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News: This post is created based on the article ‘At WTO, growing disregard for trade rules shows world is fragmenting’, published in Business Standard on 4th October 2023.
Syllabus Topic: GS Paper 2, International Relations and Organisations
News: The article discusses the trends of unilateralism and reduced functioning of WTO.
Since 2019, the WTO’s dispute settlement system has been severely impacted, with 29 cases left unresolved. This occurred after the US blocked the appointment of new judges to the WTO’s Appellate Body, citing concerns over judicial overreach. Countries that have submitted cases include China, India, the US, and several others.
What are the recent worrying trends in global trade, that necessitate the WTO’s existence?
First, the WTO warned that the rise in unilateral measures could fragment the global economy, potentially leading to a 5% reduction in global income.
Second, while import restrictions have decreased since 2018, export curbs have significantly increased. It was on an average 21 per year between 2016 and 2019, surging to 139 in the last year.
The rise in export curbs has led to an increase in “trade concerns” at the WTO. Examples include export restrictions on Indian rice and subsidies introduced by various countries, such as the US Inflation Reduction Act and subsidies for electric cars in China.
Third, The US’s local content requirements under the Buy American Act and the European Union’s subsidies to boost domestic supply of critical minerals indicate a shift in global trade dynamics.
