World Trade Organization (WTO) is a global institution which deals with the set of laws to administer and liberalise international trade between different nations. It was established on January 1, 1995 under the Marrakesh Agreement. WTO is the successor of General Agreement on Tariffs and Trade (GATT) which was introduced in 1947. The headquarter of WTO is at Geneva, Switzerland.
The World Trade Organization acts as a framework for formalizing and negotiating trade agreements between nations. It is also a dispute settlement body for the members of WTO, Where WTO agreements are signed by the representatives of the trading nations and approved by their respective parliaments. The working of WTO is on the basis of the negotiations occurred previously from Uruguay Round (1986-1994).
The membership of World Trade Organization comprises of 160 countries worldwide. In WTO, ministerial conferences are held at the gap of every two years for taking major decisions. All the decisions in WTO are administered by the Ministerial Conference. A General Council is appoint which foresees and implements the decisions taken in the conference and also deals with the administration of daily operations. for proper administration the Ministerial Conference also appoint a director-general.
Objectives of World Trade Organization
- To help the people of the members nations in improving their living standards.
- To help the members countries in increasing effective demand and also to help them in achieving full employment.
- To encourage trading activities and ensure large scale of production.
- Environmental protection and sustainable development.
- To provide proper market shares to the developing countries and Least Development Countries (LCD’s) in the growth of international trade.
- To encourage trade of services while expanding large scale of production.
- To make sure that the resource of the world are utilised in the best possible way.
- To include the philosophy of sustainable development in achieving these objectives.
Functions of World Trade Organization
- Helping Developing and Transition Economies: About 75% of the WTO members are developing countries. Most of them are transitioning from planned economy to a market based economy. The major function of World Trade Organization is to help these countries in developing their economic system.
- Specialised Help for Export: International business centre was formed by WTO and United Nations in 1964 to promote exports of developing countries. It was established to provide important export related information, suggestions and techniques to the developing countries for improving their marketing activities. It also helps in training the human resources involved in such trade operations.
- Taking Information: Another important function of WTO is collecting information about policies and tariffs from the member countries. It regularly records the ongoing development activities in different countries. Different member countries have to submit a report containing the altered trade measures like technical and safety standards, countervailing and anti-dumping duties, etc.
- Giving Information to Public: It also facilitates internal information regarding changes and progress to the general public through its website or publications.
- Encouraging Development and Economic Reforms: It also helps them by providing transition periods to adjust with new difficult economic conditions. WTO follows the ministerial decisions of the Uruguay round that developed countries should fulfil their commitments by enabling market access of production exported to the developing countries. The decision also commands the developed countries to provide technical support to the less developed nations.
Agreements Of World Trade Organization
1. 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; the text of the General Agreement spelt out important, rules, particularly non-discrimination.
Since 1995, the updated GATT has become the WTO s umbrella agreement for trade in goods. It has annexes dealing with specific sectors such as, agriculture and textiles and with specific issues such as, state trading, product standards, subsidies and action taken against dumping.
2. Services: Banks, insurance firms, telecommunication companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of free and fair that originally only applied to trade in goods.
These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors, they are willing to open for foreign competition and how open those markets are.
3. Intellectual Property: The WTO’s intellectual property agreement amounts to rules for trade and investment in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs, integrated circuit layout designs and undisclosed information such as trade secrets “intellectual property” should be protected when trade is involved.
4. Dispute Settlement: The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of the ruling by a panel of experts and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO. For example: Around 300 cases in eight years compared to the 300 disputes dealt with during the entire life of GATT (1947-94).
5. Policy Review: The Trade Policy Review Mechanism’s purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting and to assess their impact. Many members also see the reviews as constructive feedback on their policies. All WTO members must undergo periodic scrutiny, each review containing reports by the country concerned and the WTO Secretariat.
6. Development and Trade: A WTO committee on trade and development, assisted by a sub-committee on least-development countries, looks at developing countries special needs. It responsibility includes implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system.
7. Technical Assistance and Training: WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials.