WORLD TRADE ORGANISATION

(WTO)
Course: BBA
Subject: Business Environment
Unit-4
Faculty: Dr. Priya Sharma
 WTO
• World Trade Organization (WTO), international organization established to
supervise and liberalize world trade. The WTO is the successor to the General
Agreement on Tariffs and Trade (GATT), which was created in 1947 in the
expectation that it would soon be replaced by a specialized agency of the United
Nations (UN) to be called the International Trade Organization (ITO). Although the
ITO never materialized, the GATT proved remarkably successful in liberalizing world
trade over the next five decades. By the late 1980s there were calls for a stronger
multilateral organization to monitor trade and resolve trade disputes. Following
the completion of the Uruguay Round (1986–94) of multilateral trade negotiations,
the WTO began operations on January 1, 1995.
• The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. At its heart are the WTO
agreements, negotiated and signed by the bulk of the world’s trading nations and
ratified in their parliaments. The goal is to help producers of goods and services,
exporters, and importers conduct their business.
 Difference Between GATT and WTO
General Agreement on Traiffs and
Trade (GATT) World Trade Organisation (WTO)
1. WTO is a permanent institution.
1. GATT is a set of rules and 2. WTO is established to serve its
multilateral agreement. own purpose.
2. GATT is designed with an 3. Its rules are applicable to trade in
attempt to establish merchandise services and trade
International Trade Organization. in related aspects of intellect.
3. Its rules are applicable to trade 4. It has members.
and merchandise goods. 5. It has a legal basis because
4. It had contracting parties. member nations have verified the
WTO agreements.
5. It has no provisions for creating
an organization. 6. WTO commitments are full and
permanent.
6. GATT is ad-hoc and provisional.
 Objectives
• The WTO has six key objectives:
• (1) to set and enforce rules for international trade,
• (2) to provide a forum for negotiating and monitoring further trade liberalization,
• (3) to resolve trade disputes,
• (4) to increase the transparency of decision-making processes,
• (5) to cooperate with other major international economic institutions involved in
global economic management, and
• (6) to help developing countries benefit fully from the global trading system.
 Fact File

Location: Geneva, Switzerland

Established: 1 January 1995

Created by: Uruguay Round negotiations (1986-94)

Membership: 164 members representing 98 per cent of world trade

Budget: 197 million Swiss francs for 2019

Secretariat staff: 625

Head: Roberto Azevêdo (Director-General)

 Structure
• The WTO has 164 members, accounting for 98% of world trade. A total of 22 countries 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, the GATT. The WTO’s agreements have been ratified in all
members’ parliaments.
• The WTO’s top level decision- making body is the Ministerial Conference, which meets
usually every two years.
• Below this is the General Council (normally ambassadors and heads of delegation based
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 Dispute 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.
 Functions of WTO
Trade negotiations
• The WTO agreements cover goods, services and intellectual property. They spell out the principles of
liberalization, and the permitted exceptions. They include individual countries’ commitments to lower
customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures
for settling disputes. These agreements are not static; they are renegotiated from time to time and new
agreements can be added to the package. Many are now being negotiated under the Doha Development
Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.
Implementation and monitoring
• WTO agreements require governments to make their trade policies transparent by notifying the WTO
about laws in force and measures adopted. Various WTO councils and committees seek to ensure that
these requirements are being followed and that WTO agreements are being properly implemented. All
WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing
reports by the country concerned and the WTO Secretariat.
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. Judgements by specially
appointed independent experts are based on interpretations of the agreements and individual countries’
commitments.
 Functions of WTO(Contd.)
Building trade capacity
• WTO agreements contain special provision for developing countries, including longer time
periods to implement agreements and commitments, measures to increase their trading
opportunities, and support to help them build their trade capacity, to handle disputes and to
implement technical standards. The WTO organizes hundreds of technical cooperation
missions to developing countries annually. It also holds numerous courses each year in
Geneva for government officials. Aid for Trade aims to help developing countries develop the
skills and infrastructure needed to expand their trade.
Outreach
• The WTO maintains regular dialogue with non-governmental organizations, parliamentarians,
other international organizations, the media and the general public on various aspects of the
WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and
increasing awareness of WTO activities.
 WTO and the principle of trading system
• Most-favoured-nation
• National treatment
• Freer trade
• Predictability
• Promoting fair competition
• Encouraging development and economic reform

(For detail study please refer to book notes)

How can you ensure that trade is as fair as possible, and as free
as is practical?- “ By negotiating rules and abiding by them”
(WTO AGREEMENTS)
The WTO’s rules—the agreements—are the result of negotiations between the
members. The current set were the outcome of the 1986–94 Uruguay Round
negotiations which included a major revision of the original General Agreement on
Tariffs and Trade (GATT). 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 60
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 promises to do the same for imports into its own market.
The system also gives developing countries some flexibility in implementing their
commitments.
 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 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 actions taken
against dumping.
 SERVICES
• Banks, insurance firms, telecommunications companies, tour operators,
hotel chains and transport companies looking to do business abroad can
now enjoy the same principles of freer and fairer trade 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
to foreign competition, and how open those markets are.
 INTELLECTUAL PROPERTY
• The WTO’s intellectual property agreement amounts to rules for trade and
investment in ideas and creativity. The rules state how copyrights,
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.
 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.
Judgements 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 a 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—
167 cases by March 1999 compared to some 300 disputes dealt with
during the entire life of GATT (1947–94).
 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. Over 54 members have been
reviewed since the WTO came into force
 WTO stand for(importance)..
The WTO agreements are lengthy and complex because they are legal texts covering a
wide range of activities. But a number of simple, fundamental principles run
throughout all of these documents. These principles are the foundation of the
multilateral trading system.
Non-discrimination
• A country should not discriminate between its trading partners and it should not
discriminate between its own and foreign products, services or nationals.
More open
• Lowering trade barriers is one of the most obvious ways of encouraging trade;
these barriers include customs duties (or tariffs) and measures such as import bans
or quotas that restrict quantities selectively.
Predictable and transparent
• Foreign companies, investors and governments should be confident that trade
barriers should not be raised arbitrarily. With stability and predictability,
investment is encouraged, jobs are created and consumers can fully enjoy the
benefits of competition — choice and lower prices.
 WTO stand for(importance)(Contd.)..
More competitive
• Discouraging ‘unfair’ practices, such as export subsidies and dumping products at
below cost to gain market share; the issues are complex, and the rules try to establish
what is fair or unfair, and how governments can respond, in particular by charging
additional import duties calculated to compensate for damage caused by unfair trade.
More beneficial for less developed countries
• Giving them more time to adjust, greater flexibility and special privileges; over three-
quarters of WTO members are developing countries and countries in transition to
market economies. The WTO agreements give them transition periods to adjust to the
more unfamiliar and, perhaps, difficult WTO provisions.
Protect the environment
• The WTO’s agreements permit members to take measures to protect not only the
environment but also public health, animal health and plant health. However, these
measures must be applied in the same way to both national and foreign businesses. In
other words, members must not use environmental protection measures as a means
of disguising protectionist policies.
 WTO & DEVELOPING COUNTRIES
• DEVELOPMENT AND TRADE Over three quarters of WTO members are developing or least-developed
countries. Special provisions for these members are included in all the WTO agreements. They include
longer time periods for implementing agreements and commitments, measures to increase trading
opportunities for these countries, provisions requiring all WTO members to safeguard the trade interests
of developing countries, and support to help developing countries build the infrastructure for WTO work,
handle disputes, and implement technical standards. In 1997, a high-level meeting on trade initiatives and
technical assistance for least-developed countries brought their concerns to centre stage. The meeting
involved six intergovernmental agencies and resulted in an “integrated framework” to help least-
developed countries increase their ability to trade, and some additional preferential market access
agreements. A committee on trade and development, assisted by a sub-committee on least-developed
countries, looks at developing countries’ special needs. Its responsibility includes implementation of the
agreements, technical cooperation, and the increased participation of developing countries in the global
trading system .
• TECHNICAL ASSISTANCE AND TRAINING The 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. Regional seminars are held regularly in all regions of the world with a special
emphasis on African countries. Training courses are also organized in Geneva for officials from countries in
transition from central planning to market economies. In 1997/98, the WTO set up reference centres in
over 40 trade ministries in capitals of least developed countries, providing computers and internet access
to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the
WTO’s immense database of official documents and other material.
 WTO and India
India has been a WTO member since 1 January 1995 and a member of GATT since 8
July 1948.

• Reduction of tariff and non-tariff barriers

• Trade related investment measures(TRIMS)
• Trade related intellectual property rights(TRIPS)
• Agreement on agriculture(AOA)
• Agreement on sanitary and pysto-sanitary measures(SPM)
• Multi-Fiber Agreement(MFA)

(For detail please refer to book notes and must see the below links)
https://commerce.gov.in/PageContent.aspx?Id=32
https://www.wto.org/english/thewto_e/countries_e/india_e.htm
 The WTO and the Sustainable Development Goals

• The WTO is central to achieving the 2030 Agenda for Sustainable

Development and its Sustainable Development Goals (SDGs), which set
targets to be achieved by 2030 in areas such as poverty reduction, health,
education and the environment. The SDGs put significant emphasis on the
role that trade plays in promoting sustainable development and recognize
the contribution that the WTO can make to the 2030 Agenda.
By delivering and implementing trade reforms which are pro-growth and
pro-development, and by continuing to foster stable, predictable and
equitable trading relations across the world, the WTO is playing an
important role in delivering the SDGs, just as it did with the Millennium
Development Goals before them.
 How trade contributes to delivering key Sustainable
Development Goals
SDG 1: No Poverty
• There is increasing evidence that well planned and strategically executed trade policy
initiatives can impact positively on sustainable poverty reduction. Trade opening has
also generated higher living standards through greater productivity, increased
competition and more choice for consumers and better prices in the marketplace.
SDG 2: Zero Hunger
• Eliminating subsidies that cause distortions in agriculture markets will lead to fairer
more competitive markets helping both farmers and consumers while contributing to
food security. The WTO’s 2015 decision on export competition eliminated export
subsidies in agriculture, thereby delivering on Target 2.B of this goal.
SDG 3: Good Health and Well-being
• One of the main objectives under SDG 3 is to ensure access to affordable medicines
for all. An important amendment to the WTO’s TRIPS Agreement recently entered into
force. This measure will make it easier for developing countries to have a secure legal
pathway to access affordable medicines in line with Target 3.B of this goal.
SDG 5: Gender Equality
• Trade can create opportunities for women’s employment and economic development.
Through trade, job opportunities for women have increased significantly. Jobs in
export sectors also tend to have better pay and conditions. Export sectors are an
important job provider for women in developing countries.
 How trade contributes to delivering key
Sustainable Development Goals (Contd.)

SDG 8: Decent Work and Economic Growth

• Trade-led inclusive economic growth enhances a country’s income-generating capacity, which
is one of the essential prerequisites for achieving sustainable development. The WTO’s Aid for
Trade initiative can make a big difference in supplementing domestic efforts in building trade
capacity, and SDG 8 contains a specific target for countries to increase support under this
initiative.
SDG 9: Industry, Innovation and Infrastructure
• Trade produces dynamic gains in the economy by increasing competition and the transfer of
technology, knowledge and innovation. Open markets have been identified as a key
determinant of trade and investment between developing and developed countries allowing
for the transfer of technologies which result in industrialization and development, helping to
achieve SDG 9.
SDG 10: Reduced Inequalities
• At the global level, changes in development patterns have been transforming prospects of the
world’s poorest people, decreasing inequality between countries. WTO rules try to reduce the
impact of existing inequalities through the principle of Special and Differential Treatment for
Developing Countries. This allows the use of flexibilities by developing and least-developed
countries to take into account their capacity constraints.
 How trade contributes to delivering key Sustainable Development
Goals (Contd.)

SDG 14: Life Below Water

• The WTO plays an important role in supporting global, regional and local efforts to
tackle environmental degradation of our oceans under SDG 14. The Decision on
Fisheries Subsidies taken by WTO members in December 2017 is a step forward in
multilateral efforts to comply with SDG Target 14.6, committing members to prohibit
subsidies that contribute to overcapacity and overfishing, and eliminate subsidies that
contribute to illegal, unreported and unregulated fishing, with special and differential
treatment for developing and least-developed countries. Members committed to
fulfilling this commitment by the 12th Ministerial Conference.
SDG 17: Partnerships for the Goals
• SDG 17 recognizes trade as a means of implementation for the 2030 Agenda. The
targets under this goal call for: countries to promote a universal, rules-based, open,
non-discriminatory and equitable multilateral trading system; the increase of
developing countries’ exports and doubling the share of exports of least-developed
countries (LDCs); and the implementation of duty-free and quota-free market access
for LDCs with transparent and simple rules of origin for exported goods. The WTO is the
key channel for delivering these goals.
Thank You