Most of the developed countries are losing their interest on multilateralism in trade, which makes WTO weak.
India should be more actively engaged to arrest the slide and then make the WTO a more equitable organisation.
How did WTO evolved into a multilateral trade forum?
In the early 1990s, global trading powers U.S., EU, Japan and Canada pushed for a GATT (General Agreement on Tariff and Trade) agreement that would vastly increase access for their products in foreign markets.
They succeeded with the 1994 Marrakesh agreement by which “farm subsidisers” of the U.S. and EU agreed to bring agriculture under GATT rules.
In exchange, the developing countries had to pay up front by reducing import duties on manufacture, opening their markets to services, and agreeing to strict protection of intellectual property rights.
The Marrakesh agreement also created the new Dispute Settlement Body (DSB) to adjudicate on trade disputes.
By which WTO was born in 1995, replacing the General Agreement on Tariffs and Trade (GATT).
Why developed nations are losing interest on WTO?
WTO has been felled by the weight of the extraordinary ambitions, many developed countries made pressure to bring many more “new” non-trade issues under the WTO.
As a consequence, since the late 2000s, the organisation has been unable to carry out its basic task of overseeing a successful conduct of multilateral trade negotiations.
The WTO seemed to be just the kind of “super” international organisation that the major powers wanted.
This over-reach of the organisation at sometimes had the opposite of the intended outcomes of the developed nations.
The entry of China into the WTO in 2001 also became a challenge for developed countries.
China used its newly acquired ‘most favoured nation’ status as its tool to expand exports by its export ambitions China hollowed out U.S. manufacturing.
Due to the active presence of developing nations like India, Brazil etc. and majority of such memberships, Developed nations realised that no more they can influence WTO.
What are the recent threats posed by the developed nations?
The U.S. and EU have sought to formally scrap the DDA and try to make new laws which is favourable for them.
In 2014, trade facilitation (covering customs rules and procedures) was taken out of the DDA and a stand-alone agreement was signed, because the U.S. and the EU were interested in it.
This virtually destroyed the principle of reciprocity under which each country wanting to obtain gains in specific areas makes concessions in others.
The U.S. has even begun to undermine the very elements of the WTO that it had pushed through in the early 1990s.
It now refuses to implement some DSB decisions.
Most recently, it has taken decisions on DSB appointments which will in effect bring adjudication to a halt.
During 11th ministerial meeting at Buenos Aires, proposals were made for the WTO to take up “new issues” such as e-commerce, investment facilitation and trade and gender.
But all these were outside the DDA and of interest only to a select membership.
