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WTO Functions and Structure-1

The document discusses the establishment and structure of the World Trade Organization (WTO). It was created in 1995 to replace the General Agreement on Tariffs and Trade (GATT) and regulate international trade. The WTO has over 150 member countries and aims to improve standards of living through cooperation on trade.

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Rahul Singh
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27 views

WTO Functions and Structure-1

The document discusses the establishment and structure of the World Trade Organization (WTO). It was created in 1995 to replace the General Agreement on Tariffs and Trade (GATT) and regulate international trade. The WTO has over 150 member countries and aims to improve standards of living through cooperation on trade.

Uploaded by

Rahul Singh
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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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.

Conference Year Place


9-13 Dec.,
I 1996 Singapore
18-20 May Geneva
II 1998 (Switzerland)

30 Nov.-З
III Dec., 1999 Seattle (USA)

9-14 Nov.,
IV 2001 Doha (Qatar)

10-14 Sep.,
V 2003 Cancun (Mexico)

13-18 Dec..
VI 2005 Hong Kong

30 Nov-2Dec., Geneva
VII 2009 (Switzerland)

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.

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