Q. World trade organisation (WTO) as a multilateral body is facing challenges on various counts. In this light discuss the relevance of WTO and also suggest suitable reform in its functioning.

Structure of the answer:

  • Introduction (about WTO)
  • Challenges faced by WTO
  • Relevance of WTO
  • Reform in functioning of WTO

Model Answer

WTO was set up under Marrakesh Treaty (1994) and as an organization aim to improve living standards, generate employment, and expand global trade.

However, in recent years WTO is facing challenges on various counts such as:

  • Consensus based rule making has become a root cause in stagnation in reforms.
  • Further, the very existence of WTO is under threat with rise of trade disputes/ trade war between China and USA.
  • WTO has also failed to change as per the global requirementFor Ex.- WTO lacks any agreement to deal with e-commerce.
  • WTO is facing process challenges/ loopholes such as the negotiation process prime facie seems democratic but Ministerial Conferences are opaque and overly technical.
  • The dispute resolution mechanism is costly and lengthy. It is majorly resorted to by developed countries and developing countries are victims to the mechanism.

But, the WTO remains relevant considering the following points in its favour:

  • It amicably settles disputes among its members through its Dispute Settlement Mechanism.
  • World trade body serves as a platform on new global trade agreementsLike- Doha Round.
  • It ensures that global trade follows rules-based multilateral trading system.
  • WTO by removing trade barriers stimulates global growth.
  • WTO ensure predictability and transparency in trade-related regulations through its binding provisions.
  • It also preserves member’s autonomy as members are free to enter into preferential trade agreements and free trade agreements.

In light of the above challenges following reforms are required in functioning of WTO:

  • Plurilateral negotiations should be promoted as they offer prospect of building coalition among like-minded members.
  • The appointment process to dispute settlement body should be made independent of political control.
  • The issue of abuse of national-security exemption to justify trade restrictions should be solved at the political level, rather than at WTO.
  • WTO should be conferred with penalizing powers to curb wilful non-compliance.

There is also a need for using other platforms for reform talks such as G20, which have the advantage of limited and effective global membership.

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