Context : Decline in WTO’s Functions and Relevance
- WTO was created for negotiations, dispute settlement, and trade monitoring—none of which are functioning effectively now.
- Doha Round (2001) negotiations collapsed; only the fisheries agreement has been partially concluded.
- Dispute Settlement Mechanism (DSM) is defunct due to U.S. blocking judge appointments to the Appellate Body.
- Trade monitoring is weak due to lack of transparency and cooperation from major members.
Relevance : GS 2(International Relations)
United States and WTO: Systemic Undermining
- U.S. began unilateralism with Trump’s “reciprocal tariffs,” continuing under Biden (e.g., Sections 232 & 301).
- U.S. grievance: it liberalized tariffs more than others (like India), expecting reciprocity which didn’t follow.
- WTO accused of “legislating from the bench” via DSM, raising U.S. concerns about sovereignty.
- There’s a bipartisan consensus in the U.S. that MFN (Most-Favoured-Nation) hasn’t served its interests.
MFN Principle & Rise of Bilateralism
- MFN, the foundation of WTO (Article I of GATT 1947), is being eroded.
- Rise in Free Trade Agreements (FTAs) reflects global shift from multilateral to bilateral trade deals.
- WTO has failed to scrutinize FTAs rigorously, weakening multilateralism further.
India’s Position and Resistance
- India has opposed deals on agriculture, public stockholding, fisheries subsidies, etc., citing domestic sensitivities.
- WTO’s cap on agri subsidies (10%) seen as unfair given U.S./EU historical subsidies.
- India prefers discussing labour/environment standards bilaterally rather than at WTO, for flexibility and control.
China’s Entry and Global Trade Impact
- China’s WTO accession underestimated: WTO rules couldn’t prevent market flooding or ensure reciprocal access.
- WTO failed to foresee or regulate excess capacity, e.g., China’s steel and cement overproduction.
- China’s actions, though not violating WTO rules per se, undermine the spirit of fair trade.
Structural and Procedural Flaws
- Consensus-based decision-making is a bottleneck; reforms are blocked by even two opposing members (e.g., India & U.S.).
- WTO lacks enforcement power to compel members to disclose trade measures or adopt reforms.
- EU’s proposal for alternative arbitration system has not gained traction globally.
Conclusion: Is WTO Still Relevant?
- WTO is not dead but comatose — functioning in form, not substance.
- It can’t prevent trade wars or economic crises in its current state.
- Relevance depends on major reforms in rules, dispute resolution, and decision-making processes.
