Answer: Protectionism refers to policies and practices that favor domestic industries and businesses over foreign competition. These typically tariffs, non-tariff barriers such as  quotas, regulations, and subsidies; and government procurement. While the WTO strives to promote free trade and economic cooperation, rising protectionism threatens its core mission.

Impact of Protectionist Tendencies on International Trade:

Positive Impacts:

• Protecting domestic industries: from foreign competition, allowing them time to develop and become more competitive.
• Saving jobs: in specific industries facing intense foreign competition.
• National security concerns: to safeguard critical industries or technologies deemed essential for national security.

Negative Impacts:

• Reduced trade volume: Tariffs, quotas, and other protectionist measures increase the cost of imports, making them less competitive and discouraging trade. This leads to lower overall trade volume, impacting both exporting and importing countries.
• Ex: The EU imposes tariffs and subsidies on many agricultural products under its Common Agricultural Policy (CAP). The aim is to increase prices for domestic farmers and ensure food security, but this also reduces the competitiveness of farmers in developing countries and increases the cost for consumers.
• Higher prices for consumers: as imported goods become more expensive. This reduces purchasing power and leads to lower overall economic growth.
• Ex: The USA has imposed tariffs on steel and aluminum imports from most countries, as well as on many Chinese goods such as fridges, washing machines, and clothes. The tariffs raised the prices of inputs and final goods, hurt US exporters who face retaliatory tariffs from China.
• Disrupted supply chains: leading to production slowdowns and shortages.
• Job losses in export-oriented industries: While protectionism aims to protect domestic jobs, it also leads to job losses in export-oriented industries that rely on foreign markets.
• Increased international tensions: Trade wars and protectionist disputes can increase tensions between countries, hindering cooperation and diplomacy.
• Ex: The Trump administration imposed tariffs on billions of dollars worth of Chinese goods, sparking a trade war that disrupted global supply chains and raised consumer prices.

Challenges Posed to the WTO by Protectionist Tendencies on International Trade:

• Enforcement of WTO rules: Protectionist measures often take the form of seemingly legal loopholes or grey areas that exploit ambiguities in WTO rules. This makes it difficult for the WTO to enforce its principles and adjudicate disputes effectively.
• Ex: US tariffs on steel and aluminium based on national security concerns, which is technically allowed by WTO rules but contradicts its spirit of free trade.
• Stalemated Doha Round negotiations: The Doha Round, aimed at further global trade liberalization, has been stalled since 2008 due to disagreements between developed and developing countries. This lack of progress weakens the WTO's authority and legitimacy in addressing contemporary trade challenges.
• Rise of regional trade agreements: Many countries are increasingly turning to regional trade agreements (RTAs) that bypass WTO rules and create separate trading blocs. This fragments the global trading system and undermines the WTO's role as the central forum for trade negotiations.
• Ex: The Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership create preferential trade arrangements that exclude non-member countries.
• Lack of consensus on new issues: Emerging trade issues like e-commerce, intellectual property, and digital services are not adequately addressed by existing WTO rules. The lack of consensus on how to adapt the WTO to these new realities further hinders its effectiveness.
• Weakening public support: Growing populism and concerns about job losses due to globalization fuel public scepticism towards free trade. This weakens the political support for the WTO and its role in promoting open trade.
• Ex: The "America First" policy under the Trump administration.
• Decision-making by consensus: The WTO's requirement for consensus decision-making is cumbersome and slow, especially with rising protectionist sentiments.
• Lack of transparency: Concerns exist about the transparency of WTO negotiations, Dispute Settlement Body and decision-making processes, leading to accusations of unfairness and bias.

Protectionism poses a threat to the WTO and global trade. To combat this, the WTO can revamp dispute settlement, modernize rules, and increase transparency. Member countries can commit to open trade, address domestic concerns, and foster collaboration on joint initiatives and innovative solutions. By working together, the WTO and its members can reinforce free and fair trade principles for a more prosperous and inclusive global economy.