Context: WTO members generally agree that the organization urgently needs reforming in order to remain relevant.

Challenges faced by WTO are increasing:

  • Appointment of new judges:
    • The WTO’s appellate body, which adjudicates trade disputes among member countries, effectively ceased functioning last December amid disagreements regarding the appointment of new judges to the panel. 
  • Early step down of current director-general:
    • Recently, director-general Roberto Azevêdo announced that he would step down at the end of August, a year before his current term was due to end.
  • Since its establishment in 1995, the WTO has failed to conclude a single trade-negotiation round of global trade talks, thus missing an opportunity to deliver mutual benefits for its members. 
    • The Doha Development Round, which began in November 2001, was supposed to be concluded by January 2005.
    • WTO members are still debating whether the Doha process should continue.
  • The Doha Development Round, which was intended to modernize the WTO’s rulebook, covers very few of these topics.
    • There is a need for much broader regional trade deals that cover pressing issues such as the digital economy, investment, competition, the environment, and climate change.
  • No obligation: 
    • Some of the organization’s existing rules can easily be circumvented, thereby upsetting the balance of rights and obligations among members.
    • During the current covid-19 crisis, for example, some countries have imposed questionable export controls on medical supplies and food products in order to mitigate shortages. 
  • Concerns of few countries:
    • Developed countries believe that they have shouldered the burden of trade liberalization for far too long, and that developing countries should shoulder more obligations if they are in a position to do so. 
    • Least-developed and low-income developing countries, meanwhile, say that WTO rules are hampering their efforts to grow and modernize their economies.

WTO is not a failure:

  • It has built upon the successes of its predecessor, the General Agreement on Tariffs and Trade (GATT), which entered into force in 1948. 
  • The rules-based multilateral trading system that began with GATT has contributed immensely to global economic growth over the last seven decades, by reducing average tariffs and steadily eliminating non-tariff barriers.
  • Living standards have improved in most countries.
  • Rules-based global trade has helped underpin peace and security, because trading partners are more likely to resolve differences through negotiations than through armed conflict.
  • WTO members today recognize the need to reboot the organization for the 21st century

Way forward:

  • Trade is not a zero-sum game: Rights and obligations can be balanced, as the evolution of global and regional trading rules since 1948 has shown. 
  • Mutually beneficial agreements: All members should participate in this endeavour, because that is the only way the organization can regain its credibility and carry out its rule-making function.
  • New negotiations must take account of members’ varying levels of economic development, and aim—as ever—to reach fair and equitable agreements.
  • Enhanced transparency: In the form of timely notifications of countries’ trade measures, and an effective dispute-settlement system that commands the confidence of all members.

The WTO has an irreplaceable role to play in transforming countries’ economic prospects and the lives of people around the world.

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