What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?. (UPSC IAS Mains 2018 General Studies Paper – 2)
World Trade Organization (WTO) officially commenced in 1995 after replacing the General Agreement on Tariffs and Trade (GATT). It was intended to supervise and liberalise international trade. But recent trade wars, initiated by USA with China, India and other countries, evoke the need of reform in WTO if it has to survive in the present context.
Current issues:
- There are clear signals that the current trading system represented by the WTO has lost its utility for the US and the EU.
- The US and the EU have not been able to counter China’s tariff manipulation. They are also bound by the commitments made under the WTO rules so they cannot raise import duties without violating WTO rules. But they do not want to meet the WTO obligations such as reducing agriculture subsidies.
- Their game plan is to put the old obligations on the back-burner and push the WTO to form rules on e-commerce, an area where the US firms have a clear edge.
- Most WTO member countries want them to first deliver on the agreed issues like reduction in agriculture subsidies.
The key areas of reforms are:
- There is urgent need of reforms regarding bringing transparency, shortening of time frames, permanent panel body, special and differential treatment for developing countries etc. India can benefit from the reforms if proposals specific to developing countries are accepted.
- Though WTO has come out with Trade Facilitation Agreement (TFA) in this regard, but it mainly addresses the trade of goods. India being a major service provider would benefit if reforms are carried out in trade facilitation of services. It is expected that there are considerable economic benefits from the better movement of people across borders.
- The establishment of procedures and practices that are more inclusive of the majority of WTO Members, notably developing countries is needed.
- Adoption of “peace clauses” for developing country implementation of current agreements. This will formalise the commitments made by major trading powers to allowing “grace periods” and to exercising “due restraint”.
- The Uruguay Round’s single package approach is not working in the Doha Round and new types of negotiation modes have been advocated.
- Dispute settlement mechanism must be strengthened and made faster.
- Separation of political and human rights issues from trade disputes under SPS norms is needed.
The WTO is at a crossroads. Not only are the multilateral trade negotiations stuck, but overall rule-making has made little progress while alternative trade pacts, not least the mega-regional arrangements, have clearly challenged the position of trade multilateralism.
The impasse of the Doha Round is not so much a result of transatlantic disagreement as a situation in which highly industrialised countries and large developing countries disagree over the type of market access and protection of vulnerable sectors of the economy.
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