Mint Primer | Down, not out: Will WTO live to see another day?

What has Trump said about the WTO?

Nothing so far in his second term as president. But during his first term, he was characteristically belligerent, telling Fox News, “If they don’t improve, I’ll pull out of the WTO." He told Bloomberg he thought the WTO was “created to benefit everyone except us". This time around, according to Reuters, the Trump administration has paused paying its share of funds to the Geneva-based body. The US contribution, based on its share of world trade, is 11% of the WTO’s annual budget of $232 million. A state department spokesman said, “Funding for the WTO, along with other international organizations, is currently under review."

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Why doesn’t Trump like the WTO?

The first thing to understand is that it’s not Trump alone. In varying degrees, scepticism about International organizations runs through US policy making. The US failed to punish China for unfair trade practices, including tariffs and dumping at WTO. Suspicious of WTO’s dispute settlement mechanism, the US has blocked all appointments to the appellate body since 2017, when Barack Obama was president. This is a self-fulfilling prophecy: If you hobble the settlement mechanism, sooner or later it won’t be fit for the purpose, and complaints against WTO rule-making will rise, undermining multilateralism.

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How does WTO settle disputes?

This is at the heart of global trade rule-making, but also very controversial. First, a dispute settlement panel, comprising three or five experts, hears a complaint. If it remains unresolved, the matter is heard by an appellate body of seven members, usually professors, lawyers, former government officials or judges. All seven positions have been blocked by the US.

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What’s India’s stake in the WTO?

India has played a massive role in the WTO. Its biggest contribution was in the Doha Development Round talks, where it took a strong and unflinching position as the informal spokesperson for the developing world against unfair US and EU farming subsidies. The round was declared dead after members failed to agree to a threshold for the special safeguard mechanism, a measure to protect poor farmers by allowing countries to impose a special tariff on certain agricultural goods. India was blamed but took it on the chin. 

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Doesn’t the WTO’s future look a bit grim?

The WTO will survive, with or without the US. This is because developing countries have thrown in their lot with multilateral organizations such as WTO. Rules favour the poor and middling countries: analysts call it the prisoner’s dilemma — it makes sense not to betray the other even if the outcome is not optimal. The bigger question is if developing countries will continue to push the WTO into working towards an equitable trade order and take on the beggar-thy-neighbour regime of escalating tariffs.