, representing 98% of world trade.
  • Reform of Deliberative and Negotiating Functions:
    • Welcomed efforts to improve WTO Councils, Committees, and Negotiating Groups.
    • Emphasized enhancing organization’s efficiency and effectiveness.
    • Committed to continue the reform process and report progress to MC14.
  • Dispute Settlement Commitment:
    • Renewed commitment to achieving a fully functional dispute settlement system accessible to all Members by 2024.
  • E-Commerce Moratorium:
    • Extended until MC14 or 31 March 2026, whichever is earlier.
  • TRIPS Non-Violation and Situation Complaints:
    • Extended moratorium on non-violation and situation complaints under the TRIPS Agreement.
  • COVID-19-related TRIPS Waiver:
    • Noted lack of consensus on expanding product scope for special rules, which won’t apply to Covid-19 diagnostics and therapeutics.
  • Special and Differential Treatment:
    • Adopted decision to improve the use of special and differential treatment provisions.
  • Plurilateral Agreements and Initiatives:
    • Several agreements or progress reports made in important areas, including Investment Facilitation for Development (IFD).
  • Domestic Regulation of Services:
    • Agreement reached on implementing new disciplines for domestic regulation of services, aimed at facilitating trade by streamlining procedures.
  • Sustainability-Related Initiatives:
    • Efforts made in sustainability initiatives, such as addressing plastics pollution and fossil fuel subsidy reform.
  • Fisheries Subsidies:
    • Progress welcomed towards the Agreement on Fisheries Subsidies (AFS) entry into force, with 71 Members ratifying as of March 1, 2024.

Challenges Currently Undermining the WTO’s Effectiveness:

  • Erosion of Multilateralism:
    • Noticeable decline in multilateral cooperation, leading to increased trade disputes and unilateral actions.
    • Lack of progress in addressing key issues like fisheries subsidies during MC13 indicates serious divisions among member countries.
  • Protectionism and Trade Wars:
    • Proliferation of tariffs and trade barriers undermines principles of free trade.
    • US-China trade dispute strains multilateral trading system and challenges WTO’s mediation capabilities.
  • Dispute Settlement Mechanism Crisis:
    • Dysfunction of WTO’s dispute settlement mechanism due to US blocking appointments to Appellate Body.
    • Absence of functional mechanism erodes confidence in multilateral trading system.
  • Development Divide and Special and Differential Treatment:
    • Disparities persist in developing nations’ capacity to participate in trade negotiations and reforms.
    • Least-developed countries lack resources and assistance, perpetuating their marginalization.
  • Digital Trade and E-commerce:
    • Rapid growth of digital trade poses regulatory challenges outside traditional trade agreements.
    • WTO must adapt rules to accommodate digital trade while ensuring fair competition.
  • Environmental and Sustainability Concerns:
    • Pressure to incorporate environmental considerations into trade rules due to climate change and biodiversity loss.
    • Balancing environmental objectives with trade liberalization requires innovative approaches.
  • Public Health and Access to Medicines:
    • Covid-19 highlights importance of public health in trade policy.
    • Need to reconcile intellectual property rights with access to medicines, especially during emergencies.
  • Agriculture and Food Security:
    • Little progress in updating WTO disciplines on agriculture since 2000.
    • Failure to reach consensus at MC13, particularly on public stockholding for food security purposes, reflects ongoing challenges.
Key WTO Agreements: Shaping Global Trade Rules

  • General Agreement on Tariffs and Trade (GATT):
    • Signed in 1947 by 23 nations post-World War II.
    • Aimed to reduce tariffs and trade barriers to boost international trade.
    • Uruguay Round negotiations addressed its limitations, leading to the establishment of the WTO in 1995.
    • Addressed at the 13th Ministerial Conference.
  • Agreement on Agriculture (AoA):

    • International treaty under the WTO.
    • Objective: Reduce government support and subsidies to domestic agricultural producers.
    • Consists of three pillars: Domestic Support, Market Access, and Export Subsidies.
    • Discussed at the 13th Ministerial Conference.
  • General Agreement on Trade in Services (GATS):
    • Treaty under the WTO, effective from January 1995 after Uruguay Round negotiations.
    • Extends multilateral trading system to service sector, similar to GATT for merchandise trade.
    • Covers various service sectors, requiring fair treatment of foreign providers.
  • Agreement on Trade-Related Investment Measures (TRIMS):
    • Negotiated during the Uruguay Round, applies to measures affecting trade in goods.
    • Aims to prevent trade-restrictive and distorting effects of certain investment measures.
    • Prohibits members from applying measures contrary to GATT provisions on national treatment and quantitative restrictions.

The WTO is at a crossroads, challenged by economic nationalism, geopolitical tensions, and a departure from its foundational principles of multilateralism and consensus-based decision-making. To remain relevant and effective, the organization must overcome internal divisions, revive its dispute settlement mechanism, address developmental concerns meaningfully, and counter the rise of trade protectionism. Achieving these goals requires renewed political commitment from all member nations.

Source: India Express

Mains Practice Question:

“Examine the challenges faced by the World Trade Organization (WTO) in the context of the 13th Ministerial Conference outcomes. Discuss the implications of these challenges for global trade and suggest measures to rejuvenate the WTO for enhancing its role in promoting a fair and sustainable global trade system. Analyze the impact of economic nationalism and trade protectionism on the WTO’s functioning and its implications for developing countries.”