The return of trade barriers and economic sanctions has diminished the spirit of GATT. In this context, discuss the factors contributing to the decline of WTO in recent times. (2024, 15 Marks)
The “spirit of GATT” (1947) was the bargain John Gerard Ruggie called embedded liberalism: non-discriminatory, progressively freer trade under agreed rules, with room left for domestic welfare. The WTO (1995) stretched it to agriculture, services and intellectual property, promising every member Ricardian gains. Dani Rodrik’s trilemma (The Globalization Paradox, 2011) explains the backlash: deep integration, national sovereignty and democratic politics cannot all be had at once.
Factors behind the decline
1. The return of unilateral barriers. The 2018 Section 232 and 301 tariffs, the US–China trade war and the 2025 “reciprocal” tariffs replaced negotiated bindings with unilateral rates. When the IEEPA tariffs were struck down in February 2026, Section 122 and 301 duties took their place. By September 2025 the share of world trade on MFN terms had fallen from about 80% to 72% (WTO).
2. Sanctions fused with tariffs. The G7 withdrew MFN treatment from Russia in 2022, and US export controls on advanced chips followed. Henry Farrell and Abraham L. Newman call this weaponised interdependence. India felt it: an extra 25% US tariff over Russian oil (August 2025), sanctions on Rosneft and Lukoil (October 2025), and a 2026 US law authorising tariffs of up to 100% on buyers of Russian oil. Such measures invoke the Article XXI security exception, which a 2019 panel (Russia — Traffic in Transit) held reviewable, not self-judging.
3. A disabled referee. The Appellate Body lost quorum on 11 December 2019 because Washington blocked appointments. Losers now appeal into the void, as India did in its sugar case. The MPIA stopgap excludes both the United States and India.
4. Negotiating paralysis. The single undertaking and consensus at 166 members killed Doha. MC14 (Yaoundé, March 2026) ended without a declaration, the e-commerce moratorium lapsed for the first time since 1998, and India alone blocked the investment-facilitation agreement.
5. The China problem and the attack on MFN. Market-economy rules cannot discipline state capitalism: SOEs, subsidies, overcapacity. Washington’s MC14 message argued that MFN itself fails to deliver reciprocity.
6. A felt North–South asymmetry. The South accepted TRIPS and TRIMS for agricultural promises never fully kept; it faces green-box subsidies, the 1986–88 reference price used against India’s MSP, and SPS barriers.
7. Industrial policy and regional routes. Subsidy laws such as the US Inflation Reduction Act (2022), the EU’s carbon border levy, and 387 regional trade agreements, Jagdish Bhagwati’s “termites in the trading system” (2008), move rule-making outside Geneva.
How deep is the decline?
Realists read it as power reasserting itself over institutions; liberal institutionalists like Robert O. Keohane point to persistence. Merchandise trade grew 4.6% in 2025, mostly on MFN terms, and the Fisheries Subsidies Agreement entered into force in September 2025. The legislative and judicial functions are failing, but the floor of bound tariffs, MFN and transparency still holds.
Conclusion
The WTO is declining as a court and legislature, not as a rulebook. Revival depends on major powers again valuing predictability over leverage. India, which cannot win by leverage, has the strongest stake in restoring it.