WTO in the Reciprocal Tariff Era: Decline and India’s Options
Why in the news
With US reciprocal tariffs under Trump, analysts say the WTO has been sidelined and cannot enforce rules or absorb trade shocks.
Structural breakdown
| Function | Problem |
|---|---|
| Negotiation | Doha Round deadlock since 2001 |
| Dispute settlement | US blocked Appellate Body appointments |
| Trade monitoring | Countries, especially China, withhold transparency |
US and the WTO
- US actions under Sections 232 and 301 show disregard for the Most-Favoured-Nation (MFN) principle.
- The US liberalised tariffs expecting reciprocity that never came.
- Stalled talks pushed nations towards bilateral FTAs that step away from MFN.
- Trump’s tariffs are seen as a withdrawal from WTO norms.
Reform gridlock
- Moving from consensus to voting is opposed by nations including India and the US.
- The EU’s arbitration proposals for dispute settlement reform lack universal backing.
- WTO has no way to force disclosure of protectionist policies.
India’s position
- Opposes disciplines on subsidies and public stockholding, citing food security and politics.
- WTO caps India’s subsidies at 10%, while developed nations once gave far more.
- Avoids labour and environment topics at WTO but is open to them bilaterally with the EU, UK and US.
- Could gain as an early mover in bilateral talks.
China factor
- WTO rules did not anticipate China’s rise as a low-cost exporter.
- Steel and cement overcapacity distorted trade without clearly breaking rules.
- Gaps on excess capacity and non-tariff distortions were exploited.
Way forward
- Press for targeted WTO reforms.
- Use bilateral trade diplomacy.
- Protect sensitive sectors without blocking needed global engagement.
Exam angle
- Principle: Most-Favoured-Nation (MFN).
- Stalled round: Doha Round (2001).
- US laws cited: Sections 232 and 301.