UPSC Notes-WTO And Developing Countries

The World Trade Organization (WTO) plays a crucial role in global trade governance, and its relationship with developing countries is significant for international trade dynamics. Here are detailed notes on the WTO and developing countries suitable for UPSC preparation:

Background of the WTO

1. Establishment:
   • The WTO was established on January 1, 1995, replacing the General Agreement on Tariffs and Trade (GATT).
   • It provides a framework for negotiating and formalizing trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements.
2. Objectives:
   • To facilitate smooth and free trade by ensuring that trade flows as smoothly, predictably, and freely as possible.
   • To provide a platform for negotiating trade agreements and settling trade disputes.

Structure of the WTO

1. Ministerial Conference:
   • The highest decision-making body, meeting at least once every two years.
   • Comprises all WTO members.
2. General Council:
   • Conducts day-to-day operations and oversees the implementation of agreements.
   • Meets as the Dispute Settlement Body and the Trade Policy Review Body.
3. Secretariat:
   • Led by the Director-General, it provides administrative and technical support for WTO activities.

WTO Agreements

1. GATT (General Agreement on Tariffs and Trade):
   • Focuses on trade in goods.
2. GATS (General Agreement on Trade in Services):
   • Deals with trade in services.
3. TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights):
   • Addresses issues related to intellectual property rights.
4. Other Agreements:
   • Includes agreements on agriculture, textiles, technical barriers to trade, and sanitary and phytosanitary measures.

Developing Countries and the WTO

1. Special and Differential Treatment (S&D):
   • Provisions designed to provide developing countries with special rights and the ability to meet their development needs.
   • Includes longer time periods for implementing agreements and commitments, measures to increase trading opportunities, and provisions to safeguard their trade interests.
2. Participation in Trade Negotiations:
   • Developing countries are actively involved in WTO negotiations, often through groupings like the G77 and the African Group.
   • They seek to address imbalances and ensure that the rules are fair and supportive of their development goals.

Benefits for Developing Countries

1. Market Access:
   • Developing countries gain better access to global markets for their goods and services.
   • Reduction of tariffs and other trade barriers facilitates increased exports.
2. Dispute Resolution:
   • Provides a platform for resolving trade disputes impartially.
   • Helps developing countries protect their trade interests against more powerful economies.
3. Technical Assistance and Capacity Building:
   • The WTO provides technical assistance to help developing countries build their trade capacity and implement WTO agreements.
   • Training programs and workshops enhance their understanding of trade rules and negotiation skills.

Challenges Faced by Developing Countries

1. Implementation Costs:
   • The cost of implementing WTO agreements can be high for developing countries, particularly those related to infrastructure, legal systems, and administrative capacities.
2. Trade Barriers:
   • Despite WTO agreements, developing countries often face non-tariff barriers, such as stringent sanitary and phytosanitary standards, which can limit their market access.
3. Agricultural Subsidies:
   • Developed countries’ agricultural subsidies can distort global markets and undermine the competitiveness of developing countries’ agricultural products.
4. Limited Bargaining Power:
   • Developing countries often have less influence in negotiations compared to developed countries, which can lead to outcomes that do not fully address their concerns.

Recent Developments

1. Doha Development Agenda:
   • Launched in 2001, this round of negotiations focuses on addressing the needs of developing countries.
   • Progress has been slow, with key issues like agricultural subsidies and market access for non-agricultural goods remaining unresolved.
2. Trade Facilitation Agreement (TFA):
   • Entered into force in February 2017, aims to simplify and expedite the movement, release, and clearance of goods across borders.
   • Expected to benefit developing countries by reducing trade costs and enhancing participation in global trade.
3. E-commerce and Digital Trade:
   • Developing countries are increasingly engaging in discussions on e-commerce and digital trade, seeking to benefit from the growing digital economy while addressing digital divides.

India’s Role and Perspective

1. Advocacy for Developing Countries:
   • India has been a vocal advocate for the interests of developing countries within the WTO.
   • It has championed issues like food security, agricultural subsidies, and the need for S&D treatment.
2. Dispute Settlements:
   • India has been actively involved in the dispute settlement process, both as a complainant and respondent, to protect its trade interests.
3. Trade Policy:
   • India’s trade policy emphasizes the importance of a fair and equitable multilateral trading system.
   • It seeks to balance the benefits of globalization with the need to protect domestic industries and promote inclusive development.