For years, the World Trade Organisation (WTO) has come under fire for its rules that are seemingly outdated in a new age of globalisation.
The WTO is an intergovernmental organisation that regulates international trade between nations and is also responsible for dispute resolution. However, as economies develop and the world becomes more connected and trade becomes more complex, the decades-old WTO rules have been put in the spotlight.
At the World Economic Forum in Davos, Switzerland, this year, Dr Keyu Jin, associate professor of economics at the London School of Economics, pointed out why China is a prime example for the need to overhaul the WTO’s rules.
“There are two things that are not in the perspective in the WTO system,” she said, in a session titled ‘Recharging International Trade.’
“Emerging markets can graduate and they can become huge — that’s what happened with China. So when the terms were agreed, [and China was a developing economy] it all seemed reasonable [then]. But China graduated and became really large. So the new system has to take into account the possibility that of emerging markets can graduate.”
This year, the Atlantic Council reignited the discussion when it spoke to Mark Linscott, a senior fellow in the Atlantic Council’s South Asia Center who also served as the assistant US trade representative for WTO and Multilateral Affairs from 2012 to 2016.
“This has been a perennial issue in the multilateral trading system even going back to the early days of the WTO,” said Linscott , who also represented the United States at the US Mission to the WTO in Geneva from 1996 to 2002.
“The present system was essentially established in the 1970s under the old GATT [the General Agreement on Tariffs and Trade], where there is special and differential treatment for members labelled “developing countries.” These members have a lesser set of obligations depending on a particular WTO agreement. Any country can essentially identify itself as a developing country and consequently take advantage of a lesser set of requirements, agreement by agreement.”