Table of Contents
WHY WTO IS CRUMBLING?
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- Organizational Structure of WTO
- Ministerial Conference – It Includes all members, meets once in 2 year and the 11th Ministerial Conference was held in Argentina)
- General Council – It acts a Dispute Settlement Body and Trade Policy Review Body
- Presently, IMF, World Bank and WTO has called for reforms in multilateral trading System in order to tackle ongoing trade war between China and US, stalemate at 11th Ministerial Conference of WTO, USA’s consideration of withdrawal from WTO.
- Reasons for Crumbling Of WTO
- Changing world order:
- Process Loopholes:
- Nature of agreements:
- Dispute Resolution:
- 1.The unipolar world under US was represented through institutions like WTO. Trade during this phase became rule based in nature which favored the west. But this unipolar world order is facing structural changes with rise of developing countries and their increasing share in world trade. This is perceived by US and EU as unfavorable whom they have attacked by resorting to policies of protectionism. E.g. China via trade war, Solar panel case against India in Dispute Settlement Body
- 2The negotiation process prime facie seems democratic but Ministerial Conferences are accused of being opaque and overly technical. The green room meetings prohibit participation of majority of countries. It has proven to be disproportionately advantageous to developed countries. Moreover, consensus- based rule making has become a root cause in stagnation in reforms.
- 3Agreements signed under WTO are alleged to be discriminatory and exclusionary in functioning. DDA (Doha Development Agenda has still not been able to provide permanent solution to subsidies under domestic support. WTO do not have any agreement to deal with digital enabled trade i.e. ecommerce.
AllegationsareleveledbydevelopedcountriesagainstdevelopingoffloutingTRIPS.Theyopposegeneric medicines, compulsory license and import substitution. On the other hand, developing countries cite public health concerns and level allegations of ever-greening against pharmaceutical companies
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- 4The dispute resolution mechanism is costly and lengthy. It is majorly resorted to by developed countries and developing countries are victims to the mechanism. There is politicization of the Appellate Body appointment and reappointment process. E.g. solar panel dispute was adjudged in favor of US is a case in point.
- WTO regulates 98% of global trade flows. The average value of tariffs has reduced by 85% since 1942. Tariff reduction along with technological advances have driven extra-ordinary expansion of global trade.
- Trade as a share of GDP has grown from 24% in 1960 to 60% in 2015. Expansion of trade has fueled economic growth, created jobs and increased household incomes around the world.
- An ever-deepening rules-based system—notably under WTO—brought more openness, transparency, and stability.
- Trade act as a powerful force too for inclusive Growth, by lowering poverty and by opening opportunities for small firms, women, farmers as well as fishermen.
- As nations’ economies have become more and more inter-dependent, breakdown of a trade organization will be major blow to international trade order
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