It is true that the rules of the WTO and its institutional mechanisms have failed to rein in Trump’s unilateral economic coercive actions such as reciprocal tariffs, despite these breaching multiple commitments of the US at the WTO. Further, with the Doha Round being virtually pushed into cold storage, it cannot be denied that the negotiating function of the WTO is in a limbo.
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l Other members adhering to the WTO rulebook
WHILE THERE MAY be considerable justification in concluding that the WTO has been rendered irrelevant in the current scenario, the reality is more nuanced.With the exception of the US, the remaining 165 members of the WTO continue to abide by their commitments and adhere to the WTO rulebook.Further, WTO member nations continue to remain engaged in negotiations in several areas, including fisheries subsidies, dispute settlement as well as WTO reform. The various committees of the multilateral trade organisation continue tomeet regularly for overseeing the implementation, administration and operation of the various agreements.It may, thus, be a bit pre-mature and unwise to consign the WTO as an institution, and its rulebook, to history.
l Origins of the current crisis
FIRST, DUE TO effective coalitions of many developing countries, the US and the EU were unable to secure most of their negotiating objectives under the Doha Round in November 2001. To escape taking new commitments, in December 2015, the US foiled attempts of many developing nations to move ahead on the Doha Round. This dealt a severe blow to the negotiating function of the WTO.In late 2019, the Appellate Body of the WTO, which hears appeals from panel cases on trade disputes, ceased to function as the US refused to allow the process of nomination of new members to replace those retiring to proceed. Absence of rule of law has created space for the US to indulge in power play by resorting to series of illegal actions on the trade front.
l Can bilateral deals replace multilateral rules?
EFFICIENT CONDUCT OF global trade requires an overarching framework of rules applicable to a large number of countries. A web of bilateral trade pacts cannot be an effective substitute for multilateral rules. It is unlikely that the comity of nations can dispense with a common framework of multilateral trade rules to which a large number of countries subscribe. However, the jury is out on whether the WTO will continue to be the institution to provide the multilateral rules for international trade.
l What lies ahead for WTO?
WHILE TRUMP HAS refused to abide by the WTO rulebook, it is likely that the US is using bilateral deals to pursue WTO-related trade objectives. This is evident from the recent trade deal between the US and Indonesia. Indonesia has also agreed to fully implement the WTO Agreement on Fisheries Subsidies. These references to the WTO suggest that while the US continues to attach some salience to the WTO, it may simultaneously be laying the foundation of a new global trading order. This could build on most of the existing WTO rules. The emerging regime could also strike new ground on issues such as tariffs and non-discriminatory treatment. The new trading order may be housed in the WTO, or another institution could be created for it.
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l What India can do
A MULTILATERAL TRADE regime should be the preferred option for India to promote its national interest. Hence, India must continue to engage with other countries at the WTO. In parallel, its efforts must be directed at ensuring that if a new global trading order emerges, it is multilateral in character. India needs to ensure that a potential new trade order meaningfully addresses the legitimate aspirations of the developing countries and does not perpetuate the asymmetries and imbalances inherent in the existing rules at the WTO.
The author is an international trade expert. Views expressed are personal.