- The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world
- The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments.
- The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals.
- Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
Context : The next Director-General of the organization will have to navigate through a slew of thorny issues in WTO.
1. WTO to lead by a woman for the first time :
- For the first time in its 25-year history, the World Trade Organization (WTO) will be led by a woman.
- The D-G’s job will require perseverance and outstanding negotiating skills for balancing the diverse and varied interests of the 164 member countries, and especially, for reconciling competing for multilateral and national visions, for the organization to work efficiently.
- The next D-G will have to grapple with the global economic fallout of the COVID-19 pandemic and work towards carrying out reforms of the multilateral trading system for reviving the world economy.
- On all these issues, her non-partisan role will be watched carefully.
2. Tussle between developed and developing countries
- The current impasse in the WTO negotiations has led member countries to believe in the necessity of carrying out urgent reforms, which is likely to throw up some difficult choices for developing countries like India.
- At the core of the divide within the WTO is the Doha Development Agenda, which the developed countries sought to move in favour of a new agenda that includes, amongst others, e-commerce, investment facilitation, MSMEs and gender.
- Salvaging the ‘development’-centric agenda is critical for a large number of developing countries as they essentially see trade as a catalyst of development.
- Restoring the WTO dispute settlement mechanism, especially the revival of its Appellate body, is also crucial for the organization’s efficient functioning.
3. Definition of ‘Developing Country’ – a contentious issue
- The push for a change in the definition of “developing country” under the principle of special and differential treatment (S&DT), aimed at upgrading certain developing countries, will deeply affect the status of emerging economies such as India, China, South Africa, Turkey, Egypt, etc.
- The assumption that some countries have benefited immensely from the WTO rules since its formation in 1995 is flawed, at least in the case of India. And even if there may be no consensus of views on measuring ‘development’, India will remain a developing country no matter which parameter is used.
- The way out for India could be to negotiate a longer phase-out period or an acceptable formula based on development indices, etc.
4. Fisheries subsidies negotiations
- Among the current negotiations at the WTO, the fisheries subsidies negotiations command the highest attention.
- India can lead the way in finding a landing zone by urging others to settle for the lowest common denominator while seeking permanent protection for traditional and artisanal farmers who are at the subsistence level of survival.
- The danger lies in seeking larger carve-outs, which could result in developed countries ploughing precious fisheries resources in international waters.
5. Lessons from COVID-19
- The COVID-19 crisis has revealed the urgent and enduring need for international cooperation and collaboration, as no country can fight the pandemic alone.
- The D-G can help mitigate the effects of the pandemic by giving clear directions on ensuring that supply chains remain free and open, recommending a standard harmonized system with classification for vaccines, and by the removal of import/export restrictions.
- Voluntary sharing and pooling of Intellectual Property Rights (IPR) is required for any global effort to tackle the pandemic, but with the fear of vaccine nationalism looming large, several countries are seeking to secure the future supply of leading COVID-19 vaccines.
- India’s reiteration that its vaccine production and delivery capacity will help the whole of humanity will require the D-G to play a responsible role in removing barriers to intellectual property and securing a legal framework within the WTO TRIPS Agreement.
- This can be done by lending salience to the effective interpretation of Articles 8 and 31 of the Agreement, that allow compulsory licensing and agreement of a patent without the authorization of its owner under certain conditions.
- The consensus-based decision-making in the WTO, which makes dissension by even one member stop the process in its track, gives developing countries some heft and influence at par with developed countries.
- The D-G would need to tread cautiously on this front, as some will allude to the successful implementation of the Trade Facilitation Agreement in 2017 that allowed member countries to make commitments in a phased manner in accordance with their domestic preparedness.
- Most imminently, the next D-G will need to build trust among its members that the WTO needs greater engagement by all countries, to stitch fair rules in the larger interest of all nations and thwart unfair trade practices of a few.