OBJECTIVES AND FUNCTIONS
ABHISHEK DAS SHARMA
The World Trade Organization (WTO) is an organization that intends to supervise
and liberalize international trade. The organization officially commenced on 1
January 1995 under the Marrakech Agreement, replacing the General Agreement
on Tariffs and Trade (GATT), which commenced in 1948. The organization deals
with regulation of trade between participating countries; it provides a framework
for negotiating and formalizing trade agreements, and a dispute resolution process
aimed at enforcing participant's adherence to WTO agreements, which are signed
by representatives of member governmentsand ratified by their parliaments. Most
of the issues that the WTO focuses on derive from previous trade negotiations,
especially from the Uruguay Round (1986–1994).
Created by: Uruguay Round negotiations (1986-94)
Membership: 159 countries
Head : Director-General – Mr. Pascal Lamy
Established: 01 January 1995
Location: Geneva, Switzerland
The headquarters of the World
Trade Organization, in Geneva,
ROLE OF WTO
• The main goal of WTO is to help the trading industry to become smooth, fair, free and
predictable. It was organized to become the administrator of multilateral trade and business
agreements between its member nations. It supports all occurring negotiations for latest
agreements for trade. WTO also tries to resolve trade disputes between member nations.
• Multi-lateral agreements are always made between several countries in the past. Because of
this, such agreements become very difficult to negotiate but are so powerful and influential
once all the parties agree and sign the multi-lateral agreement. WTO acts as the
administrator. If there are unfair trade practices or dumping and there is complain filed, the
staff of WTO are expected to investigate and check if there are violations based on the multi-
The system helps promote peace.
The system allows disputes to be handled constructively.
A system based on rules rather than power makes life easier for all.
Free trade cuts the cost of living.
It gives consumers more choice and a broader range of qualities to choose from.
Trade raises incomes.
Trade stimulates economic growth and that can be good news for employment
The basic principles make the system economically more efficient, and they cut costs.
OBJECTIVES OF WTO
• To arrange the implementation, administration and operations of multilateral (involving three
or more participants) and Plurilateral trade agreements (power which shared between
• To arrange the forum for deliberations for the member nations in regard to their multilateral
trade relations in issues deal with under the agreements.
• To provide a framework for implementing of the results arising out of the deliberations (long
and care full agreements/consideration) which taken place at ministerial conference level
• To manage the created understanding on rules and procedure governing the settlement of
• To manage effectively and efficiency the trade policy review mechanism (TRIM)
• To create more together relationship with all nations in respect of global economic policy-
making, it would cooperate with the IMF and the world bank & its affiliated Organizations.
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations
FUNCTIONS OF WTO
• Among the various functions of the WTO, these are regarded by analysts as the most
• It oversees the implementation, administration and operation of the covered agreements.
• It provides a forum for negotiations and for settling disputes.
• Additionally, it is the WTO's duty to review and propagate the national trade policies, and to
ensure the coherence and transparency of trade policies through surveillance in global
economic policy-making. Another priority of the WTO is the assistance of developing, least-
developed and low-income countries in transition to adjust to WTO rules and disciplines
through technical cooperation and training.
(i) The WTO shall facilitate the implementation, administration and operation and further the
objectives of this Agreement and of the Multilateral Trade Agreements, and shall also provide
the frame work for the implementation, administration and operation of the multilateral
(ii) The WTO shall provide the forum for negotiations among its members concerning their
multilateral trade relations in matters dealt with under the Agreement in the Annexes to this
(iii) The WTO shall administer the Understanding on Rules and Procedures Governing the
Settlement of Disputes.
(iv) The WTO shall administer Trade Policy Review Mechanism.
(v) With a view to achieving greater coherence in global economic policy making, the WTO
shall cooperate, as appropriate, with the international Monetary Fund (IMF) and with the
International Bank for Reconstruction and Development (IBRD) and its affiliated agencies.
The above five listings are the additional functions of the World Trade Organization.
As globalization proceeds in today's society, the necessity of an International Organization to
manage the trading systems has been of vital importance. As the trade volume increases,
issues such as protectionism, trade barriers, subsidies, violation of intellectual property arise
due to the differences in the trading rules of every nation. The World Trade Organization
serves as the mediator between the nations when such problems arise. WTO could be
referred to as the product of globalization and also as one of the most important
organizations in today's globalized society.
The WTO is also a center of economic research and analysis: regular assessments of the
global trade picture in its annual publications and research reports on specific topics are
produced by the organization. Finally, the WTO cooperates closely with the two other
components of the Bretton Woods system, the IMF and the World Bank.
• The WTO oversees about 60 different agreements which have the status of international legal texts.
Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the
most important agreements follows. The Agreement on Agriculture came into effect with the
establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars":
domestic support, market access and export subsidies. The General Agreement on Trade in Services was
created to extend the multilateral trading system to service sector, in the same way as the General
Agreement on Tariffs and Trade (GATT) provided such a system for merchandise trade. The agreement
entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property
Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was
negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in
• The Agreement on the Application of Sanitary and Phytosanitary Measures—also known as the SPS
Agreement—was negotiated during the Uruguay Round of GATT, and entered into force with the
establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints
on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labeling)
as well as animal and plant health (imported pests and diseases). The Agreement on Technical Barriers to
Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay
Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of
the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as
testing and certification procedures, do not create unnecessary obstacles to trade". The Agreement on
Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes
methods of customs valuation that Members are to follow. Chiefly, it adopts the "transaction value"
• In December 2013, the biggest agreement within the WTO was signed and known as the Bali Package.
BRICS -ROLE OF WTO
BRICS is the acronym for an association of five major emerging national
economies: Brazil, Russia, India, China and South Africa. The grouping was originally known
as "BRIC" before the inclusion of South Africa in 2010. The BRICS members are all developing
or newly industrialized countries, but they are distinguished by their large, fast-growing
economies and significant influence on regional and global affairs; all five are G-20 members.
As of 2013, the five BRICS countries represent almost 3 billion people, with a combined
nominal GDP of US$16.039 trillion, and an estimated US$4 trillion in combined foreign
reserves. Presently, South Africa holds the chair of the BRICS group, having hosted
the group's fifth summit in 2013. The BRICS have received both praise and criticism from
The foreign ministers of the initial four BRIC states (Brazil, Russia, India, and China) met
in New York City in September 2006, beginning a series of high-level meetings. A full-scale
diplomatic meeting was held in Yekaterinburg, Russia, on 16 May 2008.
The BRIC grouping's first formal summit, also held in Yekaterinburg, commenced on 16 June
2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the
respective leaders of Brazil, Russia, India and China, all attending. The summit's focus was on
means of improving the global economic situation and reforming financial institutions, and
discussed how the four countries could better co-operate in the future. There was further
discussion of ways that developing countries, such as the BRIC members, could become more
involved in global affairs.
In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a
new global reserve currency, which would have to be "diversified, stable and
predictable". Although the statement that was released did not directly criticize the
perceived "dominance" of the US dollar – something that Russia had criticized in the past – it
did spark a fall in the value of the dollar against other major currencies.
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.
The BRICS Forum, an independent international organization encouraging commercial, political
and cultural cooperation between the BRICS nations, was formed in 2011. In June 2012, the BRICS
nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF).
However, this loan was conditional on IMF voting reforms. In late March 2013, during the fifth
BRICS summit in Durban, South Africa, the member countries agreed to create a global financial
institution which they intended to rival the western-dominated IMF and World Bank. After the
summit, the BRICS stated that they planned to finalize the arrangements for this
new development bank by 2014. However, disputes relating to burden sharing and location have
slowed down the agreements.
BENEFITS OF THE AGREEMENTS
• Increase in foreign trade
• Increase in agriculture exports
• Increase in inflow of foreign investment
• Improvement in services
• Benefits for clothing and textile industry
• Restricts dumping
• Promotion to research on patents
• Reduction in tariff and non-tariff barriers.
• Amendment in patent act
• Copyright, trademark and industrial designs
• Geographically indications
• Disadvantage to agriculture sector
-- reduction in subsidy
-- Import of food grains
• Loss to domestic industries
• Patent of Domestic grown herbs taken over by foreign companies
The share of BRICS in global trade has more than doubled over the past decade. This can be partly
attributed to a shift in the countries’ trade policies. Tariﬀ rates have been cut signiﬁcantly over the past
few years in the BRICS economies and average tariﬀ rates currently range from 8% to 12% (Table 5).
Moreover, the BRICS as WTO members are required to bind their tariﬀs, in other words to put ceilings
beyond which they cannot increase their tariﬀ rates. Russia, which has recently acceded to the WTO,
bound its tariﬀs from the date of WTO membership.
Spurred by domestic concerns, both bound and applied rates have been kept higher for agricultural good.
A number of trade arrangements have emerged amongst the BRICS over the past few years, either on a
bilateral basis or as a part of a larger grouping (e.g. South Africa as part of SACU). In addition, both India and
China are members of Asia Paciﬁc Trade Agreement (APTA), a preferential trade agreement seeking to
promote trade among developing countries in the Asia-Paciﬁc region. Negotiations on a Regional
Comprehensive Economic Partnership Agreement (RCEP) are also on the anvil.
Evidently, there are several areas of convergence and a few points of divergence in the trade policies of
the BRICS. Eﬀorts have been recently focused on increasing intra-BRICS trade and expanding the areas
of possible collaboration. BRICS Trade Ministers at their New Delhi meeting in March 2012, resolved to
more than double the trade among BRICS from US $230 billion in 2011 to US $500 billion by 2015. The
Delhi Action Plan was endorsed at the Summit to encourage intra-BRICS cooperation in other key areas.
Concrete suggestions are being put forward on setting up a development bank and enabling credit and
trade ﬁnance facilities in local currencies. There is also scope for coordinating positions at the WTO
and in other multilateral fora.