Reasons for Crumbling Of WTO

♤ Changing world order: 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.

♤ Process Loopholes: The 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.

♤ Nature of agreements: Agreements 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. Allegations are leveled by developed countries against developing of flouting TRIPS. They oppose generic 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.

♤ Dispute Resolution: The 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.

1.8. Relevance of WTO

Amidst all these challenges that WTO faces, we cannot deny the role it has played in integrating and opening the world trade.

♤ 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 the GATT and 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.

♤ Filing of dispute resolution suits before the WTO is increasing which signifies that economies around the world want the system to work.

♤ By bringing complaints to the WTO, countries also draw the world’s attention to violations, naming and shaming violators of the rules. This effectively damages the reputations of leaders who erect discriminatory barriers.

♤ WTO is an essential platform for small countries to address their grievances. Barbados and Antigua took the US to the Dispute Settlement Body (DSB) on the issue of gambling and