UPSC Mains – What recent challenges have emerged in the dispute settlement mechanism of the WTO? Do the policies implemented at the WTO disproportionately affect the interests of emerging economies such as India?

Introduction:

The dispute settlement mechanism of the World Trade Organization (WTO) is undergoing a crisis due to challenges in appointing new members to its Appellate Body, responsible for hearing appeals in trade disputes.

Body:

Reasons for Delays and Issues at WTO:

1. Non-Functioning Appellate Body: The Appellate Body, crucial for the dispute settlement mechanism, faces a crisis with a non-functioning status. The United States has blocked appointments, reducing members from seven to three, hampering effective appeals.
2. Delay in Dispute Resolution: The Appellate Body’s inability to review appeals since July 2018 has led to significant delays in dispute resolution. For instance, an appeal in the Japan-India dispute on safeguard measures for iron and steel imports remains unresolved.
3. Politicization of Appointments: Concerns arise over the politicization of Appellate Body appointments, impacting impartiality and making the dispute settlement mechanism vulnerable to geopolitical tensions.
4. Ineffectiveness in Resolving Disputes: The lack of new members questions the effectiveness of the WTO’s dispute settlement mechanism, compromising timely and fair resolution.
5. Rising Protectionism: Global protectionist measures and trade tensions contribute to challenges in WTO dispute resolution, leading to an increase in trade disputes among major economies.
6. Dispute Backlog: The current situation results in a backlog of unresolved disputes, undermining the credibility and efficiency of the dispute settlement system.

WTO’s Impact on Emerging Economies like India:

1. Domination of Developed Nations: The WTO, influenced by developed countries, shifts from favoring special treatment for developing nations like India, limiting their flexibility in complying with WTO rules.
2. Intellectual Property Policies: WTO pressures developing countries to modify intellectual property laws, affecting industries such as pharmaceuticals and biotechnology.
3. Restriction on Welfare Policies: Complaints against India’s welfare and subsidy programs, like the sugar industry package, challenge the country’s ability to support domestic industries.
4. Attack on Multilateralism: WTO’s creation of plurilateral arrangements, like e-commerce policy discussions, undermines multilateralism, pressuring countries like India to concede policy space.

Conclusion:

The WTO is vital for global trade, but without reforms, developing countries struggle to protect their interests. Inconclusive WTO negotiations contribute to regional free trade agreements and global trade wars, emphasizing the need for rule-based global free trade. The WTO must regain credibility, promote inclusive trade practices, and address developing nations’ specific concerns.

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