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Explain the role of World Trade Organization (WTO) in the present context. Discuss the merits and demerits of TRIMs and TRIPs. 

This question was previously asked in
UPSC CSE 2025 (Prelims) CSAT Official Paper (25-May-2025)

The World Trade Organization (WTO) remains the foundational pillar of the multilateral trading system, even in the face of contemporary challenges. Its primary role is to ensure that global trade flows as smoothly, predictably, and freely as possible. In the present context, it acts as:

  • Forum for Negotiations: Providing a platform for reducing trade barriers through multilateral agreements.
     
  • Administrator of Agreements: Overseeing compliance with established trade rules.
     
  • Dispute Settlement Body: Offering a rules-based mechanism to resolve disputes, preventing unilateral retaliation and trade wars.
     
  • Trade Policy Review: Monitoring members’ trade policies to ensure transparency.
     
  • Technical Assistance: Supporting developing countries in better integrating into global trade.
     

Despite challenges—such as the paralysis of its dispute settlement body and difficulties in reaching new agreements—the WTO’s framework underpins most of world trade, preventing a slide into protectionism.

Two significant WTO agreements are TRIMs and TRIPs:

  • TRIMs (Trade-Related Investment Measures): Prohibit measures that distort trade, such as local content or trade balancing requirements.

    • Merits: Create a fairer environment for foreign investors, encourage efficient resource allocation, and attract FDI by ensuring predictability.
       
    • Demerits: Limit developing countries’ ability to foster infant industries, guide industrial policy, or mandate technology transfer, thereby constraining their development strategies.
       
  • TRIPs (Trade-Related Aspects of Intellectual Property Rights): Set minimum global standards for IPR protection covering patents, copyrights, trademarks, and geographical indications.

    • Merits: Promote innovation and R&D by rewarding creators, provide legal certainty across borders, and facilitate trade in knowledge-based goods and services.
       
    • Demerits: Raise costs of essential goods like medicines and advanced technologies for developing countries, restrict reverse engineering and adaptation, and risk widening the technology gap. Flexibilities such as compulsory licensing exist but remain contentious in practice.

Thus, while WTO agreements enhance predictability and global integration, they also expose tensions between efficiency-driven liberalization and the developmental needs of poorer nations.

Answered By:

Sakshi Negi

Sakshi Negi is a Delhi-based journalist and content specialist with expertise in educational content and digital media, focusing particularly on government exam preparation and career guidance. With a degree in Journalism and Mass Communication from NRAI School of Mass Communication and her background as a Kendriya Vidyalaya alumna, she brings unique insights into the Indian education system and government sector opportunities.

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