The world in WTO – WTO reforms and the USA | 17th June 2023 | UPSC Daily Editorial Analysis

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What's the article about?

  • It talks about the present status of the WTO and how India, as a G20 president, can initiate reforms in the WTO to keep it active.


  • GS2: Important International Institutions, agencies and fora – their Structure, Mandate;
  • Essay;
  • Prelims


  • The recently concluded meeting of the G20 working group on trade and investment focused on the important issue of WTO reform.
  • In this regard, the writer points out four important points that India should keep in mind while negotiating the reform process.


Need for WTO reforms:

  • The begining:
    • From the beginning it is argued that “trade policy is foreign policy”.
    • It was believed that trade relations will also ensure peace between nations. And thus, economic interdependence was promoted. 
    • Here comes the role of WTO. It aimed at legalising and policing economic interdependence.
  • The present:
    • But as the time changes, the nature of policies also change.
    • Today's world is dominated by geoeconomic considerations and heightened securitisation of international economic relations.
    • The pursuit of unilateralism in international economic relations, especially by developed countries like the US, is on the rise.
    • But the WTO lacks the necessary reform to handle this situation and ensure fair and free trade.
    • Thus, it is naïve to believe that the developed G20 countries are interested in reforming the WTO for the better.
    • A weak WTO perfectly suits the US as part of its foreign policy aimed at strategic rivalry with China.
    • Against this background the push for WTO reforms must come from G20’s “middle powers” such as India, Indonesia, Brazil, and South Africa.

Four critical areas of reform: While the term WTO reform means different things to different people, there are four critical areas that developing countries should focus on.

  • First, one of the cardinal pillars of the international trading regime is the presence of special and differential treatment (SDT) principle in WTO agreements.
    • Given the varying levels of development of different WTO member countries, SDT provisions give special rights to developing countries and obligate developed countries to treat the former more favourably.
  • Second, the appellate body — the second tier of the WTO’s two-tiered dispute settlement body — remains paralysed since 2019 because of the US’s continued nonchalance.
    • This is part of Washington’s overall game plan to dilute the policing part of the WTO, which, in turn, allows it to pursue trade unilateralism without many checks.
    • However, the remaining G20 countries need to either persuade the US to change its position or resurrect the appellate body without the US.
  • Third, given the slowness of the consensus-based decision-making in the WTO, from 2017 onward, there has been a shift away from this principle toward plurilateral discussions on select issues such as investment facilitation.
    • While the plurilateral approach is a welcome development for rule-making, there is a need to develop a multilateral governance framework for plurilateral agreements.
  • Fourth, it is imperative to address the transparency gap in the WTO, especially in terms of notification requirements.
    • Although WTO member countries are obliged to notify all their laws and regulations that affect trade, compliance with this obligation is poor. This increases the cost of trade, especially for developing countries.

Way Forward:

  • Trade multilateralism might be out of fashion, but remains of vital salience for countries like India.
  • Hence, India, under its Presidency of the G20, should work with others to drive the WTO reforms agenda aimed at making trade multilateralism inclusive.

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