Save the WTO, save world trade

The WTO may have flaws, but it is a crucial platform for developing nations like India.

 Save the WTO, save world trade

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• The story: The only multilateral trade body in the world - the World Trade Organisation WTO - is stuck in a quagmire now. Its Geneva MC November 2021 will be a chance to save it from collapse.
• Story of the WTO: It came into being in 1995, when neoliberalim was rising and shining. It represented free market capitalism. Some sensible people kept criticising it even then, calling it an agent of the US imperialist agenda.

1. 25 years later, the US has lost interest in WTO
2. It feels that American interests are not served, China's rise is not curtailed, and US fails to win many trade disputes
3. Trump was inimical towards is, and so is Biden

• AB crippled: The Appellate Body (AB) of the WTO has now been crippled, due to vacancies. This dispute settlement body is a permanent one, with seven members, and is the appellate court against decisions of WTO panels. US blocks fresh appointments, and vetoes proposals to find solutions also. The EU wanted an alternative mechanism, but the US stalled that too.
• WTO's four challenges:

1. FIRST - The 'public stockholding of foodgrains' issue has been hanging fire since 2015 Nairobi MC. For India that uses the MSP mechanism to buy foodgrains, this is a big issue. WTO allows countries to buy, stock and distribute food, but if the MSPs used in this are higher than the external reference price, then the support by govt. is taken as "trade-distorting". It is then capped. India can soon breach the cap, as it needs to buy more at higher MSPs. Only a temporary waiver is given in WTO for now, but a permanent solution is needed (ie. not counting MSP-support as trade-distorting).
2. SECOND - Since 2020, when India and South Africa put the proposal for waiving all TRIPS norms on Covid-19 medical products, nothing has moved. Both nations wanted free access to knowledge pertaining to vaccines and more. It's time for action.
3. THIRD - Irrational subsidies on fishing that lead to over-exploitation are under a scanner at WTO. China catches the most fish and exports the most too. However, the new agreement constraining subsidies must keep in mind livelihoods also, while working for ocean resource preservation. So an effective "special and differential treatment" is needed.
4. FOURTH - Problems at the WTO have led to the parallel growth of mega deals like CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) between 11 countries. Then there's the RCEP (Regional Comprehensive Economic Partnership). Such agreements fragment the world trade structure, pusing WTO to the margins.

• World Trade Organisation (WTO): It is the only global international organization dealing with the rules of trade between nations, and was created in 1995 superseding the 1947 General Agreement on Tariffs and Trade (GATT). It is headquartered at Geneva in Switzerland, and has over 160 members representing 98 per cent of world trade. Its Ministerial Conference (MC) is the topmost decision-making body of WTO which usually meets every two years. Its General Council is the highest-level decision-making body that has representatives from all member governments and meets  regularly to carry out the functions of the WTO. The General Council also meets under different rules as the Dispute Settlement Body and as the Trade Policy Review Body.
• Summary: India wants a rules-based global order. The only way to tackle economic nationalism and unilateralism is institutional multilateralism. WTO is where things can change. The imbalances that today's globalisation created can be tackled only in a forum like WTO.
• EXAM QUESTIONS: (1) What is "rules based global trade order"? Is it in India's interest? Explain. (2) The WTO is one forum that can help tackle the fragmentation in world trade due to new agreements like the CPTPP and RCEP. Do you agree? Explain. (3) Why is the WTO weakening? List four major reasons.

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