IAS Gyan

Daily News Analysis

World Trade Organisation (WTO)

8th October, 2021 Economy

Figure 1: No Copyright Infringement Intended



  • The World Trade Organization (WTO)- the global trade body- is facing a serious existential crisis.
  • The upcoming WTO ministerial meeting scheduled for next month in Geneva provides an opportunity to rescue this critical global institution from irrelevance.


  • The continuation of the U.S. policy on the WTO is most evident in the sustained crippling of the Appellate Body (AB).
  • The AB is part of the WTO's dispute settlement mechanism. It is a permanent body with seven members, and acts as an appellate court hearing appeals from the decisions given by WTO panels.
  • However, since December 2019, the AB has stopped functioning due to rising vacancies. Over the years, the U.S. has consistently blocked the appointment of AB members.
  • The U.S. also vetoes proposals to find solutions to this impasse, including stalling the proposal of the European Union to establish an alternative interim appellate arbitration mechanism.
  • The number of pending appeals to the AB has increased sharply to around 20 cases.
  • Countries now have an easy option not to comply with the WTO panel decisions by appealing into the void.


Challenges with WTO:

  • no solution has been found to the public stockholding for food security purposes despite a clear mandate to do so in the 2015 Nairobi ministerial meeting.
  • the WTO member countries continue to disagree on the need of waiving the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement for COVID-19 related medical products.
  • the WTO is close to signing a deal on regulating irrational subsidies provided for fishing that has led to the overexploitation of marine resources by countries like China, which is the largest catcher and exporter of fish.


Way Forward:

  • Prime Minister Narendra Modi, during his recent U.S. visit, rightly pleaded for a rule-based global order.
  • Institutional multilateralism would be the ideal antidote to unilateralism and economic nationalism.
  • Notwithstanding its flaws, the WTO is the only forum where developing countries like India, not party to any mega plurilateral trade agreements, can push for evolving an inclusive global trading order that responds to the systemic imbalances of extant globalisation.

About WTO:

  • Intergovernmental organisation which regulates the international trade
  • Officially commenced on 1st Jan 1995 under the Marrakesh Agreement
  • Signed by 123 nations in 1994
  • WTO had replaced GATT (General agreement on tariffs and trade)
  • It deals with agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property and much more.


  • Forum for trade negotiations
  • Handling trade disputes
  • Monitoring national trade policies Technical assistance and training for developing countries
  • Cooperation with other international organizations


  • Administering WTO trade agreements
  • The basic principles of the WTO (According to the WTO):
  • Trade Without Discrimination:
    • Most Favoured Nation (MFN): treating other people equally
    • National treatment: Treating foreigners and locals equally
  • Freer trade: gradually, through negotiation
  • Predictability: through binding and transparency
  • Promoting fair competition
  • Encouraging development and economic reform.