Explain the role of World Trade Organization (WTO) in the present context. Discuss the merits and demerits of TRIMs and TRIPs.

Role of the World Trade Organization (WTO) in the Present Context

The WTO's role in the current global economic order is multifaceted, acting as a crucial pillar for multilateral trade governance despite facing significant headwinds.

• Administering Trade Agreements: The WTO oversees the implementation of various multilateral and plurilateral trade agreements, ensuring members adhere to agreed-upon rules and commitments.
• Forum for Trade Negotiations: It provides a platform for member countries (currently 164 members) to negotiate new trade agreements and liberalize trade further, addressing issues from tariffs to non-tariff barriers, services, and agriculture.
• Dispute Settlement Mechanism (DSM): A cornerstone of the WTO, the DSM allows members to resolve trade disputes through a rules-based system, preventing unilateral actions and promoting stability. However, this mechanism is currently impaired due to the blocking of appointments to the Appellate Body since 2016 by the US.
• Monitoring National Trade Policies: The WTO regularly reviews the trade policies of its members, promoting transparency and adherence to WTO principles through its Trade Policy Review Mechanism.
• Technical Assistance and Capacity Building: It supports developing and least-developed countries (LDCs) by providing technical assistance and training to help them integrate more effectively into the multilateral trading system.
• Restraining Protectionism: Despite the rise of bilateral and regional free trade agreements, the WTO continues to play a vital role in restraining protectionist tendencies and promoting non-discrimination (Most-Favoured-Nation and National Treatment principles) in global trade.
• Addressing Global Commons and Public Interest Issues: The WTO has shown its capacity to address issues of public interest, such as facilitating access to affordable medicines and vaccines during the COVID-19 pandemic and working on agreements like the Agreement on Fisheries Subsidies to protect shared resources.

However, the WTO's relevance is increasingly questioned due to:

• Paralysis of the Appellate Body: The inoperability of the Appellate Body has severely hampered the WTO's ability to resolve disputes, undermining the credibility of the rules-based system.
• Stalled Negotiations: Major multilateral trade negotiations, particularly in agriculture and non-agricultural market access (NAMA), have remained largely inconclusive due to divergent interests between developed and developing countries.
• Rising Protectionism and Unilateralism: Major economies have increasingly resorted to unilateral trade measures and protectionist policies, challenging the multilateral framework.
• Geopolitical Tensions: Difficult trade relations between major economies like the US and China strain the multilateral trading system.
• Need for Reforms: There is a strong call for WTO reforms to make it more responsive to current concerns such as digital trade, national security, and environmental standards, and to strengthen its inclusivity.

Merits and Demerits of Trade-Related Investment Measures (TRIMs)

The Agreement on Trade-Related Investment Measures (TRIMs), part of the WTO agreements, addresses investment measures that restrict or distort trade. It primarily aims to ensure national treatment and eliminate quantitative restrictions that violate GATT Article III (National Treatment) and Article XI (Elimination of Quantitative Restrictions).

Merits of TRIMs:

• Promotes Non-Discrimination: TRIMs ensures that foreign investors are treated no less favorably than domestic investors, creating a level playing field and preventing discriminatory practices that favor local firms.
• Fosters Global Economic Integration: By limiting investment measures that distort trade, TRIMs facilitates a more fluid movement of foreign direct investment (FDI) across borders, contributing to global economic integration.
• Enhances Transparency: The agreement requires WTO members to publish and provide information on their laws and regulations affecting investment, ensuring greater transparency.
• Reduces Trade Barriers: It prohibits certain trade-related investment measures (e.g., local content requirements, trade balancing requirements), thereby dismantling obstructive trade barriers and encouraging fair competition.
• Attracts Foreign Investment: A transparent and non-discriminatory investment environment can make a country more attractive to foreign investors, potentially leading to increased capital inflow, technology transfer, and job creation.

Demerits of TRIMs:

• Limits Policy Space for Developing Countries: Critics argue that TRIMs restrict the ability of developing countries to use investment policies (e.g., local content requirements) to foster domestic industrial development, protect infant industries, and create local employment. India, for instance, has historically used such measures.
• Potential for Balance of Payments Issues: By prohibiting trade balancing requirements, TRIMs could exacerbate balance of payments challenges for developing countries if foreign investors disproportionately rely on imported components without corresponding export obligations.
• Reduced Local Linkages: Without performance requirements, multinational corporations might be less inclined to build strong linkages with local suppliers, hindering the development of domestic industries.
• Concerns over Sovereignty: Some argue that the agreement encroaches on the sovereign right of nations to formulate industrial and investment policies aligned with their national development goals. India has strongly objected to pushing talks on investment facilitation at the WTO, stating it falls outside the body's mandate.

Merits and Demerits of Trade-Related Aspects of Intellectual Property Rights (TRIPs)

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) is the most comprehensive multilateral agreement on intellectual property rights (IPRs). It establishes minimum standards for the protection and enforcement of IPRs across WTO member countries, covering patents, copyrights, trademarks, geographical indications, industrial designs, and trade secrets.

Merits of TRIPs:

• Promotes Innovation and Creativity: By guaranteeing exclusive rights to intellectual property owners, TRIPs provides incentives for businesses to invest in research and development (R&D), fostering innovation and creativity.
• Facilitates Technology Transfer: Stronger IP protection can encourage technology owners to license their products and technologies, potentially leading to technology transfer to developing nations.
• Ensures Fair Competition: Standardized IP protection across members supports fair and equitable global trade, helping to combat counterfeiting and piracy.
• Attracts Foreign Direct Investment: Robust intellectual property protection can attract foreign direct investment, as companies are more willing to invest in countries where their IP is secure.
• Provides Legal Certainty: TRIPs offers a clear legal framework for the protection and enforcement of IPRs, benefiting innovators and investors.

Demerits of TRIPs:

• High Cost of Medicines: One of the most significant criticisms, particularly from developing countries, is that high patent standards for pharmaceuticals lead to exorbitant drug prices, limiting access to affordable essential medicines. The Doha Declaration on TRIPS and Public Health (2001) affirmed countries' right to use flexibilities like compulsory licensing.
• Impact on Traditional Knowledge: TRIPs primarily protects Western-style intellectual property, with inadequate provisions for the protection of traditional knowledge, indigenous innovations, and biodiversity, which are crucial for many developing countries.
• Monopoly and Reduced Competition: Granting exclusive control to multinational corporations through patents can limit competition, stifle local innovation, and lead to higher prices for consumers.
• Technology Gap Widening: Instead of fostering technology transfer, some argue that TRIPs has widened the technology gap by making cutting-edge technologies more expensive and less accessible for developing nations.
• Increased Royalty Outflows: Developing countries, including India, have seen significant increases in royalty expenditure due to stringent IP protection, leading to concerns about economic drain. An RSS affiliate, Swadeshi Jagaran Manch, recently noted India's royalty outgo increased from less than $1 billion in the 1990s to over $17 billion annually, calling for India to "dump" TRIPs.
• Restrictions on Agricultural Practices: Patent protection on seeds and other agricultural inputs can affect traditional farming practices and food security in developing countries.