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  • 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).


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.


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.


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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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: WTO UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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