Complying to WTO puts a burden on developing nations. It is high time India rethinks its obligation to WTO. (250 Words)

Mentors Comments:
1. Discuss WTO – India relation briefly
2. Discuss why WTO has been burdensome – TRIPS, Doha Development Agenda, etc.,
3. However, argue how WTO has, in fact, helped developing countries, quoting the recent WTO win on solar dispute against the US

Link: https://www.thehindu.com/opinion/op-ed/a-minor-win-for-india-at-wto/article29376593.ece

Answer:

The World Trade Organization is an intergovernmental organization that regulates international trade. WTO aims at making global trade smooth, predictable and free. India and WTO have locked horns in the past owing to various international trade issues like agricultural subsidies, solar panel content, etc India along with other developing nations has demanded institutional, operational and structural reforms in WTO.

Following are the problems facing the WTO are:

1. Dispute settlement cases continue to be filed for the time being and are being litigated. A civil dialogue over trade issues persists.
2. Technical functioning is now wholly inadequate to meet the major challenges to the strategic relevance of the WTO in the 21st century. In critical areas, the organization has neither responded, nor adapted, nor delivered.
3. Dimensions of its structures and functions are fragile, creaking, and failing in parts.
4. Functioning of state enterprises engaging in commercial activities is interfering with and distorting the operative assumption of the General Agreement on Tariffs and Trade
(GATT)/WTO that international trade is to be conducted, principally, by private sector operators in response to conditions of supply and demand through price in a market economy.
5. Developed countries led by the US and the European Union sought to find a way out of the deadlock at the WTO talks by forming large pressure groups on e-commerce, investment facilitation and MSMEs within the WTO with more than 70 members in each formulation.
6. Many WTO members bear responsibility for the use of trade-distorting domestic subsidies. Agricultural and industrial subsidies have caused blockages in the system and prompted protectionist reactions in a number of WTO members.
7. India along with other developing and least developed countries, namely the G-33 had opposed the Agreement on Agriculture (AoA) made in Uruguay round due to its favouring lean towards developed nations. As a result, the peace accord has been agreed upon in 2013 for the food stocking program without violating the AoA.
8. Blockage and deadlock in the Appellate Body stage of the WTO dispute settlement system triggered the present crisis.
9. The WTO lost the critical balance between the organisation as an institution established to support, consolidate, and bind economic reform to counter damaging protectionism, on the one hand, and the organisation as an institution for litigation-based dispute settlement, on the other hand.
10. For years now, the multilateral system for the settlement of trade dispute has been under intense scrutiny and constant criticism. The U.S. has systematically blocked the appointment of new Appellate Body members (“judges”) and de facto impeded the work of the WTO appeal mechanism.
11. The Doha Development Agenda, which the Indian government has been keen to promote and which is based on multilateralism, has been put on hold much to the chagrin of many developing countries comprising the Group of 33.
12. There is a trade war between the US and China despite both being a member of WTO. This negates the core non-discriminatory principle of WTO.

However, the WTO confers specific benefits to all its members including India. These specific benefits are as follows-

  • enabling countries to take binding commitments which increase certainty over their trade policies
  • applying rules which offer a more equitable playing field (although improvements can still be made) and also a predictable global trade environment
  • providing flexibilities that better allow developing countries to undertake such
    commitments,
  • facilitating technical assistance to build trading capacity within those economies,
  • providing a way to settle disputes in a fair, open manner. For instance, A WTO panel accepted India’s claim in a dispute concerning U.S. regulations on the domestic content requirement in the production of renewable energy.
  • providing a forum to negotiate further commitments and updated rules.

Way forward
1. A vibrant WTO cannot accommodate conflicting economic models of market versus state. All WTO members will have to accept the operative assumption of a rules-based order steered by a market economy, the private sector, and competition.
2. Launch negotiations to address the intertwined issues of agricultural subsidies and market access, while recognising that food security concerns will not disappear.
3. A credible trading system requires a dispute settlement system that is accepted by all.
4. Launch serious negotiations to restore the balance, and we must do so in an open-ended plurilateral manner that cannot be blocked by those who do not want to move ahead.
5. GATT/WTO rules in a number of areas are outdated. New rules are required to keep pace with changes in the market and technology. Rules and disciplines on topics ranging from trade-distorting industrial subsidies to digital trade require updates.

A reformed WTO will have to be constructed on the foundation of liberal multilateralism, resting on open, non-discriminatory plurilateral pillars, an improved Appellate Body, explicit accommodation of regional trade agreements, and appropriate safety valves for rules-based sovereign action. A reaffirmed commitment to the rules-based liberal market order with a development dimension must be the foundational starting point.

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