Relevance: GS II (International Organizations) & GS III (Economy) | Source: Economic News

1. What is the News?

• The World Trade Organization (WTO) is holding its biggest meeting, the 14th Ministerial Conference (MC14), in Cameroon.
• The Problem: The WTO is going through a massive crisis. Powerful countries like the US are ignoring global trade rules and fighting their own trade wars, putting the survival of fair global trade at risk.

2. Why is the WTO in Trouble?

The main system of the WTO is breaking down for two major reasons:

• The “Supreme Court” is Closed: The WTO has a judicial branch (the Appellate Body) to solve fights between countries. However, the United States has completely paralyzed it by refusing to let new judges be appointed.
• Too Slow to Make Rules: To pass a new rule, all 166 member countries must agree (Consensus). Because getting 100% agreement is almost impossible today, countries are getting frustrated and leaving the WTO to make their own private trade deals.

3. The Big Fights at the Meeting (For Your Mains Answer)

There are three major debates happening right now that will affect India:

• The Digital Tax Debate (E-Commerce Moratorium): * Currently, countries do not charge customs tax on digital items that cross borders (like downloaded software, movies, or music).
  • Rich countries want to make this “no-tax” rule permanent.
  • India’s Stand: India strongly opposes this. As digital trade grows, developing countries are losing thousands of crores in potential tax revenue.
• The “Special Help” Debate (Special & Differential Treatment – SDT):
  • The Rule: The WTO gives poorer and developing nations extra time and relaxed rules to help their economies grow.
  • The Fight: The US wants to cancel this special help for large developing economies, specifically targeting China, India, and Brazil.
• The “Golden Rule” Debate (Most Favoured Nation – MFN):
  • The Rule: Treat everyone equally. If you lower a tax for one friend, you must lower it for all 166 WTO members.
  • The Fight: Powerful nations want to bypass this rule so they can punish specific countries with high taxes. Developing nations are fighting hard to protect this rule of equality.

4. The Rulebook Fight: Who Makes the Rules?

India is fighting a big battle regarding how new trade rules are created:

• Multilateral Agreements: A rule where all 166 countries sit together and agree. India supports this because everyone gets an equal voice.
• Plurilateral Agreements: A side-deal made by a small, exclusive group of countries. India strictly opposes this because it divides the world and allows rich nations to bypass the standard rules.

UPSC Value Box

With reference to the principles and functioning of the World Trade Organization (WTO), consider the following statements:

1. A “Plurilateral” agreement at the WTO requires the mandatory participation and agreement of all 166 member countries.
2. The ‘Special and Differential Treatment’ (SDT) provision gives developing nations more lenient trade rules and longer transition periods.
3. India strongly supports making the WTO moratorium on customs duties on electronic transmissions (digital goods) permanent.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)