What is WTO, what are its objectives, and why is it important?

Before discussing the negative impacts of the WTO, we should first know what the WTO is. WTO’s full form is the World Trade Organisation, founded on January 1, 1995. India was one of its founding members, along with 130 other nations. It is headquartered in Geneva, Switzerland.  

Main objectives: 

  • Only global organisations deal with rules of trade between nations
  • Promote trade between producers to export goods and exporters to conduct business
  • Provides a non-biased platform for trade negotiations
  • Give space for cooperation between nations to resolve their trade conflicts by reaching a common solution through diplomatic means

WTO’s relationship with developed countries and developing countries:

There has been a constant observation that the WTO is influenced mainly by developed nations. Developed nations try to pressure developing countries like India to lower their tariffs and government subsidies.

Issues with India:

There have been lots of WTO issues with India. Some of the core issues are discussed below:

One way trade:

  • In this, product exported by developing nations is subjected to rejection if it does not fulfil their certain not so important trade protocols and customs
  • Due to this the developed nations then refuse to pay for the rejected product but instead pressurise the developing nations to accept their exported product
  • It then becomes a sort of biassed trade

Government Subsidies Issue:

  • With the subsidies given the cost of production drastically reduces due to which the market price of the product reduces especially in the case of farming like free electricity etc
  • Due to this the price market of the product is the lowest which eliminates the other players in the market and they face huge losses
  • Hence, for this issue, WTO pressurises to remove the subsidy or lessen it

Disadvantages in Indian Agriculture:

As we had discussed above, the WTO has problems related to government subsidies.So to counter the Subsidies problem WTO has agreed to call the AOA-Agreement of Agriculture. 

Agreement of Agriculture(AOA):

  • In this, the limit was set for the developing nations like China and India that describe at what percentage of GDP subsidy can be provided, and it was finalised at 10-15%
  • Developed countries would give 5% of their GDP subsidy. Now the problem arises is that during 1995 our GDP was around 300 Billion Dollars whereas the USA and European Nations were above 7000 Billion Dollars
  • So we can see clearly that it’s not fair trade but it inserts a monopoly of developed nations

Criticisms of WTO:

There has been continuous criticism and disregarding by the developing nations which are:

  • Influence of Developed Nations: Even though it aims to make Global trade a Fair and Ideal way, its working process functions by concerning the developed countries’ economies and tends to favour them more
  • Work Progress: The Working process is slow and it is difficult to negotiate and come to trade in terms with specially developed nations 
  • Environment safety: Many policymakers in WTO tend to prefer more GDP growth due to trade products rather than the Environmental hazard it is creating and WTO tends to ignore that fact in an era of Deforestation, Ocean pollution, Global warming, etc
  • Corporate Domination over local trade: Because of the huge players some emerging local companies are small whose market shares are taken over by Big MNC giants and this issue is not handled properly by WTO

Impacts of WTO on INDIA’s Economy:

Negative impacts:

  • CAM ( Competitive Agriculture Markets)did not have a positive impact as it benefited the MNC giants to dominate the trade market
  • Due to the low price of imports in the Indian market, the crop producers suffered a heavy loss 
  • There is still a lack of transparency in WTO regarding the developed nations

Positive Impacts:

  • 70% of the Indian consumers are dependent on the agricultural product so in one or another way it has generated revenue for the Indian economy
  • It helps in the upliftment of the situation of middle-class consumers and helps to phase out the socio-economic difference

Conclusion:

  • WTO was formed on 1st January 1995 with the objective goal of Trade Liberalisation but with top officials mostly siding with the western powers of the developed nations, leading to the downside for the markets of the developing nations
  • There have been issues with India regarding the subsidies, especially on the d agricultural issues with which the product of crops are lower on the Indian side by which when exported in the made the international players left
  • So to counter this AOA(Agreement of Agriculture) was introduced to give only 10-15% of GDP subsidies for developing nations and 5% for developed nations
  • It tends to remain biassed as the GDP of developed countries is more so mathematically their 5% GDP subsidy is more than our 15% GDP subsidy
  •  There have been some slightly better improvements in the social economy but not enough on our Indian side