“While protectionism may offer short-term benefits, it undermines the long-term goals of a multilateral trading system.” Critically analyze this statement in the context of WTO’s mandate and recent global trade developments.

Answer: Model Answer approach

Policies and actions that prioritize home companies and industries over international competition are referred to as protectionism. These usually include government procurement, tariffs, and non-tariff obstacles including quotas, rules, and subsidies. The WTO’s primary goal of fostering free trade and economic cooperation is in jeopardy due to the rise of protectionism.

• Set the stage for discussion of the difficulties by defining protectionist tendencies, briefly explaining their recent emergence in the global environment, and giving an outline of the World Trade Organization and its function in promoting international trade.

Body: The effects of protectionist tendencies on global trade, including challenges and instances of nations using protectionist policies presented to the World Trade Organization

Import prices are raised by tariffs, quotas, and other protectionist policies, which reduces their competitiveness and deters trade. Both exporting and importing nations are impacted as a result of the decreased overall trade volume.

• Example: Under its Common Agricultural Policy (CAP), the EU levies tariffs and provides subsidies on a wide range of agricultural products. Although the goal is to guarantee food security and raise prices for home farmers, this also lowers the competitiveness of farmers in developing nations and raises prices for consumers.

Draw a conclusion about the necessity of teamwork in tackling these issues. OR End by outlining potential actions or changes that the WTO or its member nations could take to combat the emergence of protectionist inclinations and strengthen the foundations of international trade.

• The WTO and international trade are threatened by protectionism. The WTO can improve transparency, update regulations, and restructure dispute resolution to counter this. In addition to addressing domestic issues and promoting cooperation on cooperative projects and creative solutions, member nations might pledge to open trade. For a more prosperous and inclusive global economy, the WTO and its members may strengthen free and fair trade principles by cooperating.

Practice Question

Question: Protectionist policies are increasingly being used as tools of economic diplomacy. Examine how such tendencies are affecting the credibility and effectiveness of the World Trade Organization (WTO). (15 marks)

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Mains PYQs 

Question: What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India? (UPSC IAS 2018)

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