aktu/mba 2nd se/ b.env./ unit 5

1. “
”
WORLD TRADE ORGANISATION
‘WTO’
Dr.ANURAG KUMAR ASSOCIATE PROFESSOR DEPTT. OF MBA,
ABES EC GHAZIABAD

2. ITO ESTABLISHMENT
• FOR THE STABLISHMENT OF ITO (INTERNATIONAL TRADE
ORGANISATION ) DRAFT WAS PREPARED IN HAWANA CONFERENCE.
• THIS IS ALSO KNOWN AS HAWANA CHARTER AND SIGNED BY 53
COUNTRIES EXCEPT AMERICA
• DUE TO WHICH ‘ITO ‘ COULD NOT BE ESTABLISHED BY THEES
COUNTIES

3. ABOUT GATT
• The General Agreement on Tariffs and Trade came into force on 1
January 1948
• At the same time, 15 countries focused on negotiating a simple trade
agreement. A total of 23 countries signed the GATT deal on October
30, 1947, clearing the way for it to take effect on June 30, 1948.
• GATT didn’t require the approval of American Congress GATT was an
agreement under the provisions of the U.S. Reciprocal Trade Act of
1934. It was only supposed to be temporary until the ITO replaced it
•

4. • Throughout the years, rounds of further negotiations on GATT
continued. The main goal was to further reduce tariffs. In the mid-
1960s, the Kennedy round added an Anti-Dumping Agreement.
• The Tokyo round in the seventies improved other aspects of trade.
The 8th Uruguay round lasted from 1986 to 1994 proposed for the
formation of World Trade Organization. In this 8th round 128 countries
participated .In this conference following topics were covered:
• Tariff & Non tariff measures, Services, Intellectual Property
right,Dispute settlement , agriculture Textile & creation of WTO.

5. WORLD TRADE ORGANISATION
• The WTO was founded in 1995 as the successor organisation to the
General Agreement on Trade and Tariff (GATT). GATT was established
in 1948 with 23 countries as the global trade organisation to
administer all multilateral trade agreements by providing equal
opportunities to all countries in the international market for trading
purposes. WTO is expected to establish a rule- based trading regime
in which nations cannot place arbitrary restrictions on trade.

6. Genesis of world trade organization
•
• The GATT continued for nearly five decades and then was
replaced by the WTO, which started functioning since 1
January 1995 with 128 countries as member.

7. WORLD TRADE ORGANISATION
• In addition, its purpose is also to enlarge production and trade of
services, to ensure optimum utilisation of world resources and to
protect the environment. The WTO agreements cover trade in goods
as well as services to facilitate international trade (bilateral and
multilateral) through removal of tariff as well as non-tariff barriers
and providing greater market access to all member countries.

8. WORLD TRADE ORGANISATION
• As an important member of WTO, India has been in the
forefront of framing fair global rules, regulations and
safeguards and advocating the interests of the developing
world. India has kept its commitments towards
liberalisation of trade, made in the WTO, by removing
quantitative restrictions on imports and reducing tariff
rates.
• Essentially, the WTO is a place where member
governments go, to try to sort out the trade problems
they face with each other. At its heart are WTO
agreements, negotiated and signed by the bulk of the
world’s trading nations.
• But the WTO is not just about liberalizing trade, and in
some circumstances its rules support maintaining trade
barriers — for example to protect consumers, prevent the
spread of disease or protect the environment.

9. WORLD TRADE ORGANISATION
FUNCTIONS OF WTO
• Implementation of Reduction in Trade Barriers:
WTO shall check the implementation of tariff cuts and
reduction of non-tariff measures agreed upon the
member nations
• Forum for Negotiation: WTO shall provide the forum
of negotiations among its members concerning their
multilateral trade relations
• Settlement of Disputes: WTO shall administer the
understanding on rules and procedures governing the
settlement of disputes.

10. WORLD TRADE ORGANISATION
FUNCTIONS OF WTO
• Assistance to IMF (International Monetary Fund) : WTO
shall co-operate with IMF and its affiliated agencies to
achieve greater coherence in global economic policy.
• Administration of Agreements:
• Examination of Trade Policies: WTO shall regularly
examine the foreign trade policies of member nations, to
see that such policies are in line with WTO’s guidelines.
• Consultancy Service: WTO shall keep a watch on the
developments in the world economy and it provides
consultancy services to its member nations.
• Collection of Foreign Trade Information: WTO shall
collect information on import - export trade and on
various trade measures and other trade statistics of
member nations.

11. Objectives of world trade
organization
• It is committed to develop a viable and durable multilateral trading
system in the world.
• It will work to achieve sustainable development and ensure
optimum utilization of resources.
• It will promote and preserve the environment
•In the area of trade and economic development, it tries to increase
the volume of real resources, raise the standard of living and effective
demand, and achieve full employment.
• An important objective of the WTO is the expansion of world
production and also of trade in goods and services.

12. Regulatory principles and functions
of WTO
• It has been administering the understanding on the roles and
procedures that govern the settlement of disputes among the
member countries.
• It provides a forum for trade negotiations between member
countries so that the terms and conditions become clear.
•National treatment: Foreign Goods should be given equally
weightage as domestic goods , countries should not make any policy
which can give special benefit to domestic good over foreign good
•Reciprocity: Mutual lowering of trade barriers.

13. • It has been providing all cooperation with the World Bank and the
IMF in formulating and implementing world economic policies.
• The most favoured nation (MFN) clause says that countries cannot
discriminate between two trading partners. If a favour is shown to
one partner, it has to be shown also to the other partner.

14. World trade organization and the
developing countries
Agricultural Trade, Food Security, and World Trade Organization
• In the case of the agricultural sector of poor developing economies,
a concerted attempt has been made by the WTO along with the
multinational corporations (MNCs) and many developed capitalist
economies to allow for more liberalization and openness.
• The WTO-sponsored globalization in the matter of agricultural
development in a country like India is beset with many contradictions
• Agriculture cannot simply be regarded as a commodity producing
sector; it creates different types of relations and associations with the
producers and also with other sectors.

15. World trade organization and the
developing countries
Impact of World Trade Organization
• One of the main objectives of the WTO is to reduce tariff and pave
the way for more and more free or fair trade.
• Tariff reduction being practised by LDCs at the behest of the WTO
has substantially reduced their revenue earning, and therefore, their
economic power and resources have gone down.
• The policies formulated and implemented by the WTO are
discriminatory in character.
• The Uruguay Round clearly shows that the developed countries are
benefitted more than the poor countries.
• India wants complete liberalization in the textile trade but the USA
is opposing it because it will lose many American jobs.

16. Achievements of WTO
• The trade policy review mechanism has given a kind of
transparency, which was conspicuous by its absence before
the existence of the WTO (i.e., before 1995).
• A democratic norm with one member having one vote has
been instituted by the WTO.
• The WTO has furthered the process of liberalization,
privatization, and globalization, like
the other two institutions.
• The rates of tariffs have been reduced.
• Anti-dumping rules have also been framed by the WTO.
• Bilateral trade relations are being encouraged through
official negotiations process.