Economic Project

Mohd Naved Alam Ansari

B.A.LL.B (S/F) Ist Year
Jamia Millia Islamia

WTO

Formation :- The World Trade

Organization (WTO) is an intergovernmental
organization that regulates international trade.
The WTO officially commenced on 1 January
1995 under the Marrakesh Agreement, signed
by 124 nations on 15 April 1994, replacing
the General Agreement on Tariffs and
Trade (GATT), which commenced in 1948. It is
the largest international economic
organization in the world.
Introduction :- The WTO deals with regulation
of trade in goods, services and intellectual
property between participating countries by
providing a framework for negotiating trade
agreements and a dispute resolution process
aimed at enforcing participants' adherence to
WTO agreements, which are signed by
representatives of member governments and
ratified by their parliaments. The WTO
prohibits discrimination between trading
partners, but provides exceptions for
environmental protection, national security,
and other important goals. Trade-related
disputes are resolved by independent judges at
the WTO through a dispute resolution process.
The WTO's current Director-General is Roberto
Azevêdo, who leads a staff of over 600 people
in Geneva, Switzerland. A trade facilitation
agreement, part of the Bali Package of
decisions, was agreed by all members on 7
December 2013, the first comprehensive
agreement in the organization's history. On 23
January 2017, the amendment to the WTO
Trade Related Aspects of Intellectual Property
Rights (TRIPS) Agreement marks the first time
since the organization opened in 1995 that
WTO accords have been amended, and this
change should secure for developing countries
a legal pathway to access affordable remedies
under WTO rules.
Studies show that the WTO boosted trade, and
that barriers to trade would be higher in the
absence of the WTO. The WTO has highly
influenced the text of trade agreements, as
"nearly all recent [preferential trade
agreements (PTAs)] reference the WTO
explicitly, often dozens of times across
multiple chapters... in many of these same
PTAs we find that substantial portions of treaty
language—sometime the majority of a
chapter—is copied verbatim from a WTO
agreement."

History :- The WTO's predecessor, the General

Agreement on Tariffs and Trade (GATT), was
established in 1947 after World War II in the
wake of other new multilateral institutions
dedicated to international economic
cooperation – such as the World Bank (founded
1944) and the International Monetary
Fund (founded 1944 or 1945). A comparable
international institution for trade, named
the International Trade Organization never
started as the U.S. and other signatories did
not ratify the establishment treaty, and so
GATT slowly became a de facto international
organization.
Ministerial Conferences :- The highest
decision-making body of the WTO,
the Ministerial Conference, usually meets
every two years. It brings together all members
of the WTO, all of which are countries or
customs unions. The Ministerial Conference
can take decisions on all matters under any of
the multilateral trade agreements. Some
meetings, such as the inaugural ministerial
conference in Singapore and the Cancun
conference in 2003 involved arguments
between developed and developing economies
referred to as the "Singapore issues" such
as agricultural subsidies; while others such as
the Seattle conference in 1999 provoked large
demonstrations. The fourth ministerial
conference in Doha in 2001 approved China's
entry to the WTO and launched the Doha
Development Round which was supplemented
by the sixth WTO ministerial
conference (in Hong Kong) which agreed to
phase out agricultural export subsidies and to
adopt the European Union's Everything but
Arms initiative to phase out tariffs for goods
from the Least Developed Countries.
The Twelfth Ministerial Conference (MC12) is
set to be held in Astana, Kazakhstan, in 2020.
The decision was taken by consensus at the
General Council meeting on 26 July 2018 and
marks the first time a Ministerial Conference is
to be organized in Central Asia.

Role of WTO :- It oversees the implementation,

administration and operation of the covered
agreements. It provides a forum for
negotiations and for settling disputes.
Additionally, it is WTO's duty to review and
propagate the national trade policies, and to
 ensure the coherence and transparency of
trade policies through surveillance in global
economic policy-making. Another priority of
the WTO is the assistance of developing, least-
developed and low-income countries in
transition to adjust to WTO rules and
disciplines through technical cooperation and
training.
1.The WTO shall facilitate the implementation,
administration and operation and further the
objectives of this Agreement and of the
Multilateral Trade Agreements, and shall also
provide the framework for the implementation,
administration and operation of the multilateral
Trade Agreements.
2.The WTO shall provide the forum for
negotiations among its members concerning
their multilateral trade relations in matters
dealt with under the Agreement in the Annexes
to this Agreement.
3.The WTO shall administer the Understanding
on Rules and Procedures Governing the
Settlement of Disputes.
4.The WTO shall administer Trade Policy Review
Mechanism.
5.With a view to achieving greater coherence in
global economic policy making, the WTO shall
cooperate, as appropriate, with the
international Monetary Fund (IMF) and with the
International Bank for Reconstruction and
Development (IBRD) and its affiliated agencies.

The above five listings are the additional

functions of the World Trade Organization. As
globalization proceeds in today's society, the
necessity of an International Organization to
manage the trading systems has been of vital
importance. As the trade volume increases,
issues such as protectionism, trade barriers,
subsidies, violation of intellectual property
arise due to the differences in the trading rules
of every nation. The World Trade Organization
serves as the mediator between the nations
when such problems arise. WTO could be
referred to as the product of globalization and
also as one of the most important
organizations in today's globalized society. The
WTO is also a centre of economic research and
analysis: regular assessments of the global
trade picture in its annual publications and
research reports on specific topics are
produced by the organization. Finally, the WTO
cooperates closely with the two other
components of the Bretton Woods system, the
IMF and the World Bank. The avowed goal of
the WTO is to create a fair and equitable, rule
based multilateral trade system. The most
appealing aspect is that the new multilateral
trade regime would be transparent and non-
discriminatory. For the world trading
community as a whole, every initiative on trade
liberalization should ensure rewards in the
form of large and expanding markets and
greater trade flows for all participating
members.

All quantitative restrictions (quotas, import

licensing etc.) would be replaced by tariff so
as to make the process more transparent and
open to international public scrutiny; all
reductions and adjustments in tariffs would be
effected through negotiations and are to be
notified to the WTO. Then, all kinds of
subsidies would be reduced in due course by
the developed countries so that the developing
economies under their sheer comparative cost
advantage could gain larger access to the
markets in the developed world.

The two most significant principles of WTO

agreements are the Most Favoured Nation and
the National Treatment Clause. Under the
former, no discrimination is to be exercised
among member countries; any trade
concession offered by one member to another
must be offered to all members. Under the
latter, imported products and domestic
products are to be accorded the same
treatment; moreover, besides import duty, no
extra tax other than one also levied on
domestic products is to be imposed. Foreign
companies investors and Government must
feel assured that trade barriers would not be
raised arbitrarily by any trading partner. Lastly,
the new trade regime should work to a greater
advantage of the less developed countries;
they must be given more time to adjust,
greater flexibility and some special privileges.
On a broad plane, the canvas of WTO
agreements is spread over three
compartments; goods, services and
intellectual property rights. First, trade in
goods of all descriptions (agricultural or
industrial) is to be governed under GAIT
reformulations. Second, trade in services of all
kinds is to be regulated under General
Agreement on Trade in Services. Third, trade
related aspects of Intellectual Property Rights
would set out the terms and conditions for the
international flow of intellectual property.

The WTO can also cut living cost and raise

living standards. They settle disputes and
reduce trade tension. They stimulate economic
growth and employment. They cut the cost of
doing business internationally. WTO encourage
good governance and help countries to
develop. They give the weak a stronger voice
and support the environment and health. WTO
contribute to peace and stability and also can
be effective without hitting the headlines.
Members and observers :- The WTO has 164
members and 23 observer
governments. Liberia became the 163rd
member on 14 July 2016, and Afghanistan
became the 164th member on 29 July 2016. In
addition to states, the European Union, and
each EU country in its own right, is a member.
WTO members do not have to be fully
independent states; they need only be a
customs territory with full autonomy in the
conduct of their external commercial relations.
Thus Hong Kong has been a member since
1995 (as "Hong Kong, China" since 1997)
predating the People's Republic of China,
which joined in 2001 after 15 years of
negotiations. The Republic of China (Taiwan)
acceded to the WTO in 2002 as "Separate
Customs Territory of
China: Taiwan, Penghu, Kinmen and Matsu"
(Chinese Taipei) despite its disputed
status. The WTO Secretariat omits the official
titles (such as Counsellor, First Secretary,
Second Secretary and Third Secretary) of the
members of Chinese Taipei's Permanent
Mission to the WTO, except for the titles of the
Permanent Representative and the Deputy
Permanent Representative.
As of 2007, WTO member states represented
96.4% of global trade and 96.7% of global
GDP. Iran, followed by Algeria, are the
economies with the largest GDP and trade
outside the WTO, using 2005 data. With the
exception of the Holy See, observers must
start accession negotiations within five years
of becoming observers. A number of
international intergovernmental organizations
have also been granted observer status to
WTO bodies. 12 UN member states have no
official affiliation with the WTO.

Conclusion :- Studies show that the WTO

boosted trade. Research shows that in the
absence of the WTO, the average country
would face an increase in tariffs on their
exports by 32 percentage points. According to
a 2017 study in the Journal of International
Economic Law, "nearly all recent [preferential
trade agreements (PTAs)] reference the WTO
explicitly, often dozens of times across
multiple chapters. Likewise, in many of these
same PTAs we find that substantial portions of
treaty language—sometime the majority of a
chapter—is copied verbatim from a WTO
agreement... the presence of the WTO in PTAs
has increased over time."

Bibliography :-

Websites :-

1.https://en.m.wikipedia.org/wiki/World_Trade_
Organization

2.https://www.wto.org/english/thewto_e/whatis_
e/10thi_e/10thi00_e.htm

3. https://www.managementstudyhq.com/role-
of-wto.html