INTRODUCTION

Formation January 1, 1995

HeadquartersCentre William Rappard, Geneva, Switzerl
Membership 153 member states
Official languages English, French, Spanish
Director-General Pascal Lamy
Budget 189 million Swiss francs
(approx. 182 millionUSD) in 2009.
Staff 625
The world Trade Organization (WTO) is the only international
organization dealing with theglobal rules of trade between nations.
The WTO has 153 members, representing more than 95% of total
world trade and 30observers, most seeking membership. The WTO is
governed by a ministerial conference,meeting every two years; a general
council, which implements the conference's policy decisionsand is
responsible for day-to-day administration; and a director-general, who is
appointed bythe ministerial conference. The WTO's headquarters is at
the Centre William Rappard, Geneva,Switzerland.
What is the World Trade Organization?

Simply put: the World Trade Organization (WTO) deals with the
rules of trade betweennations at a global or near-global level. But there
is more to it than that.
There are a number of ways of looking at the WTO. Its an
organization for liberalizingtrade. Its a forum for governments to
negotiate trade agreements. Its a place for them tosettle trade disputes.
It operates a system of trade rules. (But its not Superman, just in
caseanyone thought it could solve or cause all the worlds
problems!)
Essentially, the WTO is a place where member governments go, to
try to sort out the tradeproblems they face with each other. The first step
is to talk. The WTO was born out of negotiations, and everything the
WTO does is the result of negotiations. The bulk of the WTOscurrent
work comes from the 198694 negotiations called the Uruguay Round
and earliernegotiations under the General Agreement on Tariffs and
Trade (GATT). The WTO is currentlyThe WTO is currentlythe host to
new negotiations, under the Doha Development Agenda launched in
2001.



1. HISTORY
The World Trade Organization came into being in 1995. One of the
youngest of theinternational organizations, the WTO is the successor to
the General Agreement on Tariffs andTrade (GATT) established in the
wake of the Second World War.So while the WTO is still young, the
multilateral trading system that was originally set up underGATT is well
over 50 years old.
The past 50 years have seen an exceptional growth in world trade.
Merchandise exportsgrew on average by 6% annually. Total trade in
2000 was 22-times the level of 1950. GATT andthe WTO have helped to
create a strong and prosperous trading system contributing to
unprecedented growth.
Harry Dexter White (l) and John Maynard Keynes at the Bretton
Woods Conference Botheconomists had been strong advocates of a
liberal international trade environment, andrecommended the
establishment of three institutions: the IMF (fiscal and monetary issues),
theWorld Bank (financial and structural issues), and the ITO
(international economic cooperation).



The WTO's predecessor, the General Agreement on Tariffs and
Trade (GATT), was establishedafter World War II in the wake of other
new multilateral institutions dedicated to internationaleconomic
cooperation - notably the Bretton Woods institutions known as the World
Bank and the International Monetary Fund. A comparable international
institution for trade, named theInternational Trade Organization was
successfully negotiated. The ITO was to be a UnitedNations specialized
agency and would address not only trade barriers but other issues
indirectlyrelated to trade, including employment, investment, restrictive
business practices, andcommodity agreements. But the ITO treaty was
not approved by the United States and a fewother signatories and never
went into effect.
I. Uruguay Round
During the Doha Round, the US government blamed Brazil and
India for being inflexible, andthe EU for impeding agricultural
imports.[16] The President of Brazil, Luiz Incio Lula da Silva,responded
to the criticisms by arguing that progress would only be achieved if the
richestcountries (especially the US and countries in the EU) make
deeper cuts in their agriculturalsubsidies, and further open their markets
for agricultural goods.
Well before GATT's 40th anniversary, its members concluded that
the GATT system wasstraining to adapt to a new globalizing world
economy. In response to the problems identified inthe 1982 Ministerial
Declaration (structural deficiencies, spill-over impacts of certain
countries'policies on world trade GATT could not manage etc.), the
eighth GATT round known as theUruguay Round was launched in
September 1986, in Punta del Este, Uruguay. It was thebiggest
negotiating mandate on trade ever agreed: the talks were going to
extend the tradingsystem into several new areas, notably trade in
services and intellectual property, and to reformtrade in the sensitive
sectors of agriculture and textiles; all the original GATT articles were
upfor review.
The Final Act concluding the Uruguay Round and officially
establishing the WTO regime wassigned during the April 1994 ministerial
meeting at Marrakesh, Morocco, and hence is known asthe Marrakesh
Agreement. The GATT still exists as the WTO's umbrella treaty for trade
ingoods, updated as a result of the Uruguay Round negotiations (a
distinction is made betweenGATT 1994, the updated parts of GATT, and
GATT 1947, the original agreement which is stillthe heart of GATT
1994). GATT 1994 is not however the only legally binding


agreementincluded via the Final Act at Marrakesh; a long list of about 60
agreements, annexes, decisionsand understandings was adopted. The
agreements fall into a structure with six main parts:

the Multilateral Agreements on Trade
in Goods including theGATT 1994 and the Trade Related Investment
Measures
the General Agreement on Trade in Services
the Agreement on Trade-Related
Aspects of Intellectual PropertyRights (TRIPS)\

ws of governments' trade policies (TPRM)
2. PrinciPles of the trading system
The WTO agreements are lengthy and complex because they are
legal texts covering a widerange of activities. They deal with: agriculture,
textiles and clothing, banking,telecommunications, government
purchases, industrial standards and product safety, foodsanitation
regulations, intellectual property, and much more. But a number of
simple,fundamental principles run throughout all of these documents.
These principles are thefoundation of the multilateral trading system. A
closer look at these principles:
I. Trade without discrimination
1. Most-favored-nation (MFN):
treating other people equally Under the WTOagreements,
countries cannot normally discriminate between their trading partners.
Grantsomeone a special favor (such as a lower customs duty rate for
one of their products) and youhave to do the same for all other WTO
members.This principle is known as most-favored-nation (MFN)
treatment. It is so important that itis the first article of the General
Agreement on Tariffs and Trade (GATT), which governs tradein goods.
2. National treatment:
Treating foreigners and locals equallyImported and
locallyproduced goods should be treated equally at least after the
foreign goods have entered themarket. The same should apply to
foreign and domestic services, and to foreign and localtrademarks,
copyrights and patents. This principle of national treatment (giving
others thesame treatment as ones own nationals) is also found in all the
three main WTO agreements(Article 3 of GATT, Article 17 of GATS and
Article 3 of TRIPS), although once again the principleis handled slightly
differently in each of these.
II. Freer trade:
gradually, through negotiationLowering trade barriers is one of the
most obvious means of encouraging trade. Thebarriers concerned
include customs duties (or tariffs) and measures such as import bans
orquotas that restrict quantities selectively. From time to time other
issues such as red tape andexchange rate policies have also been
discussed. Since GATTs creation in 194748 there have been eight
rounds of trade negotiations. Aninth round, under the Doha
Development Agenda, is now underway. At first these focused
onlowering tariffs (customs duties) on imported goods. As a result of the
negotiations, by the mid-1990s industrial countries tariff rates on
industrial goods had fallen steadily to less than 4%But by the 1980s, the
negotiations had expanded to cover non-tariff barriers on goods, and
tothe new areas such as services and intellectual property.Opening
markets can be beneficial, but it also requires adjustment. The WTO
agreementsallow countries to introduce changes gradually, through
progressive liberalization. Developingcountries are usually given longer
to fulfill their obligations.
III. Binding and enforceable commitments
The tariff commitments made by WTO members in a multilateral
trade negotiation and onaccession are enumerated in a schedule (list) of
concessions. These schedules establish "ceilingbindings": a country can
change its bindings, but only after negotiating with its tradingpartners,
which could mean compensating them for loss of trade. If satisfaction is
not obtained,the complaining country may invoke the WTO dispute
settlement procedures.
IV. Transparency
The WTO members are required to publish their trade regulations,
to maintain institutionsallowing for the review of administrative decisions
affecting trade, to respond to requests forinformation by other members,
and to notify changes in trade policies to the WTO. Theseinternal
transparency requirements are supplemented and facilitated by periodic
country-specific reports (trade policy reviews) through the Trade Policy
Review Mechanism (TPRM). TheWTO system tries also to improve
predictability and stability, discouraging the use of quotasand other
measures used to set limits on quantities of imports.
V. Safety Valves
In specific circumstances, governments are able to restrict trade.
There are three types of provisions in this direction: articles allowing for
the use of trade measures to attainnoneconomic objectives; articles
aimed at ensuring "fair competition"; and provisions
permittingintervention in trade for economic reasons. Exceptions to the
MFN principle also allow forpreferential treatment of developing
countries, regional free trade areas and customs unions.
3. WTO AGREEMENTS
The WTOs 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 amajor revision of the
original General Agreement on Tariffs and Trade (GATT).
GATT is now the WTOs principal rule-book for trade in goods. The
Uruguay Round alsocreated new rules for dealing with trade in services,
relevant aspects of intellectual property,dispute settlement, and trade
policy reviews. The complete set runs to some30,000 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 servicesmarket-opening.
The table of contents of The Results of the Uruguay Round of
Multilateral TradeNegotiations: The Legal Texts is a daunting list of
about 60 agreements, annexes, decisionsand understandings. In fact,
the agreements fall into a simple structure with six main parts:
anumbrella agreement (the Agreement Establishing the WTO);
agreements for each of the threebroad areas of trade that the WTO
covers (goods, services and intellectual property); disputesettlement;
and reviews of governments trade policies.The agreements for the two
largest areas goods and services share a common three-part
outline, even though the detail is sometimes quite different.
They start with broad principles: the General Agreement on
Tariffs and trade (GATT) (forgoods), and the General Agreement on
Trade in Services (GATT) (The third area, Trade-Related Aspects of
Intellectual Property Rights (TRIPS), also falls into this category although
at presentit has no additional parts.)
Then come extra agreements and annexes dealing with the
special requirements of specificsectors or issues.
Finally, there are the detailed and lengthy schedules (or lists) of
commitments made byindividual countries allowing specific foreign
products or service providers access to theirmarkets. For GATT, these
take the form of binding commitments on tariffs for goods in general,and
combinations of tariffs and quotas for some agricultural goods. For
GATS, the commitmentsstate how much access foreign service
providers are allowed for specific sectors, and theyinclude lists of types
of services where individual countries say they are not applying the
most-favored-nation principle of non-discrimination.
A. Tariffs: more bindings and closer to zero
The bulkiest results of Uruguay Round are the 22,500 pages listing
individual countries commitments on specific categories of goods and
services. These include commitments to cutand bind their customs
duty rates on imports of goods. In some cases, tariffs are being cut
tozero. There is also a significant increase in the number of bound
tariffs duty rates that arecommitted in the WTO and are difficult to
rise.
Developed countries tariff cuts were for the most part phased in
over five years from 1January 1995. The result is a 40% cut in their
tariffs on industrial products, from an average of 6.3% to 3.8%. The
value of imported industrial products that receive duty-free treatment
indeveloped countries will jump from 20% to 44%.
There will also be fewer products charged high duty rates. The
proportion of imports into developed countries from all sources facing
tariffs rates of more than 15% will decline from 7%to 5%. The proportion
of developing country exports facing tariffs above 15% in
industrialcountries will fall from 9% to 5%.
The Uruguay Round package has been improved. On 26 March
1997, 40 countriesaccounting for more than 92% of world trade in
information technology products, agreed toeliminate import duties and
other charges on these products by 2000 (by 2005 in a handful of
cases). As with other tariff commitments, each participating country is
applying its commitments equally to exports from all WTO members (i.e.
on a most favored - nation basis),even from members that did not make
commitments.
B. Agriculture: fairer markets for farmers
The original GATT did apply to agricultural trade, but it contained
loopholes. For example, it allowed countries to use some non-tariff
measures such as import quotas, and to subsidize. Agricultural trade
became highly distorted, especially with the use of export subsidies
which would not normally have been allowed for industrial products. The
Uruguay Round produced the first multilateral agreement dedicated to
the sector. It was a significant first step towards order, fair competition
and a less distorted sector. It was implemented over a six-year
period(and is still being implemented by developing countries under their
10-year period), that began in 1995. The Uruguay Round agreement
included a commitment to continue the reform through new negotiations.
These were launched in 2000, as required by the Agriculture Agreement.
C. Standards and safety
General Agreement on Tariffs and Trade (GATT) allows
governments to act on trade in order to protect human, animal or plant
life or health, provided they do not discriminate or use this as disguised
protectionism. In addition, there are two specific WTO agreements
dealing with food safety and animal and plant health and safety and with
product standards in general. Both try to identify how to meet the need
to apply standards and at the same time avoid protectionism in disguise.
These issues are becoming more important as tariff barriers fall some
compare this to seabed rocks appearing when the tide goes down. In
both cases, if a country applies international standards, it is less likely to
be challenged legally in the WTO than if it sets its own standards.
D. Textiles: back in the mainstream
Textiles, like agriculture, were one of the hardest-fought issues in
the WTO, as it was in the former GATT system. It has now completed
fundamental change under a 10-year schedule agreed in the Uruguay
Round. The system of import quotas that dominated the trade since the
early 1960s has now been phased out.
From 1974 until the end of the Uruguay Round, the trade was
governed by the Multi fibre Arrangement (MFA). This was a framework
for bilateral agreements or unilateral actions that established quotas
limiting imports into countries whose domestic industries were facing
serious damage from rapidly increasing imports.
Since 1995, the WTOs Agreement on Textiles and Clothing (ATC)
took over from the Multifibre Arrangement. By 1 January 2005, the
sector was fully integrated into normal GATT rules. In particular, the
quotas came to an end, and importing countries are no longer able to
discriminate between exporters. The Agreement on Textiles and
Clothing no longer exists: its the only WTO agreement that had self-
destruction built in.
E. Services: rules for growth and investment
Services represent the fastest growing sector of the global
economy and account for two thirds of global output, one third of global
employment and nearly 20% of global trade. When the idea of bringing
rules on services into the multilateral trading system was floated in the
early to mid 1980s, a number of countries were skeptical and even
opposed. They believed such an agreement could undermine
governments ability to pursue national policy objectives and constrain
their regulatory powers. The agreement that was developed, however,
allows ahigh degree of flexibility, both within the framework of rules and
also in terms of the marketaccess commitments.
F. Intellectual property: protection and enforcement
The WTOs Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS),negotiated in the 1986 94 Uruguay Round,
introduced intellectual property rules into themultilateral trading system
for the first time.
The WTOs TRIPS Agreement is an attempt to narrow the gaps in
the way these rights areprotected around the world, and to bring them
under common international rules. It establishesminimum levels of
protection that each government has to give to the intellectual property
of fellow WTO members. In doing so, it strikes a balance between the
long term benefits andpossible short term costs to society. Society
benefits in the long term when intellectual propertyprotection encourages
creation and invention, especially when the period of protection
expiresand the creations and inventions enter the public domain.
Governments are allowed to reduceany short term costs through various
exceptions.
The agreement covers five broad issues:
How basic principles of the trading system and other international
intellectual propertyagreements should be applied,
How to give adequate protection to intellectual property rights,
How countries should enforce those rights adequately in their
own territories,
How to settle disputes on intellectual property between members
of the WTO,
Special transitional arrangements during the period when the
new system is being introduced.
1. How to protect intellectual property:
common ground-rules:The second part of the TRIPS agreement
looks at different kinds of intellectual propertyrights and how to protect
them. The purpose is to ensure that adequate standards of
protectionexist in all member countries. Here the starting point is the
obligations of the main internationalagreements of the World Intellectual
Property Organization (WIPO) that already existed beforethe WTO was
created:
Protection of Literary and Artistic Works (copyright).
Some areas are not covered by these conventions. In some cases,
the standards of protectionprescribed were thought inadequate. So the
TRIPS agreement adds a significant number of newor higher standards.
I. Copyright :
The TRIPS agreement ensures that computer programs will be
protected asliterary works under the Berne Convention and outlines how
databases should be protected. Italso expands international copyright
rules to cover rental rights. Authors of computer programsand producers
of sound recordings must have the right to prohibit the commercial rental
of their works to the public. A similar exclusive right applies to films
where commercial rental hasled to widespread copying, affecting
copyright owners potential earnings from their films.The agreement says
performers must also have the right to prevent unauthorized
recording,reproduction and broadcast of live performances (bootlegging)
for no less than 50 years.Producers of sound recordings must have the
right to prevent the unauthorized reproduction of recordings for a period
of 50 years.
II. Trademarks :
The agreement defines what types of signs must be eligible
forprotection as trademarks, and what the minimum rights conferred on
their owners must be. Itsays that service marks must be protected in the
same way as trademarks used for goods.Marks that have become well-
known in a particular country enjoy additional protection.
III. Geographical indications :
A place name is sometimes used to identify a product.This
geographical indication does not only say where the product was
made. More importantlyit identifies the products special characteristics,
which are the result of the products origins.
Well-known examples include Champagne, Scotch, Tequila,
and Roquefort cheese.Wine and spirits makers are particularly
concerned about the use of place names to identifyproducts, and the
TRIPS Agreement contains special provisions for these products. But
theissue is also important for other types of goods.
Using the place name when the product was made elsewhere or
when it does not have theusual characteristics can mislead consumers,
and it can lead to unfair competition. The TRIPS Agreement says
countries have to prevent this misuse of place names
IV. Industrial designs :
Under the TRIPS Agreement, industrial designs must be protected
forat least 10 years. Owners of protected designs must be able to
prevent the manufacture,sale or importation of articles bearing or
embodying a design which is a copy of theprotected design.
V. Patents :
The agreement says patent protection must be available for
inventions for at least 20years. Patent protection must be available for
both products and processes, in almost all fieldsof technology.
Governments can refuse to issue a patent for an invention if its
commercialexploitation is prohibited for reasons of public order or
morality. They can also excludediagnostic, therapeutic and surgical
methods, plants and animals (other than microorganisms),and biological
processes for the production of plants or animals (other than
microbiologicalprocesses).
G. Anti-dumping, subsidies, safeguards: contingencies, etc
Binding tariffs and applying them equally to all trading partners
(most-favored nationtreatment, or MFN) are key to the smooth flow of
trade in goods. The WTO agreements upholdthe principles, but they also
allow exceptions in some circumstances.
Three of these issues are:
Actions taken against dumping (selling at an unfairly low price)
Subsidies and special countervailing duties to offset the
subsidies
Emergency measures to limit imports temporarily, designed to
safeguard domesticindustries.
H. Non-tariff barriers: red tape, etc
A number of agreements deal with various bureaucratic or legal
issues that couldinvolve hindrances to trade
. Import licensing
Rules for the valuation of goods at customs
Preshipment inspection: further checks on imports
Rules of origin: made in ... where?
Investment measures
4. Functions
Among the various functions of the WTO, these are regarded by
analysts as the mostimportant:
the coveredagreements.

Additionally, it is the WTO's duty to review and propagate the
national trade policies, and to ensure the coherence and transparency of
trade policies through surveillance in globaleconomic 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 throughtechnical cooperation and training. The WTO is
also a center of economic research and analysis:regular assessments of
the global trade picture in its annual publications and research reportson
specific topics are produced by the organization. Finally, the WTO
cooperates closely withthe two other components of the Bretton Woods
system, the IMF and the World Bank.
5. Trade NegoTiaTioNs CommiTTee
The Trade Negotiations Committee (TNC) is the committee that
deals with the current tradetalks round. The chair is WTOs director-
general. The committee is currently tasked with theDoha Development
Round.
A. Voting system
WTO negotiations proceed not by consensus of all members, but
by a process of informal negotiations between small groups of countries.
Such negotiations are often called"Green Room" negotiations (after the
colour of the WTO Director-General's Office in Geneva),or "Mini-
Ministerial", when they occur in other countries. These processes have
been regularlycriticized by many of the WTO's developing country
members which are often totally excludedfrom the negotiations.
B. Members and observers
The WTO has 153 members (almost all of the 123 nations
participating in the UruguayRound signed on at its foundation, and the
rest had to get membership). The 27 states of theEuropean Union are
represented also as the European Communities. WTO members do
nothave to be full sovereign nation-members. Instead, they must be a
customs territory with fullautonomy in the conduct of their external
commercial relations. Thus Hong Kong (as "HongKong, China" since
1997) became a GATT contracting party, and the Republic of China
(ROC)(commonly known as Taiwan, whose sovereignty has been
disputed by the People's Republic of China) acceded to the WTO in
2002 under the name of "Separate Customs Territory of Taiwan,Penghu,
Kinmen and Matsu" (Chinese Taipei). A number of non-members (30)
are observers atWTO proceedings and are currently negotiating their
membership. As observers, Iran, Iraq andRussia are not yet members.
With the exception of the Holy See, observers must startaccession
negotiations within five years of becoming observers. Some
internationalintergovernmental organizations are also granted observer
status to WTO bodies. 14 states and2 territories so far have no official
interaction with the WTO.
C. Ministerial conferences
a. The inaugural ministerial conferencewas held in Singapore in
1996.Disagreements between largely developed and developing
economies emergedduring this conference over four issues initiated by
this conference, which led tothem being collectively referred to as the
"Singapore issues".
b. The second ministerial conferenceWas held in Geneva in Switzerland.
c. The third conferencein Seattle, Washington ended in failure, with
massivedemonstrations and police and National Guard crowd control
efforts drawingworldwide attention.
d. Fourth ministerial conferencewas held in Doha in Persian Gulf nation
of Qatar. The Doha Development Round was launched at the
conference. Theconference also approved the joining of China, which
became the 143rd memberto join.
e. The Fifth ministerial conferencewas held in Cancn, Mexico, aiming
atforging agreement on the Doha round. An alliance of 22 southern
states, the G20developing nations (led by India, China and Brazil),
resisted demands from theNorth for agreements on the so-called
"Singapore issues" and called for an endto agricultural subsidies within
the EU and the US. The talks broke down withoutprogress.
f. The sixth WTO ministerial conferencewas held in Hong Kong from
13December 18 December 2005. It was considered vital if the four-
year-old DohaDevelopment Agenda negotiations were to move forward
sufficiently to concludethe round in 2006. In this meeting, countries
agreed to phase out all theiragricultural export subsidies by the end of
2013, and terminate any cotton exportsubsidies by the end of 2006.
Further concessions to developing countries included an agreement to
introduce duty free, tariff free access for goods fromthe Least Developed
Countries, following the Everything But Arms initiative of the European
Union but with up to 3% of tariff lines exempted. Other majorissues
were left for further negotiation to be completed by the end of 2010
g. The WTO General Council, on 26 May 2009, agreed to hold aseventh
WTOministerial conferencesession in Geneva from 30 November
December 2009. A statement by chairman Amb. Mario Matus
acknowledged that the primepurpose was to remedy a breach of
protocol requiring two-yearly "regular"meetings, which had lapsed with
the Doha Round failure in 2005, and that the"scaled-down" meeting
would not be a negotiating session, but "emphasis will beon
transparency and open discussion rather than on small group processes
andinformal negotiating structures"
6. BENEFITS OF THE WTO TRADING SYSTEM
1. The system helps to keep the peace
Peace is partly an outcome of two of the most fundamental
principles of the tradingsystem: helping trade to flow smoothly and
providing countries with a constructive and fairoutlet for dealing with
disputes over trade issues. It is also an outcome of the
internationalconfidence and cooperation that the system creates and
reinforces.
History is littered with examples of trade disputes turning into war.
One of the mostvivid is the trade war of the 1930s when countries
competed to raise trade barriers in order toprotect domestic producers
and retaliate against each others barriers. This worsened the
GreatDepression and eventually played a part in the outbreak of World
War 2.
Two developments immediately after the Second World War
helped to avoid arepeat of the pre-war trade tensions. In Europe,
international cooperation developed in coal,and in iron and steel.
Globally, the General Agreement on Tariffs and Trade (GATT)
wascreated.
The GATT/WTO system is an important confidence builder. The
trade wars in the1930s are proof of how protectionism can easily plunge
countries into a situation where no onewins and everyone loses.
Confidence is the key to avoiding that kind of no-win scenario.
Whengovernments are confident that others will not raise their trade
barriers, they will not betempted to do the same. They will also be in a
much better frame of mind to cooperate witheach other.
The WTO trading system plays a vital role in creating and
reinforcing that confidence.Particularly important are negotiations that
lead to agreement by consensus and a focus on abiding by the rules.
2. The system allows disputes to be handled constructively
There could be a down side to trade liberalization and expansion.
More trade meansmore opportunities for disputes to arise. Left to
themselves, those disputes could lead to seriousconflict. But in reality, a
lot of international trade tension is reduced because countries can turnto
organizations, in particular the WTO, to settle their trade disputes.
When they bring disputes to the WTO, the WTOs procedure
focuses their attentionon the rules. Once a ruling has been made,
countries concentrate on trying to comply with therules, and perhaps
later renegotiating the rulesnot on declaring war on each other.
Around 300 disputes have been brought to the WTO since it was
set up in 1995.Without a means of tackling these constructively and
harmoniously, some could have led tomore serious political conflict.
3. A system based on rules rather than power Makes life easier for all
Decisions in the WTO are made by consensus. The WTO
agreements werenegotiated by all members, were approved by
consensus and were ratified in all members parliaments. The
agreements apply to everyone. Rich and poor countries alike have an
equalright to challenge each other in the WTOs dispute settlement
procedures.
This makes life easier for all, in several different ways. Smaller
countries can enjoysome increased bargaining power. Without a
multilateral regime such as the WTOs system, themore powerful
countries would be freer to impose their will unilaterally on their smaller
tradingpartners. Smaller countries would have to deal with each of the
major economic powersindividually, and would be much less able to
resist unwanted pressure.
4. It gives consumers more choice, and a broader range of qualities to
choosefrom
Think also of the things people in other countries can have
because they buy exportsfrom us and elsewhere. Look around and
consider all the things that would disappear if all ourimports were taken
away from us. Imports allow us more choiceboth more goods
andservices to choose from, and a wider range of qualities. Even the
quality of locally-producedgoods can improve because of the
competition from imports.
The wider choice isnt simply a question of consumers buying
foreign finished products.Imports are used as materials, components
and equipment for local production.
This expands the range of final products and services that are
made by domesticproducers, and it increases the range of technologies
they can use. When mobile telephoneequipment became available,
services sprang up even in the countries that did not make
theequipment, for example.
5. Trade raises incomes
The WTOs own estimates for the impact of the 1994 Uruguay
Round trade dealwere between $109 billion and $510 billion added to
world income (depending on theassumptions of the calculations and
allowing for margins of error).
More recent research has produced similar figures. Economists
estimate thatcutting trade barriers in agriculture, manufacturing and
services by one third would boost theworld economy by $613 billion
equivalent to adding an economy the size of Canada to theworld
economy.
So trade clearly boosts incomes. Trade also poses challenges as
domesticproducers face competition from imports. But the fact that there
is additional income meansthat resources are available for governments
to redistribute the benefits from those who gainthe most.
7. CritiCism
The stated aim of the WTO is to promote free trade and stimulate
economic growth. Criticsargue that free trade leads to a divergence
instead of convergence of income levels within richand poor countries
(the rich get richer and the poor get poorer). Martin Khor, Director of
theThird World Network, argues that the WTO does not manage the
global economy impartially,but in its operation has a systematic bias
toward rich countries and multinational corporations,harming smaller
countries which have less negotiation power. He argues that
developingcountries have not benefited from the WTO agreements of
the Uruguay Round because, amongother reasons, market access in
industry has not improved; these countries have had no gainsyet from
the phasing-out of textile quotas; non-tariff barriers such as anti-dumping
measureshave increased; and domestic support and export subsidies for
agricultural products in the richcountries remain high. Jagdish Bhagwati
asserts, however, that there is greater tariff protectionon manufacturers
in the poor countries, which are also overtaking the rich nations in
thenumber of anti-dumping filings.
Other critics claim that the issues of labor relations and
environment are steadfastlyignored. Steve Charnovitz, former director of
the Global Environment and Trade Study (GETS),believes that the WTO
"should begin to address the link between trade and labor
andenvironmental concerns." Further, labor unions condemn the labor
rights record of developingcountries, arguing that, to the extent the WTO
succeeds at promoting globalization, theenvironment and labor rights
suffer in equal measure. On the other side, Khor responds that "if
environment and labor were to enter the WTO system [...] it would be
conceptually difficult toargue why other social and cultural issues should
also not enter." Bhagwati is also criticaltowards "rich-country lobbies
seeking on imposing their unrelated agendas on tradeagreements."
Therefore, both Bhagwati and Arvind Panagariya of Columbia University
havecriticized the introduction of TRIPs into the WTO framework, fearing
that such non-tradeagendas might overwhelm the organization's
function. Other critics have characterized thedecision making in the
WTO as complicated, ineffective, unrepresentative and non-
inclusive,and they have proposed the establishment of a small, informal
steering committee (a"consultative board") that can be delegated
responsibility for developing consensus on tradeissues among the
member countries. The Third World Network has called the WTO "the
mostnon-transparent of international organizations", because "the vast
majority of developingcountries have very little real say in the WTO
system"; the Network stresses that "civil societygroups and institutions
must be given genuine opportunities to express their views and
toinfluence the outcome of policies and decisions." Certain non-
governmental organizations, suchas the World Federalist Movement,
argue that democratic participation in the WTO could beenhanced
through the creation of a parliamentary assembly, although other
analysts havecharacterized this proposal as ineffective.
8. WTO IN CONTEXT OF INDIA
1. Probable advantages
A. Increment in export:
Due to be a member of WTO India is now connected withother
member countries. It is expected that as result of being the member of
WTO, Indiancontribution in world trade was increased to 5170 million $
during 2002-03, rather than 2633million $ during 1994-95. Indias
contribution in world export was 0.61% in 1995 whichincreased to 0.86%
in 2001.
B. Increment in export of textiles:
From 1974 to 1995(formation of WTO) textileswas operated by
Multifibre Arrangement. There was a quota system in this field which has
beenabolished by 1995 and textiles is now operated by Agreements on
Textiles and Clothing to helpexport of clothes and textiles in India.
C. Advantages for services:
According to this agreement Developed Countries will openthe
service firms i.e. banks, transports, hotels, etc. in compensation they
present a market tosell Indian products.
D. Availability of foreign products:
GATT agreements provide availability of foreignproducts in Indian
markets. This helps in buying several foreign products easily and
cheaply.
E. Job Chances:
Increment in Indian trade, chances of job has been increased to a
greatextent.
2. Probable disadvantages
A. Agriculture:
While India is the member of WTO, there are some disadvantages
for agriculture-
oor formers.
Countries to pretendenvironmental conservation.
multinational products.
affects paymentbalance of the country.
B. Disadvantages of TRIPS:
plants andanimals, etc. It will help only Developed Countries having
better technologies andunlimited resources.
moneyoutside which affects payment balance.
export.
C. Loss from General Agreement on Trade in Services(GATS):
GATS is favorable fordeveloped countries because it gives
subsidies to those services whose advantage go tothe Developed
Countries. Our Banking, Insurance Transports, Education and Hotels
etc.cant compete with foreign companies. So our domestic Institutions
will find an endand our economical freedom will be lost.
D. Problems in construction of economical policy:
Due to WTO, Developing Countrieshave to face problems in
construction of free economy and non economic policies asthey have to
open their markets for Developed countries.
E. Economical torture:
Freedom to multinational companies for invests in India, willtorture
Indian economy. According to GATT agreement MNCs and National
Companiesare equal. This agreement will create problem of
conservation of industries in ourcountry.
F. Environmental Issues:
Developed Countries are creating problems to
DevelopingCountries about environmental issues. These countries are
trying to ban the productswhich affect environment and wants
compensation of these damages from DevelopingCountries. The critics
say that the 3/4thpart of environmental damages are due toDeveloped
Countries. Developed Countries are creating pressure on us to use new
eco friendly technologies.
For example:When Indian skirts became famous in U.S.A., they
started to spreadrumors about skirts, they are made of inflammable
materials and they banned it. Butall the rumors proved wrong and ban
was removed.
9. ConClusion
At the end we can say that WTO agreements are totally failed. The
decision of improvement will be successful when taken by self either it is
for person or for country. But ourimprovement decisions are those which
are imposed on us by foreign powers on the name of world trade
agreement. They are interested only that the doors of developing
markets open forthem, they are not interested in improvement of peoples
of country, improvement of agricultural development and in making a
strong base for whole economy.These hopeless results are due to lesser
competition power. Developed Countriesi.e.U.S.A. have latest
technologies of information and latest instruments and due to these
causeswe cant compete with them where half of the population is
illiterate and believing on oldtraditions either it is for industries or for
agriculture.Only those agreements will become successful which take
place between equal powers.So a justified agreement cant take place
between richer and poorer and cant apply thosethings. The total export
of India is 0.6% of world export. This is a topic of concern, who wantto
listen that country whose total contribution in world income and world
trade are only 1.2%and 0.6%.
STRUCTURE
Around 30 others are negotiating membership.
consensus.Amajority vote is also possible but it has never been used in
the WTO, and was extremely rare under theWTOs predecessor, the
GeneralAgreement on Tariffs andTrade (GATT).

-making body is the
MinisterialConferencewhich meets at least once every two years.
bassadors andheads of
delegation in Geneva, but sometimes officials sent frommembers
capitals) which meets several times a year in the Genevaheadquarters.
The General Council also meets as theTrade PolicyReview Body and
the Dispute Settlement Body.
next level, theGoods Council, Services Council andIntellectual
Property (TRIPS) Councilreport to the GeneralCouncil.
groupsandworkingpartiesdeal with the individual agreements and other
areas such as the environment, development, membership applications
andregional trade agreements.
WTO's main activities are:
-negotiating the reduction or elimination of obstacles to trade (import
tariffs,other barriers to trade) and agreeing on rules governing the
conduct of international trade (e.g. antidumping, subsidies, product
standards, etc.)
-administering and monitoring the application of the WTO's agreed rules
for trade in goods, trade in services, and trade-related intellectual
property rights
-monitoring and reviewing the trade policies of our members, as well
asensuring transparency of regional and bilateral trade agreements
-settling disputes among our members regarding the interpretation
andapplication of the agreementsbuilding capacity of developing
country government officials in internationaltrade matters
-assisting the process of accession of some 30 countries who are not
yetmembers of the organization
-conducting economic research and collecting and disseminating trade
datain support of the WTO's other main activitiesexplaining to and
educating the public about the WTO, its mission and itsactivities.
rounds, held under GATT. The first roundsdealt mainly with tariff
reductions but later negotiationsincluded other areas such as anti-
dumping and non-tariff measures. The last round the 1986-94 Uruguay
Round led tothe WTOs creation.
ntinued after theend of the
Uruguay Round.
services, with 69 governments agreeing towide-ranging liberalization
measures that went beyond thoseagreed in the Uruguay Round.
0 governments successfully concludednegotiations
for tariff-free trade in information technologyproducts, and 70 members
concluded a financial services dealcovering more than 95% of trade in
banking, insurance,securities and financial information.
In 2000, new talks started on agriculture and services. These have
nowbeen incorporated into a broader work programme, the Doha
Development Agenda (DDA), launched at the fourth WTO
MinisterialConference in Doha, Qatar, in November 2001.
ns and other work on non-
agriculturaltariffs, trade and environment, WTO rules such as anti-
dumping andsubsidies, investment, competition policy, trade
facilitation,transparency in government procurement, intellectual
property, and arange of issues raised by developing countries as
difficulties they facein implementing the present WTO agreements.
negotiationsbetween the members.
-94 Uruguay
Roundnegotiations which included a major revision of the original
General Agreement on Tariffs and Trade (GATT).
-book for trade in goods.
TheUruguay Round also created new rules for dealing with trade
inservices, relevant aspects of intellectual property, dispute
settlement,and trade policy reviews. The complete set runs to some
30,000 pagesconsisting of about 30 agreements and separate
commitments (calledschedules) made by individual members in specific
areas such aslower customs duty rates and services market-opening.
MISSIONSTATEMENT OF WTO
The World Trade Organization - the WTO - is the international
organization whoseprimary purpose is to open trade for thebenefit of all.