UPSC CSE MAINS SYLLABUS- GS – 2- Important International institutions, agencies and fora- their structure, mandate.
Multilateral Trade Frameworks – Issues
WTO will be facing a severe existence and functional crisis. Trade rules have worked best when the global economy is booming and isn’t facing a crisis. Post 2008 economic crisis the WTO faced a similar situation. But now it is far worse.
- If countries need to bring their domestic industries back, they would need space for policy flexibility.
- WTO will be redundant there — for instance, on the issue of subsidies for small industries, no country will like the WTO to command what to do or what not to do.
- The agricultural subsidies issue is going to be junked — on 31st March, India notified the WTO that it has crossed the 10% limit in rice subsidies. But, going forward, the government of India cannot be restrained from giving more subsidies for rice or other sectors vital for food security. If the WTO rules are junked, then it’s a free-for-all situation.
- In the last quarter of the twentieth century, countries adopted market forces oriented policies.But now, in major economies, governments have taken centre stage and markets have taken a backseat.
- For a while globalisation is going to settle at a new normal and it will be a very different WTO and trade governance framework, with different kinds of regional and bilateral engagements.
- India, has already become a reluctant player and had, in a way, started disengaging. Other countries were more tightly knit together through pacts like the ASEAN.
- The European Union is already in tatters and it will be important to see the role of the European Commission and the European Central Bank in getting a decent stimulus in addition to what individual governments have done.
- NAFTA is already being rewritten.
So going forward, much of the churning is going to get bigger in regional formations. If in three months, we don’t get back on track, then there will be a substantial rewriting of the rules.
The G20 leaders’ and trade ministers’ meet should reflect on global rules being in further jeopardy. If they have to work out flexibilities within the WTO framework, they should do it collectively.
POSSIBLE UPSC MAINS QUESTION:
In the post COVID 19 pandemic world what kind of problems do the WTO face ? What could be the status of multilateral trade frameworks?