Syllabus: GS3/ Economy
Context
- The World Trade Organization’s Fourteenth Ministerial Conference (MC14), held in Yaoundé, highlighted growing divisions and institutional weaknesses within the WTO.
- Trade multilateralism is facing its most serious challenge since the post-Second World War era.
Breakdown of Key Moratoriums
- End of E-Commerce Moratorium: Since 1998, WTO members had agreed not to impose customs duties on digital trade.
- MC14 failed to extend this moratorium, which lapsed on March 31, 2026.
- Countries are now free to impose tariffs on electronic transmissions.
- TRIPS Non-Violation Moratorium: It led to the expiry of the safeguard against non-violation complaints under the TRIPS Agreement.
- The safeguard since 1995 has protected the policy space of developing countries. Without it, even WTO-compliant measures, such as compulsory licensing, can be challenged by developed countries.
- For India, this increases the risk of disputes over Section 3(d) of the Indian Patents Act, 1970, which restricts patents for already-known drugs unless the new claims are superior in terms of efficacy. It curbs the evergreening of patents.
- Deadlock on Plurilateral Agreements: The proposed Investment Facilitation for Development (IFD) agreement failed to be incorporated into the WTO framework.
- India opposed its inclusion due to the absence of clear legal provisions for integrating plurilateral agreements.
Broader Challenges Faced by WTO
- Erosion of Foundational Principles: Key principles such as Most-Favoured Nation (MFN) treatment and Special and Differential Treatment (SDT) are increasingly being questioned.
- Actions by countries like the United States reflect a shift towards unilateralism and selective rule adherence.
- Crisis in Dispute Settlement Mechanism: The WTO’s dispute settlement system, particularly its appellate body, remains non-functional.
- MC14 failed to provide any roadmap for restoring this crucial mechanism.
- Without a credible dispute resolution system, enforcement of trade rules becomes ineffective.
- Fragmentation of Global Trade Rules: The failure of WTO negotiations is pushing countries towards alternative arrangements such as;
- Bilateral agreements
- Regional trade blocs
- Plurilateral agreements outside WTO.
Way Ahead
- The future of global trade governance depends on the WTO’s ability to adapt without compromising its foundational principles.
- A balanced approach combining reform, inclusivity, and strong political commitment is essential to restore faith in multilateralism.
World Trade Organization (WTO)
- WTO is the international organization that deals with the rules of trade between countries.
- History:WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War.
- The Marrakesh Agreement establishing the World Trade Organization was signed by 123 countries in 1994, leading to the birth of the WTO on 1 January 1995.
- Headquarters: Geneva, Switzerland
- Member: The WTO is run by its 166 members.
- Mandate: Its aim is to promote free trade, which is done through trade agreements that are discussed and signed by the member states.
- The preamble of the Marrakesh Agreement accords primacy to the developmental objectives of this organization.
Organizational Structure of WTO
- Ministerial Conference: The WTO’s apex decision-making body is the Ministerial Conference, which usually takes place every two years.
- All members of the WTO are involved in the Ministerial Conference and they can take decisions on all matters covered under any multilateral trade agreements.
- General Council: It is just below the Ministerial Conference that meets several times a year at the WTO’s headquarters in Geneva.
- It meets as the Trade Policy Review Body and the Dispute Settlement Body.
- Trade Related Intellectual Property Rights (TRIPS) Council: It is for the Goods, Services, and Intellectual Property, and it reports to the General Council.
Source: TH
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