Calls For Reform of Global Trading System

Syllabus: GS2/IR/GS3/Economy

In News

• Recently, the head of the World Trade Organization agreed with U.S. calls for reforming the global trading system, noting it is resilient but not robust.

Global Trading System and Role of WTO 

• The World Trade Organization (WTO) is the sole global body governing international trade rules.
• It is aiming to ensure smooth, predictable, and free trade through agreements negotiated and ratified by member nations.
• It manages global trade rules, serves as a forum for negotiating agreements, resolves trade disputes, and supports developing countries. 
• Its decisions are made by member governments through ministers or representatives in Geneva. 

Emerging Issues 

• Rising Protectionism: Growing use of tariffs and trade barriers is weakening free trade norms.
• Geopolitical Rivalries: Strategic competition among major powers is disrupting supply chains and markets.
• Agricultural Disputes: Subsidies by developed nations distort trade, affecting developing countries.
• Dispute Settlement Crisis: WTO’s Appellate Body has been inactive since 2019, weakening rule enforcement.
• Digital & Climate Issues: Lack of global consensus on e-commerce, data flows, and carbon taxes is creating new trade tensions.

Suggestions 

• Restore dispute settlement and update rules for digital trade, services, and sustainability.
• Strengthen the voice of developing countries, especially on agriculture and climate trade.
• Diversify sourcing to reduce overdependence and improve stability.
• Align trade policies with climate goals and promote green technologies.

Conclusion

• Global trade is moving away from liberal multilateralism toward mercantilism, where trade is used as a tool of state power and national advantage.
• Therefore The global trading system needs urgent reforms to prevent fragmentation and trade conflicts, ensuring it remains rules-based, inclusive, and growth-oriented.
• India should back WTO reforms while safeguarding farmers and small industries. 
  • India has opportunities in digital infrastructure, renewable energy, and services, but must strengthen institutions, social cohesion, and public investment to remain relevant in the emerging world order.

Source :DD