- Prelims: Protectionism, liberalization, WTO, GATT etc
- Mains GS Paper III: Government planning, mobilization of resources, LPG reforms, protectionism etc
ARTICLE HIGHLIGHTS
- The member-countries of the World Trade Organization (WTO) managed to hammer out a face-saving deal.
- India played a vital role at the Geneva ministerial conference, thereby keeping faith in trade multilateralism alive.
- Resurrecting the WTO’s dispute settlement system (DSS), also called WTO’s ‘crown jewel’, by 2024.
INSIGHTS ON THE ISSUE
Context
World Trade Organization(WTO):
Principles of WTO:
Functions:
The appellate body:
- It is the second tier of the WTO’s DSS that hears appeals from WTO panels.
- It is non-functional because the United States, single-handedly, has blocked the appointment of its members.
- The appellate body, from 1995-2019, has upheld the international rule of law by holding powerful countries such as the U.S. and the European Union accountable for international law breaches.
The ‘precedent’ problem:
- The U.S. reproaches the appellate body for judicial overreach and exceeding its assigned institutional mandate.
- It argues that till the time the appellate body’s role is defined precisely, it cannot be resurrected.
- The U.S. identifies that the appellate body is contrary to the text of the WTO’s dispute settlement understanding (DSU).
- It has been creating binding precedents through its decisions.
- There is no rule of stare decisis e., no rule of precedent in international law.
- The WTO’s DSU(Article 3.2): It states that the appellate body rulings can neither add nor diminish the rights and obligations of WTO member-countries.
- Same Article also says: “The dispute settlement system of the WTO is a central element in providing security and predictability to the multilateral trading system.”
- It is incumbent on the appellate body to ensure that there is consistency in the interpretation and application of the WTO agreements without creating a binding precedent.
- It has encouraged the WTO panels to rely on previous interpretations especially where the issues are the same.
Stand of Appellate body:
- The appellate body has clarified that a departure can be made from the previous rulings and reasoning if there are “cogent reasons”.
- The appellate body is not the only international court that follows its previous decisions.
- Other international courts such as the ICJ and the International Tribunal for the Law of the Sea also follow past decisions unless there are valid reasons not to do so. At
- It has been proposed that the WTO member-countries can adopt a statement that the appellate body rulings do not create precedents.
Trade multilateralism:
- The WTO was created with the neoliberal consensus that emerged after the Cold War and the collapse of communism.
- Ernst-Ulrich Petersmann(international economic lawyer). In a neoliberal economic system, the ‘invisible hand’ of market competition should be complemented by the ‘visible hand’ of the law.
- The WTO became this ‘visible hand’ of the law to regulate global trade.
De judicialization:
- De-judicialization(Daniel Abebe and Tom Ginsburg): It is the reverse phenomenon where countries weaken international courts to take back decision-making power.
- De-judicialisation should not be confused with exerting political oversight over the appellate body to improve its working.
- While US has identified multiple problems with the DSS, it has seldom offered constructive suggestions
- The emerging geo-economic challenges posed by a rising China, the U.S. wants to exercise full power over its trade policies
Way Forward
- The neoliberal order is not dead, the independent economic and security tracks have started to converge, thus heralding the geoeconomic order.
- Henry Gao argues: Countries have to elect the appellate body members by resorting to voting at the WTO’s General Council meeting.
- James Bacchus: The geoeconomic order will inevitably lead to international trade lawlessness’.
- The US’s rejection of the WTO Panel’s ruling calling it ‘flawed’.
- This will only embolden other countries to pursue unilateralism and economic nationalism.
QUESTION FOR PRACTICE
The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective.(UPSC 2016) (200 WORDS, 10 MARKS)
