7 PM Editorial |Reviving WTO to Secure Global Trade in COVID Times|4th August 2020

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Reviving WTO to Secure Global Trade in COVID Times


Relevance of WTO(World Trade Organization) in global trade rules is coming under challenge in recent years. In a world where COVID pandemic has disrupted global supply chains and trade, it is pivotal to revive WTO to ensure security and predictability of trade.

WTO – Structure and functions:

WTO was established by marrakesh agreement in 1995 after the conclusion of Uruguay round of negotiations.


Main functions:

  • Forum for negotiations of trade rules and agreements
  • Administering and monitoring existing trade agreements like Agreement on Agriculture, Trade Facilitation Agreement.
  • Dispute resolution in trade through a Dispute settlement Body(DSB) and appellate body

Importance of WTO lies in the fact that it is based on principle of equality and non discrimination

  • Every country has an equal voting right
  • MFN(Most Favoured Nation) mechanism ensures rights of all members are protected in trade.
  • Dispute Settlement Body(DSB) enforces trade rules and provides redress to all nations irrespective of their economic size

Hence WTO is very crucial for rules based global trading regime.

Troubling times for WTO:

WTO is facing troubling times recently due to following issues:

  • Difficulty in consensus building: With 164 nations, negotiations have become difficult to reach consensus
  • Divergence in priorities:
    • Developing and least developed nations have priorities of the DOHA development agenda. Promoting development and correcting injustices of Uruguay round are focus for these countries
    • Developed nations are proposing new agenda on issues of e-commerce, investment facilitation, services trade, gender norms.
  • Dysfunctional DSB: USA has blocked appointment of judges on DSB. This has effectively prevented the functioning of DSB.
  • Increasing regional agreements and WTO plus provisionson intellectual property, labour laws etc. Trans Pacific partnership between pacific countries is an example.
  • Trade warsand sidelining of WTO
  • US reluctance in engaging with WTO by citing multiple issues like developing country classification criteria.

These have to be addressed to bring back the relevance of WTO.

Steps to revive WTO process:
  • New DG(Director General) must be appointed expeditiously. DG promotes consensus building of nations which is needed in current fragmented scenario
  • Engaging with USA to bring it back into the WTO fold. Genuine concerns must be addressed which will build confidence in the process
  • DSB must be revived. Without the dispute redressal mechanism the whole idea of the WTO will be defeated. Hence this must be a priority. USA must be convinced of the same.
  • Limiting the agenda of the next ministerial conference to produce outcomes. This can improve confidence in the body. Only fisheries subsidies can be taken up in June 2021 ministerial.
  • China and its trade practices must be addressed. Role of state owned enterprises, forced technology transfer and non market economies must be discussed and clarified.
  • Discussions must move ahead on the agenda of WTO negotiations. While developed countries issues may be considered to be included, this must not dilute existing DOHA development agenda. Agriculture issues(Public stock holding procurement, special safeguarding mechanism), Special and differential treatment rules must be finalized.
  • WTO must deliberate on whether plurilateral agreements(only some countries negotiate and agree) should be part of WTO. If they are part of WTO, induction of other countries into the agreement at a later date and applicability of agreement on MFN basis to countries which are not part of agreement, must be decided.

Global trade is facing uncertain times due to pandemic, protectionism and trade wars. WTO is pivotal in ensuring security and predictability in such uncertain times. Hence it is important to rejuvenate the global body to promote economic growth of the world.

Source: https://www.hindustantimes.com

Mains Question:
  1. WTO has become dysfunctional and irrelevant in recent times. What challenges is it facing? Suggest steps to revive WTO? [15  marks, 250 words]
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