The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
The WTO has 164 members (including European Union) and 23 observer governments (like Iran, Iraq, Bhutan, Libya etc).
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Goals of WTO
The WTO’s global system lowers trade barriers through negotiation and operates under the principle of non-discrimination.
The result is reduced costs of production (because imports used in production are cheaper), reduced prices of finished goods and services, more choice and ultimately a lower cost of living.
The WTO’s system deals with these in two ways.
One is by talking: countries negotiate rules that are acceptable to all.
The other is by settling disputes about whether countries are playing by those agreed rules.
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Recent Challenges in WTO:
The WTO's dispute settlement system (DSS), including the appellate body, has been paralyzed since 2019 due to the United States blocking the appointment of its members.
The U.S. criticizes the appellate body for judicial overreach and creating binding precedents, which it believes exceeds its institutional mandate.
The U.S. argues that the appellate body's role needs to be precisely defined before it can be resurrected.
There is a lack of consensus among member-countries on how to address the challenges and revive the DSS.
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Need for Reforms in WTO:
Reforms are necessary to restore the functionality of the WTO's dispute settlement system and ensure the effective resolution of trade disputes.
The role and mandate of the appellate body need to be clarified to address concerns of judicial overreach and create a balance between consistency in interpretation and the flexibility to depart from previous rulings when justified.
There is a need to address the issue of binding precedents and find a middle ground that ensures consistency without compromising the rights and obligations of member-countries.
Reforms should focus on strengthening the WTO's multilateral trade framework, enhancing transparency, and promoting fairness in global trade.
The WTO needs to adapt to emerging challenges, such as the rise of China and changing geopolitical dynamics, to remain relevant and effective in the evolving global trade landscape.
Reforms should also address the concerns raised by the United States and other member-countries to ensure broad-based support and participation in the WTO's functions.
The reform process should involve constructive dialogue among member-countries and a willingness to find common ground and consensus on the way forward.
It is crucial to strike a balance between preserving the rule-based system and accommodating the interests and priorities of diverse member-countries.
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