THE WORLD TRADE

ORGANIZATION

INTRODUCTION
TheWorld Trade Organization(WTO) is an organization that
intends to supervise andliberalizeinternational trade. The WTO is
the only global international organization dealing with the rules of
trade between nations.
The WTO superseded and replaced the GATT which was a
provisional, multilateral agreement governing
international trade from 1947 until Jan 1, 1995.
The WTO has larger membership than GATT,
the number of members stand at 161.
India is one the founding members of the WTO.

INFORMATION
Established: 1st January 1995.
Created By: Uruguay Round negotiations
(1986-1994)
Headquarter: Geneva, Switzerland

Roberto Azevdo

Membership: 161 member states (till 2015)

Secretariat Staf: 625
Head: Roberto Azevdo (Director-General)
Budget: 196 million Swiss francs (approx)

WTO headquarters:
Geneva

GATT & WTO TRADE ROUNDS

Sr.
no

Round

Place

Year

Features

1.

First

1947

2.

Secon
d

Geneva
(Switzerlan
d)
Annecy
(France)

Tarif cuts for 45000 products worth

$10 billion of trade on an annual
basis .
Custom duty were reduced for another
5000 items of goods.

3.

Third

Torquay
(Britain)

195051

Adopted 8700 tarif reduction.

4.

Fourth

195556

To further cut duties for goods worth

$2.5 billion.

5.

Fifth

196062

6.

Sixth

It was known as Dillon Round. Custom

duties charged for 4000 items worth
$5 billion.
It was known as Kennedy Round. Cut
tarifs for industrial goods upto 50.

7.

Seven
th

Geneva
(Switzerlan
d)
Geneva
(Switzerlan
d)
Geneva
(Switzerlan
d)
Tokyo
(Japan)

8.

Eight

Uruguay

198693

1949

196467
197379

Ended at Geneva. Participants cut

custom duties by 20-30 for goods
traded.
This was known as Uruguay Round.
Lead to the formation of WTO.

FORMATION OF THE WTO

The GATT was the only multilateral instrument governing international
trade from 1948 until the WTO was established in 1995. The GATT
managed to operate for almost half a century as a semi institutionalized
multilateral treaty regime on a provisional basis.
Seven rounds of negotiations occurred under the GATT
The Tokyo round during the 70s was the first major attempt to tackle trade
barriers that do not take the form of tarifs and to improve the system but
the agreements were not accepted by all the member nations of GATT.
These agreements and policies were
amended in
URUGUAY ROUND leading to acceptance by
the
member nations and formation of WTO.
This final act concluding the Uruguay round
and
officially establishing the WTO regime was

OBJECTIVE OF THE WTO

To implement the new world trade system as visualized in the
agreement
To promote world trade in a manner that benefits every country
To ensure developing countries secure a better balance in sharing
of the advantages resulting from the expansion of international
trade corresponding to their developmental needs
To enhance competitiveness among all trading nations as to
benefit customers
To increase the level of production and productivity
with a view of ensuring level of employment in the world

THE WTO STRUCTURE

WTO: THE MEMBERS

The WTO is composed of 161 countries which represents 96.4%
of world trade.
Of these, 123 were signed during the Uruguay round
Over 3/4th of WTO members are developing or least
developed countries.
There are 23 countries that are not members known as
Observers.

VOTING PRINCIPLES IN WTO

Voting

Principle

One member, one vote

Primary aim

Consensus

No consensus

Majority vote

Interpretation of agreements

3/4 in favor

Amendment to agreements

2/3 in favor

Propose amendments

Countries and Councils

CORE PRINCIPLES OF THE WTO

CORE PRINCIPLES OF THE WTO

A CLOSER LOOK AT THESE PRINCIPLES:
Without Discrimination (MFN and National treatment
to all)
Free With barriers coming down through negotiation;
Predictable Bound tarifs
More Competitive By discouraging unfair practices
such as export subsidies and dumping products at
below cost to gain market share;
More Beneficial for Less Developed Countries By
giving them more time to adjust, greater flexibility, and

FUNCTIONS OF WTO
The main function is to ensure that trade flows
as smoothly, predictably and freely as possible.
Administering trade agreements- WTO
agreements cover goods, services, intellectual
property.
Acting as a forum for trade negotiations
Reviewing national trade policies
Settling trade disputes-Importantly WTO set
procedures to settle disputes
Assisting developing countries in trade policy
issues, through technical assistance and
training programmes.

FUNCTIONS OF WTO
Negotiating the reduction or elimination of
obstacles to trade (import tarifs, other barriers
to trade) and agreeing on rules governing the
conduct of international trade.
Assisting the process of accession of some 30
countries who are not yet members of the
organization.
Co-operating with other international
organizations- IMF and The World Bank.
World Trade Organization coordinates with its
secretariat, which employees 500 + staf
including Economists, Statisticians, Lawyers and
other experts in related area of concern.

WTO: AGREEMENTS & POLICIES

The WTOs agreements are the result of negotiations
between the members. The current set were the
outcome of the 198694 Uruguay Round negotiations
which included a major revision of the original
General Agreement on Tarifs and Trade (GATT).
The WTO oversees about 60 diferent agreements
which have the status of international legal texts.
They deal with: agriculture, textiles and clothing,
banking, telecommunications, government
purchases,
industrial standards, product safety
and more.

WTO: AGREEMENTS & POLICIES

Goods
It all began with trade in goods. From 1947 to 1994, GATT was the
forum for negotiating lower customs duty rates and other trade
barriers

Services
These principles appear in the new General
Agreement on Trade in Services (GATS).
Intellectual property
The WTOs intellectual property agreement amounts to
rules for trade and investment in ideas and creativity.

Dispute settlement
The system encourages countries to settle their
diferences through consultation.

WTO AGREEMENTS: GATS

General Agreement on Trade in Services, is the first and the only
comprehensive multilateral discipline covering international trade in
Services.

WTO services are divided into 12 areas and sub divided into
164 areas:
Business Services, Communication Services, Construction and
Engineering Services, Distribution Services, Education Services,
Environmental
Services, Financial Services, Health Services, Tourism and travel
Services,
Recreation, cultural and sporting Services, Transport Services.

WTO AGREEMENTS: TRIPS

It is the GATT Uruguay Round Agreement on Trade Related Intellectual
Property.
It deals with the protection & enforcement of Trade-Related
intellectual property rights".

DEALS IN :
How to give adequate protection to
intellectual property rights
How countries should enforce those rights adequately in their own
territories
How to settle disputes on intellectual property between members of
the WTO
Intellectual property comprises 2 distinct forms:
Special
arrangements during the period when the new
Literarytransitional
& Artistic Works- Books, paintings, musical
system is being introduced.
compositions,
plays,
operas,
movies,
radio/
TV
programs,
performances, & other artistic works
Industrial Property- Patented objects, trade secrets,
geographical indications.

WTO AGREEMENTS: TRIMS

Trade related Investment Measures does not provide any new
language ,
but It concentrates on 2 major articles. Article III & Article IX
which talks
about National Treatment and Trade Restrictions respectively.
ARTICLE III
DEALS IN : treatment of imported
National
product, unless specified in other
agreements.

ARTICLE XI
Prohibition of quantitative
restrictions on imports and
exports.

WTO AGREEMENTS: SANITARY AND

PHYTO-SANITARY (SPS) AGREEMENT
SPS agreement was negotiated during the
Uruguay Round, and entered into force with the
establishment of the WTO in1995.
The WTO sets constraints on
member-states policies relating to
food safety (bacterial
contaminants, pesticides,
inspection and labeling) as well as
animal and plant health (imported
pests and diseases).

WTO AGREEMENTS: AOA

The most important agreement follows.
TheAgreement on Agriculturecame into efect
with the establishment of the WTO at the
beginning of 1995
The AoA has three central concepts, or "PILLARS":
Domestic support
Market access
Export subsidies
Objective:
To reform trade in agriculture and to make policies more
market oriented

WTO AGREEMENTS: ANTI-DUMPING PRACTICES

(ADP)
A product is considered to be dumped if the export
price is less than the price charged for the same product
in the exporting country, or it is sold for less than its cost
of production.
The WTO agreement on anti-dumping allows
governments to act against dumping where there is
genuine (material) injury to the competing domestic
industry.

THE WTO AND INDIA

After Marrakesh Agreement, India joined WTO since inception in
1995.
Developing countries like India availed of greater trade opportunities
and also challenged a certain policies of developed countries.
For India, exposure to volatile international market would afect not
only domestic prices but also incomes of poor.
Aim to participate in WTO rule based system with greater stability,
transparency and predictability in governance of international trade.

POSITIVE IMPACT ON INDIAN

ECONOMY

Increase in export earnings

Agricultural exports
Export of textile and clothing
Multilateral rules and discipline
Growth to service exports
Foreign investment

PROS
Promotes free-er trade
Raises world output levels via specialisation
Establishes a standard rule by law and terms of trade
for greater efficiency
Updates all participating countries and banks to
international standards and efficiency in terms of
trade and commerce.

CONS

No Exports push
Price Rise
Not really Free Trade
Fundamentally undemocratic
Increasing Inequality
Erosion of Autonomy
Prominance to Developed nations

CONCLUSION

Although the stated aim of the WTO is to

promote free trade and stimulate economic
growth, some believe that globally free trade
results in rich (both people and countries)
becoming richer awhile the poor getting
poorer.
It will be able to help weak and poor
countries if it frames rules accordingly