The World Trade Organization is on life support. Will Trump’s new rules finish it off?

The World Trade Organization (WTO), established on January 1, 1995, as the successor to the General Agreement on Tariffs and Trade (GATT), stands as the cornerstone of the rules-based multilateral trading system. Its primary functions include administering existing trade agreements, acting as a forum for trade negotiations, and providing a mechanism for resolving trade disputes among its member countries. For decades, it fostered predictability and stability in global commerce, contributing significantly to economic growth and interconnectedness worldwide.

However, the WTO has been facing an existential crisis, largely exacerbated by the United States' policies, particularly under the Trump administration. This period saw a dramatic shift from multilateral engagement towards an 'America First' approach, characterized by protectionism and unilateral actions. A pivotal moment illustrating this challenge was the US blocking of appointments to the WTO's Appellate Body, the highest adjudicating authority in its dispute settlement system. This deliberate obstruction, which began to severely impact the body from December 2019, rendered it non-functional by preventing it from hearing new appeals. Without a functioning Appellate Body, the WTO's ability to enforce its rules and provide a final, binding resolution to trade disputes was severely compromised, pushing the global trade system into a state of legal uncertainty and potential anarchy.

Further escalating tensions, the US imposed Section 232 tariffs on steel (25%) and aluminum (10%) imports from various countries in March 2018, citing national security concerns. While the US argued these tariffs were permissible under GATT Article XXI (Security Exceptions), many member countries, including India, the European Union, and China, viewed them as protectionist measures violating fundamental WTO principles of non-discrimination and market access. These actions led to retaliatory tariffs from affected nations, sparking a series of trade disputes and undermining the very spirit of multilateral cooperation that the WTO embodies.

Key stakeholders in this unfolding drama include, first and foremost, the **United States**, whose actions triggered the crisis. Its motivations were rooted in a belief that the WTO's rules were unfair, particularly towards US industries, and that some countries (like China) were engaging in unfair trade practices. The **WTO Members**, comprising nearly all major trading nations, are another critical stakeholder. Countries like the European Union, Japan, Canada, and India, which largely benefit from and adhere to the rules-based system, have expressed deep concern over the WTO's weakening. They have explored interim appeal arrangements (like the Multi-Party Interim Appeal Arbitration Arrangement, MPIA) to bypass the non-functional Appellate Body, demonstrating their commitment to preserving a dispute resolution mechanism. The **WTO Secretariat and Director-General** represent the institutional stakeholder, tasked with facilitating negotiations and administering agreements, though they possess limited enforcement powers against a recalcitrant major member.

For **India**, the challenges to the WTO hold profound significance. As a developing nation heavily reliant on international trade for its economic growth, a stable and predictable multilateral trading system is crucial. The weakening of the WTO's dispute settlement mechanism directly impacts India's ability to challenge unfair trade practices by other nations, particularly regarding its agricultural subsidies, intellectual property rights, and market access issues. India has historically championed the cause of developing countries within the WTO, advocating for special and differential treatment. A fragmented global trade regime could lead to increased trade protectionism, potentially harming India's exports and hindering its integration into global supply chains. Politically, India remains committed to multilateralism, viewing the WTO as a vital forum for safeguarding its trade interests and promoting equitable global trade. India's stance, often articulated in line with Article 253 of the Indian Constitution, which empowers Parliament to make laws for implementing international treaties, emphasizes adherence to international commitments while protecting national interests, as reflected in its Foreign Trade (Development and Regulation) Act, 1992.

The historical context reveals that the WTO, and before it GATT, was born out of a post-World War II desire to prevent trade wars and foster economic cooperation, aiming to avoid the protectionist policies of the 1930s that exacerbated the Great Depression. The current crisis, therefore, represents a significant regression from decades of multilateral progress.

The future implications are stark. A weakened WTO could lead to a proliferation of bilateral and regional trade agreements, potentially creating a 'spaghetti bowl' of conflicting rules and further fragmenting global trade. This could disadvantage smaller economies and increase trade friction. The ongoing discussions about WTO reform, including proposals to address the Appellate Body impasse, enhance transparency, and update rules for the digital economy, are critical. India, along with other like-minded countries, will play a crucial role in shaping these reforms to ensure the WTO remains relevant and effective in the 21st century, safeguarding a rules-based order against the rising tide of unilateralism and protectionism. The sustainability of global supply chains and the pace of globalization itself hinge significantly on the resolution of these challenges.