21/08/2019 - International relations

kindly evaluate w.r.t question and key word

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KEY POINTS

Global economic slow down

·        Trade wars due to protectionist policy by USA and China.

·        US withdrawal of Generalized system of preferences affected the developing countries.

·        Chinese rise and US fears are straining their bilateral trade and causing serious collateral damage to the institution that has served well the cause of trade, growth and stability of the world economy.

·        Projections of World bank group shows that Global Growth to Weaken to 2.6% in 2019

Utility of WTO

·        Since the WTO came into being in 1995, the world has witnessed massive changes, some deeply structural in nature.

·        Communication technologies and containerisation lowered costs and boosted volumes of components moving in and out of countries allowing production chains to become increasingly international and also much more complex.

·        Growth in trade has exceeded growth in world GDP and has been associated with improved standards of living. Today, the WTO regulates more than 98 per cent of global trade flows among its members.

·        It also monitors the implementation of free trade agreements, produces research on global trade and economic policy, and serves as a forum for settling trade disputes between nations.

WTO lacking enforcement

·        In any case, a unilateral finding of unfair trading practices and subsequent action by the US ignoring their own WTO commitments, places other countries on higher moral ground.

·        A gracious explanation is that the US is using its power to discipline the trading system for the benefit of all.

·        Dispute settlement in the WTO has become dysfunctional and appeals to the appellate body (AB) are taking longer than the prescribed 90 days, the US has taken matters in its own hands, playing the part of benign dictator for the common good.

Relevance of WTO (multilateralism)

·        There is no doubt that the multilateral process needs to be fortified and it cannot happen until the strongest member is vested in it.

·        Multilateralism implies that every country agrees to bind itself to the same rules as other (smaller) countries even when it conflicts with self-interest.

·        Admittedly, trade is much more complex now; negotiation among 164 members on standards to generate consensus is at best hard, and at worst, impossible.

·        The alternative, regionalism, involves a limited number of countries and ostensibly relies less on “altruism” of the members and more on mutual gain. But it suffers from an exclusionary bias.

·        Multilateral agreement is still the best, and when reasonable men and women sit around the table, a solution can be found.

·        In the absence of pure multilateral negotiations, interested members could negotiate plurilaterally with the aim of achieving multilateral outcomes. But burden-sharing, as opposed to altruism among the big players, will remain an integral part of the multilateral approach. The WTO may still emerge as the lynchpin of global trade governance.

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