Context: 

• At the concluding session of the G-20 summit at Bali, Prime Minister Narendra Modi said that reforming the WTO is crucial for strengthening trust in the multilateral trading system.

Need for reforming WTO

• Rules-based, non-discriminatory, free, fair, open, inclusive, equitable, sustainable and transparent multilateral trading system, with the WTO at its core, is indispensable to the advancing shared objectives of G20 members.
• Shared objectives are inclusive growth, innovation, job creation and sustainable development in an open and interconnected world as well as to support the resilience and recovery of a global economy under strain due to Covid-19 and supply chain disruption.

Key takeaways of G20 Bali declaration

• It urges members to engage in active, constructive, pragmatic, and focused discussions on WTO reforms to improve all its functions. For instance, reform of the dispute settlement mechanism.
• It highlights the importance of allowing agriculture and food trade to flow smoothly and update global agricultural food trade rules and facilitate trade in agricultural and food products.
• It emphasizes the importance of not imposing export prohibitions or restrictions on food and fertilizers in a manner inconsistent with relevant WTO provisions.
• It says that trade and climate/environmental policies should be mutually supportive, WTO consistent and contribute to the objectives of sustainable development.

About Appellate Body of WTO

• The Appellate Body (AB) is part of the WTO’s dispute settlement mechanism. It is a permanent body with seven members, and acts as an appellate court hearing appeals from the decisions given by WTO panels.
• However, since December 2019, the AB has stopped functioning due to rising vacancies.
• Over the years, the U.S. has consistently blocked the appointment of AB members. The U.S. also vetoes proposals to find solutions to this impasse, including stalling the proposal of the European Union to establish an alternative interim appellate arbitration mechanism.
• The number of pending appeals to the AB has increased sharply.
• As a result, countries now have an easy option not to comply with the WTO panel decisions by appealing into the void.
• Many of the panel rulings of the Dispute Settlement Body  are pending at the appeal stage and the disputes linger.
• For instance, The DSB panel ruling on export subsidies went against India and is pending at the appeal stage.

Significance of dispute settlement body

• Dispute settlement is the central pillar of the multilateral trading system, and the WTO’s unique contribution to the stability of the global economy.
• This is because the rules can be enforced only when there is a mechanism for settling disputes.

Way forward

• India should persuading the Biden administration to allow the appointment of judges to hear appeals at the WTO as it will
  • Demonstrate the resolve of the G-20 leadership to move forward towards its stated aims.
  • Bring disproportionate goodwill and enhance India’s standing in the global community.