The G20 working group on trade and investment that concluded in June 2023 focused on WTO reforms. In this article, we discuss the need and challenges associated with reforms in the World Trade Organisation (WTO) and the role India can play in it. This topic is relevant for the IAS exam international relations segment.
Current Challenges to WTO Reforms
- Rise of unilateralism in international economic relations, particularly by developed countries like the US.
- Economic policies such as industrial subsidies and local content requirements that violate WTO rules.
- Weakening of trade multilateralism in favour of external plurilateral alignments.
- Neglect and disregard for WTO laws and rules by certain countries.
Read more on WTO in the linked article.
The Role of G20 “Middle Powers” in WTO Reform
- According to Jeffrey Schott, the push for WTO reforms should come from G20 “middle powers” like India, Indonesia, Brazil, and South Africa.
- Developed G20 countries may not be genuinely interested in reforming the WTO for the better due to their strategic rivalry and foreign policy considerations.
- Middle powers can play a crucial role in driving meaningful reforms and safeguarding the interests of developing countries.
Critical Areas for Developing Countries to Focus on
- Special and Differential Treatment (SDT) Principle
- SDT provisions in WTO agreements give special rights to developing countries.
- Only 21% of SDT provisions obligate developed countries to provide differential treatment.
- Efforts to weaken SDT provisions in the name of WTO reform should be opposed.
- Developing countries should push for stronger and more effective SDT provisions.
- Appellate Body Paralysis
- The WTO’s appellate body, responsible for dispute settlement, has been paralyzed since 2019 due to the US’s nonchalance.
- The US aims to dilute the policing role of the WTO and pursue unilateral trade actions.
- The remaining G20 countries should either convince the US to change its position or find alternatives to revive the appellate body without US participation.
- Shifting from Consensus-based Decision-making to Plurilateral Approach
- Since 2017, there has been a shift away from consensus-based decision-making toward plurilateral discussions on select issues.
- The plurilateral approach allows for rule-making, but a multilateral governance framework is needed.
- Key principles such as non-discrimination, transparency, and inclusivity should guide the incorporation of plurilateral agreements into the WTO rulebook.
- Imposing plurilateral agreements on non-willing members could deepen the trust deficit between developed and developing countries.
- Addressing the Transparency Gap
- There is a transparency gap in the WTO, particularly regarding notification requirements.
- WTO member countries are obligated to notify all trade-affecting laws and regulations, but compliance is poor.
- Lack of transparency increases trade costs, especially for developing countries.
- Efforts should be made to improve compliance with notification requirements and enhance transparency in the WTO.
India’s Role in Driving WTO Reforms
- As the current G20 President, India should work with other countries to prioritize and advance the WTO reform agenda.
- India can leverage its position to advocate for inclusive trade multilateralism and address the concerns of developing countries.
- By actively engaging in discussions and negotiations, India can contribute to shaping a stronger and more balanced WTO framework.
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