Home   »   World Trade Organisation (WTO)   »   World Trade Organisation (WTO)

World Trade Organisation (WTO)

 

WTO: Relevance

  • GS 2: Important International institutions, agencies and fora – their structure, mandate.

 

 

What is the WTO?

  • The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations.
  • Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
  • WTO is not a United Nations specialized agency and it is not part of the United Nations system, but has cooperative arrangements and practices with the United Nations.
  • The WTO has over 160 members representing 98 per cent of world trade.

 

History of WTO

  • From 1948 to 1994, the GATT (General Agreement on Tariffs and Trade) provided the rules for world trade.
  • It seemed well-established but throughout those 47 years, it was a provisional agreement and organization.
  • The WTO’s creation in 1995 marked the biggest reform of international trade since the end of the Second World War.
  • Whereas the GATT mainly dealt with trade in goods, the WTO and its agreements also cover trade in services and intellectual property.
  • The birth of the WTO also created new procedures for the settlement of disputes.

 

Uncategorised

 

WTO functions

  • WTO operates a global system of trade rules.
  • WTO acts as a forum for negotiating trade agreements.
  • WTO settles trade disputes between its members and
  • WTO supports the needs of developing countries.

 

WTO Decision-making

  • The WTO’s top decision-making body is the Ministerial Conference. Below this is the General Council and various other councils and committees.
  • Ministerial conferences usually take place every two years.
  • The General Council is the top day-to-day decision-making body. It meets a number of times a year in Geneva.

 

Director-General of the WTO

  • Ngozi Okonjo-Iweala is the seventh Director-General of the WTO. She took office on 1 March 2021.
  • She is the first woman and the first African to serve as Director-General. Her term of office will expire on 31 August 2025.

 

Uncategorised

 

WTO Principles

Below two principles are the foundation of the multilateral trading system.

Most-favoured-nation (MFN)

  • It means treating other people equally.
  • Under the WTO agreements, countries cannot normally discriminate between their trading partners.
  • If a country grants some country a special favour (such as a lower customs duty rate for one of their products), it has to do the same for all other WTO members.
  • Exceptions:
    • if a country has Free Trade Agreement with some country;
    • if a country is giving developing countries special access to their markets;
    • if a country has raised barriers against products that are considered to be traded unfairly from specific countries.

 

National treatment

  • It means treating foreigners and locals equally.
  • Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market.
  • The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents.
  • National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.

 

WTO dispute settlement

  • WTO also deals in Dispute Settlements.
  • One contravention of WTO agreements, a member country approaches the WTO’s dispute settlement body.
  • All the members are encouraged to settle the disputes through consultation or through a panel, if the consultation fails.
  • The WTO panel circulates the verdict of the dispute settlement amongst WTO members who can decide to either accept or reject the ruling.
  • If the ruling is approved, the member country that violated the rules must change rules in line with the WTO Agreement.
  • In the case of failure to do so, the complaining country and the violating country may determine a mutually-acceptable compensation, failing which, the complaining country may retaliate suitably.

 

WTO settlement bodies

  • The General Council convenes as the Dispute Settlement Body (DSB) to deal with disputes between WTO members.
  • Appeals are handled by the permanent seven-member Appellate Body which is set up by the Dispute Settlement Body and broadly represents the range of WTO membership.

 

Also Read:

National Leprosy Eradication Programme Highest Peak of India: Names of States where Highest Peaks are Located India Votes Against the UN Resolution of Climate Change National Helpline Against Atrocities- National Helpline for SCs/STs launched Animal Husbandry Startup Grand Challenge 2.0
Green Day Ahead Market World Energy Outlook 2021 Coal Crisis in India 44th Constitutional Amendment Act Fiscal Responsibility and Budget Management (FRBM) Act, 2003
International Solar Alliance (ISA) gets UN Observer Status One Commodity One Exchange’ Policy Legal Entity Identifier India International Science Festival (IISF) Gaganyaan Space Mission

Sharing is caring!

Leave a comment

Your email address will not be published. Required fields are marked *