Context
(i) For many years, the significance and relevance of the World Trade Organisation (WTO) have been under question due to institutional paralysis, unresolved negotiations, and increasing protectionism.
(ii) It is solely responsible for ensuring rule-based trade between nations. Its main function is to ensure that trade flows without any impediments throughout the world.
Formation of WTO
(i) Predecessor: The General Agreement on Tariffs and Trade (GATT) was established by a multilateral treaty of 23 countries in 1947. It was designed to ensure free trade among its members by regulating and decreasing tariffs on goods. Also, a common mechanism for resolving trade disputes was given emphasis.
(ii) The Marrakesh Agreement: The WTO was established when the Uruguay Round of GATT negotiations were going on (1986 to 1994). 123 nations signed it in the year of 1994, marking the culmination of the Uruguay Round and the official establishment of the WTO. It expanded the scope of the GATT to include new areas like services, intellectual property, dispute resolution, etc.
(iii) The WTO officially started its operations on January 1, 1995, by the 1994 Marrakesh Agreement, replacing the GATT.
Organisational Structure of WTO
(i) Ministerial Conference: Its highest decision-making body is the Ministerial Conference, which takes place biannually.
(ii) General Council: It meets, as a trade policy review and dispute settlement body, multiple times in a year at its headquarters(Geneva).
(iii) Trade Related Intellectual Property Rights (TRIPS) Council: Its primary and sole function is to manage Goods, Services, and Intellectual Property, and give reports to the General Council.
Challenges Facing the WTO
(i) Dispute Settlement Crisis: Since the USA blocked judge appointments, the appellate body( apex dispute resolution body) has been dysfunctional. Countries now resort to bilateral retaliation and unilateral trade measures, weakening the WTO’s enforcement mechanisms.
(ii) Rise of Protectionism: The U.S.–China trade war, export restrictions, and sanctions are evidence of the WTO’s failure. Also, various nations violate Most Favoured Nation (MFN) principles, dismantling the entire global order.
(iii) Stalled Negotiations: The Doha Development Agenda (2001) aimed to address developing nations’ concerns but has stalled for over two decades. No meaningful consensus reached on agricultural subsidies, fisheries policies, or digital trade regulations.
(iv) Failure to Address Emerging Trade Domains: WTO lacks binding rules on e-commerce, digital taxation, as well as climate-related trade policies. Countries increasingly form regional trade agreements, bypassing WTO frameworks.
(v) Marginalisation of Developing Nations: Developing countries argue that their interests do not get attention in WTO negotiations. Also, Special and Differential Treatment (S&DT) provisions are under threat, limiting their ability to protect domestic industries.
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India’s Position on WTO Reforms
(i) Support for Multilateralism: India advocates for a rules-based global trading system. But at the same time, it opposes premature liberalisation that could harm domestic industries.
(ii) Concerns Over Digital Trade Regulations: India took a cautious stance on data localisation and e-commerce rules, fearing dominance by tech giants.
(iii) Push for Agricultural Reforms: India demands fair agricultural trade policies, as well as public stockholding for food security.
Way Forward
(i) Reviving the Dispute Settlement Mechanism: There is a need for reforms to restore the Appellate Body, ensuring fair resolution of trade disputes.
(ii) Addressing Digital and Climate Trade Issues: The WTO should establish binding rules on e-commerce, carbon border taxes, and green subsidies.
(iii) Ensuring Fair Representation: Developing nations must have greater influence in trade negotiations, ensuring equitable policies.
(iv) Special and Differential Treatment (SDT): Revisiting criteria that allow self-declared ‘developing’ countries like China to claim benefits.
Conclusion
It is true that at present, the WTO faces institutional challenges, but at the same time, it is still an important pillar of global trade governance. Also, ramification in the dispute resolution system, negotiating framework, and trade policies is very much important to revitalise its role in today’s economic landscape.