CHALLENGES FACED BY

WTO: NEED FOR

GROUP-19
PRERANA KAUSHIK-41019103817
PUSHPINDER SINGH-02619103817
 INTRODUCTION
The World Trade Organization (WTO) has been the
cornerstone of the multilateral rules-based global
trading system since its inception in 1995.
However, even before the Covid-19 pandemic, all
three of the organization’s functions- providing a
negotiation forum to liberalize trade and establish
new rules, monitoring trade policies, and resolving
disputes between its 164 members are facing
challenges.
 WHY THERE IS A NEED TO
REFORM:
KEEPING PACE WITH THE 21ST CENTURY:
There are several fundamental reasons for urgency about finding
common ground on updating and improving the scope and
functioning of the WTO.
Most importantly, the organization has simply not kept up with the
pace of change in the 21st century economy. The most obvious
example involves new issues resulting from the rapid growth of
digital commerce, over the need for effective trade and investment
rules.
The growing need to place digital commerce under a multilateral,
rules-based system also directly underscores the current functional
imperfection of the WTO.
Another major gap in WTO rules receiving increased scrutiny
involves the resurgence of state-owned enterprises (SOEs) in
many large economies. Despite the collapse nearly 30years ago
of state-dominated communist economies, including the
transition in China to a more market-oriented regime, SOEs
have displayed a remarkable resilience and even renewed
growth in the 21st century. The impact of SOEs in global
markets can be seen, among many examples, in the
commercial aviation industry, where state-dominated and
financed carriers in the Middle East, Turkey, China, and
elsewhere are undermining the business models of airline
companies in the market dominated countries like the United
States, Europe, and Australia.
Problems with the Internal Workings of
the WTO: 
The second major basket of problems behind the effort to reform
the WTO concerns the processes, procedures, and efficiency of
the existing organization. The United States has notably
developed a critique of the dispute settlement mechanisms of
the WTO, especially with the Appellate Body (AB). It has
questioned or blocked appointments of new members to the AB.
Although the United States has been bitterly criticized for its
stance on reform, especially regarding the work of the AB,
which could be brought to a halt as soon as late 2019 due to lack
of judges, other important participants have recently recognized
some frailties in the functioning of the WTO and have started to
offer constructive solutions. 
Slowing Growth in World Trade and the Need
for Liberalization of Services: 
The third substantial argument for taking on the difficult task
of WTO reform is that the stagnation, inefficiency, and lack of
coverage of WTO rules in new areas is having a negative effect
on global growth. The expansion of cross border trade averaged
about seven percent annually in the relatively peaceful 1990s.
“Manufacturers’ access to better, more reliable and more diverse
business services enhanced firms’ ability to invest in new
opportunities and technologies to concentrate production in fewer
locations, to efficiently manage inventories, and to coordinate
decisions with suppliers and customers.” One study cited by the
World Bank estimates that full services trade liberalization could
raise manufacturing productivity by an average of 22 percent.
 REFORMS:
Fixing WTO Operations:
The near-term objective for WTO reform and modernization is
improving the operational efficiency and effectiveness of the
organization. Many members have already advanced constructive
ideas for addressing the weaknesses and over-reaching. In the first
place the WTO and its membership need to better enforce existing
rules. Much has been made of the difficulty of interpreting and
enforcing existing rules on intellectual property rights (IPR), and new
rules must be crafted to cover contemporary practices by China and
others. Nevertheless, the United States did initiate a case at
the WTO in March 2018 after a report undertaken unilaterally under
section 301 of the Trade Act of 1974. These cases will require
considerable time to adjudicate, but they do show determination from
transatlantic partners (joined by Australia, Japan, and others) to
enforce existing rules. Relying on enforcement to a greater extent
would show confidence in the WTO.
Adapting New Rules for 21st Century
Trading Patterns:
The second set of priorities for WTO reform involve the need
to develop or modernize rules covering new trade challenges
and older subjects not adequately covered by existing
disciplines. The inability of the WTO to agree on a
comprehensive new set of rules since the birth of the
organization in 1995 suggests that members should, as a
minimum preliminary matter, focus their reform work on the
most pressing current economic, political, and national security
issues. Among these are new rules to address the resurgence
of SOEs; an effort to bring as much of the services sector as
politically feasible into the rules-based system; developing
further new rules for trade in digital goods, services, and e-
commerce; and modernizing rules for IPR protection.
 CONCLUSION
• The WTO—and its predecessor the GATT—has been a crucial component
of the global, rules-based system conceived at Bretton Woods after World
War II. It has helped generate unprecedented peace and prosperity around
the world. Unfortunately, in recent decades its rules have not kept pace with
changes in the 21st-century economy. 
• The evolution of politics in developed countries has also contributed to
increased scrutiny and sensitivity about the localized negative effects of
globalization. Partially as a result of these factors, criticism of the
organization has grown in many important member countries.
• Safeguarding the dispute settlement system is a sine qua non condition to
preserve the reality of a rules-based trading system. It requires addressing
these different concerns in a meaningful way.