World Trade Organization Part (WTO)- II

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The goal is to ensure that trade flows as smoothly, predictably, and freely as possible. 

In the previous blog, we looked WTO origin, goals, functions, their structure, Why GATT was replaced by it, and more. This blog will focus on the presence of WTO role in globalisation, its work and relation with India and WTO contribution to sustainable development.


WTO Contribution to World 

  • The WTO is one of the three international organisations (the other two are the International  Monetary Fund (IMF) and the World Bank Group) which by and large formulate and co-ordinate world economic policy. It is playing a crucial role in:  
  • the international trade, 
  • global economics, 
  • And the political and legal issues arising in the international business because of globalization. 
  • It has emerged as the world's most powerful institution for reducing trade-related barriers between the countries and opening new markets. 
  • It cooperates with the IMF and World Bank in terms of making cohesiveness in making global economic policies. 
  • Through resolving trade-related disputes, the WTO has got the potential to maintain world peace and bilateral relations between its member countries thorough following negotiations, consultations and mediations. 
  • Global trade rules: Decisions in the WTO are typically taken by consensus among all members and they are ratified by members’ parliaments. This leads to a more prosperous, peaceful and accountable economic world. 
  • Trade negotiations: The GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth.  
  • The system was developed through a series of trade negotiations, or rounds, held under the GATT. The 1986-94 round – the Uruguay Round – led to the WTO’s creation. o In 1997, an agreement was reached on telecommunications services, with 69  governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. 
  • Also in 1997, 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information.
  • In 2000, new talks started on agriculture and services. These were incorporated into a  broader work programme, the Doha Development Agenda, launched at the fourth WTO  Ministerial Conference (MC4) in Doha, Qatar, in November 2001. 
  • At the 9th Ministerial Conference (MC9) in Bali in 2013, WTO members struck the  Agreement on Trade Facilitation, which aims to reduce border delays by slashing red tape. 
  • The expansion of the Information Technology Agreement – concluded at the 10th  Ministerial Conference (MC10) in Nairobi in 2015 – eliminated tariffs on an additional  200 IT products valued at over US$ 1.3 trillion per year. 
  • Most recently, an amendment to the WTO’s Intellectual Property Agreement entered into force in 2017, easing poor economies’ access to affordable medicines. 
  • The same year saw the Trade Facilitation Agreement enter into force. 

Hot Topic in News → Agreement on Agriculture, WTO wants to 

  • Reduce import duty 
  • Reduce export subsidies 
  • Reduce Amber box subsidies (Domestic subsidies) 



WTO and India 

  • India is a founder member of the General Agreement on Tariffs and Trade (GATT) 1947 and its successor, the WTO.  
  • India's participation in an increasingly rule-based system in the governance of international trade is to ensure more stability and predictability, which ultimately would lead to more trade and prosperity. 
  • Services exports account for 40% of India's total exports of goods and services. 
  • The contribution of Services to India's GDP is more than 55%. 
  • India's exports are mainly in the IT and IT-enabled sectors, Travel and Transport, and  Financial sectors. 
  • The main destinations are the US (33%), the EU (15%) and other developed countries. 
  • India has an obvious interest in the liberalization of services trade and wants commercially meaningful access to be provided by the developed countries. 
  • Since the Uruguay Round, India has autonomously liberalized its Services trade regime across the board. 

Ensuring food and livelihood security is critical, particularly for a largely agrarian economy like India. 

  • India is persistently demanding a permanent solution on public stockholding subsidies at WTO. 
  • India strongly favours extension of higher levels of protection to geographical indications for products like Basmati rice, Darjeeling tea, and Alphonso mangoes at par with that provided to wines and spirits under the Trade-related Aspects of Intellectual  Property Rights (TRIPS) agreement.  
  • Developed countries have been putting pressure on the inclusion of non-trade issues such as labour standards, environmental protection, human rights, rules on investment,  competition policy in the WTO agreements. 
  • India is against any inclusion of non-trade issues that are directed in the long run at enforcing protectionist measures (based on non-trade issues, the developed countries like the USA and European Union are trying to ban the imports of some goods like textile,  processed food etc.), particularly against developing countries.

How trade contributes to delivering key Sustainable Development Goals?

 
SDG 1: No Poverty 

There is increasing evidence that well planned and strategically executed trade policy initiatives can impact positively on sustainable poverty reduction.  

SDG 2: Zero Hunger 

Eliminating subsidies that cause distortions in agriculture markets will lead to fairer more competitive markets helping both farmers and consumers while contributing to food security.  

SDG 3: Good Health and Well-being 

One of the main objectives under SDG 3 is to ensure access to affordable medicines for all. An important amendment to the WTO’s TRIPS Agreement recently entered into force. This  measure will make it easier for developing countries to have a secure legal pathway to access  affordable medicines  

SDG 5: Gender Equality 

Trade can create opportunities for women’s employment and economic development. Through trade, job opportunities for women have increased significantly. Jobs in export sectors also tend to have better pay and conditions. Export sectors are an important job provider for women in developing countries.

SDG 8: Decent Work and Economic Growth 

Trade-led inclusive economic growth enhances a country’s income-generating capacity, which is one of the essential prerequisites for achieving sustainable development.  

SDG 9: Industry, Innovation and Infrastructure 

Trade produces dynamic gains in the economy by increasing competition and the transfer of technology, knowledge and innovation. Open markets have been identified as a key determinant of trade and investment between developing and developed countries allowing for the transfer of technologies which result in industrialization and development, helping to achieve SDG 9. 

SDG 10: Reduced Inequalities 

At the global level, changes in development patterns have been transforming prospects of the world’s poorest people, decreasing inequality between countries.  

SDG 14: Life Below Water 

The WTO plays an important role in supporting global, regional and local efforts to tackle environmental degradation of our oceans under SDG 14. The Decision on Fisheries Subsidies  taken by WTO members in December 2017 is a step forward in multilateral efforts to comply  with SDG 

SDG 17: Partnerships for the Goals 

SDG 17 recognizes trade as a means of implementation for the 2030 Agenda. The targets under this goal call for countries to promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system; the increase of developing countries’ exports and doubling the share of exports of least-developed countries (LDCs); and the implementation of duty-free and quota-free market access for LDCs with transparent and simple rules of origin for exported goods. The WTO is the key channel for delivering these goals. 

Conclusion 

Today, the world is going through protectionism, trade war (like the USA & China), and Brexit making the global economy squeezed. The role of WTO in the future is very crucial to preserve the global liberalized economic system evolved since the end of the 2nd World War. 

It is the right time when countries like the USA giving the threat to withdraw from WTO making it dysfunctional, India and other emerging economies like Brazil, South Africa etc. can provide a  strong base for strong WTO with saving interests of developing countries.

This blog pertains to UPSC papers on GS 2, International Organisation, Political Science optional paper 2 and Essay Type Question. Also, do check our previous blogs on various topics. Subscribe today so that you don’t miss out on any important topics.

Blog Post written by:
Anurag Trivedi
UPSC Mentor