PRINCIPLES OF WTO

VAIBHAV ARORA

WTO
O The World Trade Organization (WTO)

deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

Transparency
O WTO aims at achieving transparency in the

world trade relations by obligating members to publish their respective laws, regulations , judicial decisions and administrative ruling pertaining to the classification or valuation of products for customs, rates of duty, taxes or other charges affecting sales, distribution, transportation, insurance and warehousing with the objectives of enabling governments and traders to become familiar with them. This helps exporters plan their trade and safeguard them against hassles.

MFN Treatment
O Trades need to be conducted without

discrimination. Any member country shall not discriminate between its trading partners-all members countries are granted most favored nation MFN status. MFN means that every time a member country lowers a trade barrier or open up a market, it need to extend the benefits to all trading partners.

National Treatment
O This principle implies that imported and

locally produced goods should be treated equally. Non-discrimination within a country.

Free Trade Principle

O Optimal Utilization of Resources Lowering

trade barriers is the best way of promoting trades. Trade ensures optimum utilization of resources.

Dismantling Trade Barriers

O Physical restrictions on the import and

export of goods are prohibited under GATT. However member countries can protect domestic industry through tariff. The WTO is not a free trade institution. It permits tariffs and other form of protection but only in limited circumstances

Rule-based Trading System

O The WTO stands for rule based trading

system. The WTO sets and enforces rules necessary for conducting world trade fairly.

Treatment Of LDCs
O The WTO recognizes the need for positive

policies efforts to help developing countries to rear the benefits of trade liberalization. The WTO contains special and differential treatment provisions for developing and least developed countries.

Competition Principle
O The WTO system is designed to promote

open and fair competition. Removal or reduction of tariffs and subsidies will expose locally produced goods and services to imported ones. There is level playing field between foreign and local goods and services and this promote competition between them.

Environment Protection
O The last principle of WTO relates to

protection of environment. The preamble to the WTO agreement refers to the objective of sustainable development and to the need to preserve the environment.