World Trade Organisation WTO and its objectives and
functions!
The Uruguay round of GATT (1986-93) gave birth to World Trade
Organization. The members of GATT singed on an agreement of
Uruguay round in April 1994 in Morocco for establishing a new
organization named WTO.
It was officially constituted on January 1, 1995 which took the place of
GATT as an effective formal, organization. GATT was an informal
organization which regulated world trade since 1948.
Contrary to the temporary nature of GATT, WTO is a permanent
organization which has been established on the basis of an
international treaty approved by participating countries. It achieved
the international status like IMF and IBRD, but it is not an agency of
the United Nations Organization (UNO).
Structure:
The WTO has nearly 153 members accounting for over 97% of world
trade. Around 30 others are negotiating membership. Decisions are
made by the entire membership. This is typically by consensus.
A majority vote is also possible but it has never been used in the WTO
and was extremely rare under the WTO’s predecessor, GATT. The
WTO’s agreements have been ratified in all members’ parliaments.
The WTO’s top level decision-making body is the Ministerial
Conferences which meets at least once in every two years. Below this is
the General Council (normally ambassadors and heads of delegation in
Geneva, but sometimes officials sent from members’ capitals) which
meets several times a year in the Geneva headquarters. The General
Council also meets as the Trade Policy Review Body and the Disputes
Settlement Body.
At the next level, the Goods Council, Services Council and Intellectual
Property (TRIPs) Council report to the General Council. Numerous
specialized committees, working groups and working parties deal with
the individual agreements and other areas such as, the environment,
development, membership applications and regional trade
agreements.
Secretariat:
The WTO secretariat, based in Geneva, has around 600 staff and is
headed by a Director-General. Its annual budget is roughly 160 million
Swiss Francs. It does not have branch offices outside Geneva. Since
decisions are taken by the members themselves, the secretariat does
not have the decision making the role that other international
bureaucracies are given.
The secretariat s main duties to supply technical support for the
various councils and committees and the ministerial conferences, to
provide technical assistance for developing countries, to analyze world
trade and to explain WTO affairs to the public and media. The
secretariat also provides some forms of legal assistance in the dispute
settlement process and advises governments wishing to become
members of the WTO.
Objectives:
The important objectives of WTO are:
1. To improve the standard of living of people in the member
countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To ensure optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.
Functions:
The main functions of WTO are discussed below:
1. To implement rules and provisions related to trade policy review
mechanism.
2. To provide a platform to member countries to decide future
strategies related to trade and tariff.
3. To provide facilities for implementation, administration and
operation of multilateral and bilateral agreements of the world trade.
4. To administer the rules and processes related to dispute settlement.
5. To ensure the optimum use of world resources.
6. To assist international organizations such as, IMF and IBRD for
establishing coherence in Universal Economic Policy determination.
Table: 2 WTO Ministerial Conference:
Conference Year Place
I 9-13 Dec., 1996 Singapore
ADVERTISEMENTS: 18-20 May 1998 Geneva (Switzerla
II
III ADVERTISEMENTS: Seattle (USA)
30 Nov.-З Dec., 1999
IV 9-14 Nov., 2001 Doha (Qatar)
V 10-14 Sep., 2003 Cancun (Mexico)
VI 13-18 Dec.. 2005 Hong Kong
VII 30 Nov-2Dec., 2009 Geneva (Switzerla
WTO Agreements:
The WTO’s rule and the agreements are the result of negotiations
between the members. The current sets were the outcome to the 1986-
93 Uruguay Round negotiations which included a major revision of
the original General Agreement on Tariffs and Trade (GATI).
GATT is now the WTO’s principal rule-book for trade in goods. The
Uruguay Round also created new rules for dealing with trade in
services, relevant aspects of intellectual property, dispute settlement
and trade policy reviews.
The complete set runs to some 30,000 pages consisting of about 30
agreements and separate commitments (called schedules) made by
individual members in specific areas such as, lower customs duty rates
and services market-opening.
Through these agreements, WTO members operate a non-
discriminatory trading system that spells out their rights and their
obligations. Each country receives guarantees that its exports will be
treated fairly and consistently in other countries’ markets. Each
country promises to do the same for imports into its own market. The
system also gives developing countries some flexibility in
implementing their commitments.
(a) 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-discriminations 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.
(b) 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.
(c) 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.
(d) Dispute Settlement:
The WTO’s procedure for resolving trade quarrels under the Dispute
Settlement Understanding is vital for enforcing the rules and
therefore, for ensuring that trade flows smoothly.
Countries bring disputes to the WTO if they think their rights under
the agreements are being infringed. Judgments by specially appointed
independent experts are based on interpretations of the agreements
and individual countries’ commitments.
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 bourne out by the number of cases
brought to the WTO, around 300 cases in eight years compared to the
300 disputes dealt with during the entire life of GATT (1947-94).
(e) 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.
