Paper: GS – II, Subject: International relations, Topic: International Institutions, Issue: WTO in Crisis: Decline of Multilateral Trade Governance.
Context:
The World Trade Organization (WTO) is facing a deep crisis of relevance as its latest Ministerial Conference (MC14) failed to deliver consensus on key issues, reflecting weakening multilateralism and rising unilateral trade actions.
Key Takeaways:
BACKGROUND:
- WTO: Established in 1995, WTO is an intergovernmental organization that regulates and facilitates international trade.
- WTO ensures: Rules-based global trade, Dispute settlement mechanism & Reduction of trade barriers.
- The WTO’s 14th Ministerial Conference (MC14) was held during March 26-30, 2026, in Yaoundé, Cameroon. It was expected to restore confidence in multilateral trade & deliver reforms.
- However, the conference failed to produce even a basic ministerial declaration. This indicates that even minimal consensus is now difficult among WTO members.
CORE ANALYSIS:
Present situation: Powerful countries are increasingly acting independently instead of following WTO rules. The WTO is unable to enforce its rules or take collective decisions. As a result, the WTO is losing its authority and relevance.
E-COMMERCE MORATORIUM:
- Since 1998, countries had agreed not to impose taxes on digital trade.
- This agreement has now expired due to lack of consensus.
- Now countries can impose tariffs on digital trade.
Impact:
- Developing countries may gain revenue.
- However, digital services may become expensive and global trade may slow down.
TRIPS NON-VIOLATION ISSUE:
- TRIPS deals with intellectual property such as patents.
- Earlier, countries could not file complaints if rules were not violated.
- With the moratorium weakening, developed countries may challenge policies like public health measures. This may reduce the policy freedom of developing countries.
RISE OF PLURILATERAL AGREEMENTS:
- Instead of agreements involving all countries, some agreements now involve only a few countries. These are called plurilateral agreements.
- This creates – different rules for different groups & weakens the unified global system
WEAKENING OF CORE PRINCIPLES:
- Most Favoured Nation (MFN) principle (A principle that says equal treatment shall be given to all WTO countries) is being bypassed.
- Special treatment for developing countries is being reduced.
- This reduces fairness in global trade.
DISPUTE SYSTEM FAILURE:
- The WTO’s dispute settlement system is not working properly.
- Its highest authority (Appellate Body) is non-functional. Therefore, rules cannot be enforced effectively.
HISTORICAL PATTERN:
- Before the WTO, the General Agreement on Tariffs and Trade (GATT) weakened in the 1970s. This led to unilateral actions by powerful countries like the United States. A similar trend is visible today.
FINAL UNDERSTANDING:
- The WTO is not collapsing but is becoming weaker.
- It cannot enforce rules effectively.
- Countries are increasingly acting independently.
- Therefore, global trade is shifting from a rule-based system to a power-based system, which can harm developing countries the most.
WAY FORWARD:
- Revive WTO through institutional reforms and consensus-building.
- Restore dispute settlement credibility.
- Promote inclusive plurilateral agreements.
- Strengthen role of developing countries in negotiations.
- Reinforce commitment to rules-based multilateral trade.
UPSC SYLLABUS LINKAGE – GS PAPER II (International Relations – International organisations).
Source: (The Hindu)
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