Sambhav-2025

Approach In introduction, define the World Trade Organization (WTO) and highlight its role in global trade governance. Discuss the challenges faced by WTO and key areas of WTO reform in the context of India’s interests. Conclude suitably.

Introduction

The World Trade Organization (WTO), established in 1995, regulates international trade through agreements and dispute resolution mechanisms. However, rising protectionism, trade wars, and inefficiencies in dispute settlement have weakened its role. To maintain its relevance, comprehensive reforms are necessary to address global economic challenges and India's trade interests.

Challenges Faced by WTO:

• Dispute Settlement Paralysis: The Appellate Body has been non-functional since 2019 due to the US blocking new appointments, undermining WTO’s credibility.
• Stalled Negotiations and Decision-Making Gridlock: The Doha Development Agenda (DDA), initiated in 2001, remains incomplete, reflecting difficulties in consensus-building.
• Rise of Protectionism and Trade Wars: US-China tariff wars and subsidy disputes challenge WTO’s free trade principles.
  • A possible U.S. withdrawal could weaken WTO’s legitimacy, disrupt global trade rules, and escalate unilateral trade actions.
• Ineffective Special and Differential Treatment (S&DT): Developed nations argue that emerging economies like India and China should take on greater obligations, diluting benefits for Least Developed Countries (LDCs).
• Lack of Transparency and Compliance Issues: Many WTO members fail to disclose trade measures, limiting the effectiveness of policy monitoring.
• Rise Of Minilatralism: The rise of minilateralism undermines WTO’s multilateral framework, as countries prefer regional trade blocs like Association of Southeast Asian Nations Free Trade Area (AFTA),and Mercosur (Southern Common Market) etc.

Key Reforms Essential for WTO:

• Restoring the Dispute Settlement Mechanism:
  • Reviving the Appellate Body to ensure fair resolution of trade disputes.
  • Strengthening transparency and compliance in dispute resolution procedures.
• Enhancing the WTO’s Negotiating Function:
  • Adopting flexible negotiation models to break the deadlock on pending agreements (e.g., fisheries subsidies, e-commerce regulations).
  • Promoting plurilateral agreements where full consensus is difficult.
• Improving Transparency and Monitoring:
  • Strengthening notification requirements to prevent hidden trade barriers (e.g., agricultural and industrial subsidies).
  • Establishing a mechanism to address non-compliance, especially by major economies.
• Reforming Special and Differential Treatment (S&DT) Provisions:
  • Protecting the interests of developing nations, ensuring they retain policy flexibility for economic growth.
  • Avoiding arbitrary graduation of emerging economies without considering structural economic differences.
• Incorporating New Trade Challenges:
  • Addressing digital trade, cross-border data flows, and the impact of artificial intelligence on trade.
  • Ensuring a balanced approach to environmental and labor standards without trade distortions.

India’s Interests in WTO Reforms:

• Agriculture and Food Security:
  • Defending Minimum Support Price (MSP) and Public Stockholding (PSH) programs against unfair trade restrictions.
  • Ensuring the Agreement on Agriculture (AoA) does not disadvantage Indian farmers.
• Access to Dispute Settlement:
  • A functional Appellate Body is crucial for India to challenge unfair trade measures (e.g., US tariffs on Indian exports).
• Protection of MSMEs and Digital Economy:
  • Advocating for fairer e-commerce regulations that do not favor developed nations' tech giants.
  • Ensuring that India’s digital policies (e.g., data localization) are not unfairly targeted.

Conclusion

WTO reforms are essential to restore fair, rule-based global trade by strengthening dispute resolution, transparency, and negotiations. For India, ensuring agricultural security, fair e-commerce rules, and equitable trade terms should be key priorities. A balanced and inclusive reform agenda will enhance WTO’s credibility and support sustainable global economic growth.