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WTO (World Trade
Prof. Sneha Rajput
What is WTO?
Introduction of WTO
Functions of WTO
Objectives of WTO
Arguments in favor of WTO
Principles of WTO
Structure of WTO
What is the World Trade Organization?
“The World Trade Organization is „member-driven‟, with decisions taken by General
agreement among all member of governments and it deals with the rules of trade between
nations at a global or near-global level. But there is more to it than that.”
They deal with: agriculture, textiles and
clothing, banking, telecommunications, government purchases, industrial standards and
product safety, food sanitation regulations, intellectual property, and much more.
The WTO agreements are lengthy and complex because they are legal texts covering a
wide range of activities.
INTRODUCTION OF WTO
The predecessor to the WTO, GATT( General agreement on trades & tariff) began in 1947
with only 23 members; today it has 159 members as on 2nd march 2013, comprising
approximately 97 percent of world trade.
WTO , World Trade Organization was established in 1995 with its origins in the Bretton
Woods Conference at the end of World War II.
The headquarter is situated in Geneva , Switzerland . India join WTO in 1st January 1995.
Two of the most important international economic institutions of the postwar period: the
International Monetary Fund (IMF) and the International Bank for Reconstruction and
Development (the World Bank) was established.
FUNCTIONS OF WTO
The WTO agreements cover goods, services and intellectual property.
They spell out the principles of liberalization, and the permitted exceptions.
They include individual countries‟ commitments to lower customs tariffs and other
trade barriers, and to open and keep open services markets.
They set procedures for settling disputes.
They prescribe special treatment for developing countries.
They require governments to make their trade policies transparent by notifying the
WTO about laws in force and measures adopted, and through regular reports by the
secretariat on countries‟ trade policies
OBJECTIVES OF WTO
The primary aim of WTO is to implement the new world trade agreement.
OBJECTIVES OF WTO
To promote multilateral trade .
To promote free trade by abolishing tariff & non-tariff barriers.
To enhance competitiveness among all trading partners so as to benefit consumers.
To increase the level of production & productivity with a view to increase the level of
employment in the world.
To expand & utilize world resources in the most optimum manner.
To improve the level of living for the global population & speed up economic
development of the member nations.
To take special steps for the development of poorest nations.
ARGUMENT IN FAVOUR OF WTO
Increase in foreign trade.
Increase in agricultural exports.
Increase in inflow of foreign investment.
Improvement in services.
Inflow of better technology & better quality products.
Benefits of multilateral trade system.
Benefits of using quality seeds & new varieties of plants.
PRINCIPLES OF WTO
It has two major components: the most favored nation (MFN) rule, and the national
treatment policy. The MFN rule requires that a WTO member must apply the same
conditions on all trade with other WTO members, i.e. a WTO member has to grant the
most favorable conditions under which it allows trade in a certain product type to all
other WTO members
• It reflects both a desire to limit the scope of free-riding that may arise because of
the MFN rule, and a desire to obtain better access to foreign markets. A related point is
that for a nation to negotiate, it is necessary that the gain from doing so be greater than
the gain available from unilateral liberalization; reciprocal concessions intend to ensure
that such gains will materialize.
3.Binding and enforceable commitments: The tariff commitments made by WTO
members in a multilateral trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules establish "ceiling bindings": a country
can change its bindings, but only after negotiating with its trading partners, which
could mean compensating them for loss of trade.
4.Transparency: The WTO members are required to publish their trade regulations,
to maintain institutions allowing for the review of administrative decisions affecting
trade, to respond to requests for information by other members, and to notify
changes in trade policies to the WTO.
5.Safety valves: In specific circumstances, governments are able to restrict trade.
There are three types of provisions in this direction: articles allowing for the use of
trade measures to attain noneconomic objectives; articles aimed at ensuring "fair
competition"; and provisions permitting intervention in trade for economic reasons
STRUCTURES OF WTO
WTO has nearly 150 members, around 30 other countries are negotiating members.
WTO‟S top level decision making body is the “Ministerial Conference”.
The second level is the “General Council’( normally head by the ambassadors &
The General Council
also meets the Trade policy Review Body and the „Dispute
The third level is “The goods council”, “Services Council” & “Intellectual Property
Council” , which reports to the General Council.
• Trade to expand by 9.5% in 2010 after a dismal 2009, WTO reports
• Why was the trade decline so large?
• Trade prospects for 2010
• 32 WTO members take anti-dumping actions during first half of 2010
• Transparency mechanism for preferential trade arrangements set for approval
• Market access for LDCs
• Trade agreements between developing countries
• Overseeing national trade policies: the TPRM
The agreements are the outcome of negotiations between the members.
The current set of agreements are the result of 1986-1994 Uruguay round of
negotiations , which is a revision of GATT.
A non-discriminatory trading system is operated through these agreements, which
rights & obligations of the members.
Following are the various WTO agreements in different sectors:
a. In case of Goods
b. In case of Services
c. In case of Intellectual property
IN CASE OF GOODS
GATT was the forum for negotiating lower customs duty rates and other trade
barriers , since 1947 to 1994.
The main objective is emphasis on non discrimination.
The GATT has become WTO‟s umbrella agreement for trade in goods.
It also deals with sectors such as agriculture and textiles, and with specific issues
such as State trading, product standards, subsidies and anti-dumping actions.
Nondiscrimination: The policy of treating all of one‟s trading partners equally. A
country is practicing nondiscrimination if it charges the same tariff on imports of a
product (for example, 5 percent on shoes) without regard to where the product is
IN CASE OF SERVICES:
This agreement helps the Banks, insurance firms, telecommunications companies, tour
operators, hotel chains and transport companies, who wants to do business abroad.
It helps to enjoy free and fair trade that originally not applied to trade in goods.
IN CASE OF INTELECTUAL PROPERTY:
WTO agreement deals with intellectual property in terms of amounts invested in
ideas and creativity.
Intellectual property includes copyrights, patents, trademarks
It is the place where the member country comes and talks together and shares their
grievance in order to resolve their problem related to International trade.
The countries make their decisions through various councils and committees, whose
membership consists of all WTO members.
The system helps promote peace, by handling Dispute of member countries. It
provides free trade which cuts the costs of living and provides more choice of
products and qualities and stimulates economic growth.
The WTO agreements cover goods, services and intellectual property. They spell
out the principles of liberalization, and the permitted exceptions. They include
individual countries‟ commitments to lower customs tariffs and other trade
barriers, and to open and keep open services markets. They set procedures for
settling disputes. They prescribe special treatment for developing countries. They
require governments to make their trade policies transparent.
WTO deals with the special needs of developing countries as two thirds of the
WTO members are developing countries and they play an increasingly important
and active role in the WTO because of their numbers, because they are becoming
more important in the global economy, and because they increasingly look to trade
as a vital tool in their development efforts.