FEBRUARY 10, 2024

law related Global trade under world trade organisatio

LLM SECOND SEMESTER

PROF :Mrs. Hemanshi Ahuja

Student Name :Rutuja Rahul Bachhav
 Acknowledgement

In making this project, and completing it

successfully, I had to get help and guidance from

some respected people. I am grateful that I was given

the opportunity to make this project, which has

enhanced my knowledge in so many aspects. I would

like to show my gratitude to my Professor -

______________________ , for giving me great

guidance for this assignment. I wish to extend my

special thanks to my classmates who have always

been supportive and guided me throughout this

assignment.

Thanking You

Rutuja Bachhav

1
 Index

SR PAGE
DATE TOPIC/QUESTION SIGN
NO NO

Explain the history,purpose behind

1 8/2/2024 the establishment of WTO? 3-22

2
Explain the history,purpose behind the establishment
of WTO?

World War Two

World War Two, also known as World War II, was a devastating
global conflict that began in 1939 and ended in 1945. It involved
100 million people from over 30 countries.

World War II was the deadliest conflict in human history,

marked by 70 to 85 million fatalities. Tens of millions of people
died due to genocides (including the Holocaust), premeditated
death from starvation, massacres, and disease. To this date, it
remains the deadliest conflict in human history.

Origin of World War II

The causes of World War II are many and varied but in the end,
it all boils down to the aggressive and expansionist policies of
Adolf Hitler and his Nazi Party. Plus, the harsh Treaty of
Versailles years before only laid the foundation of future
conflicts.

Other events such as the Spanish Civil War and the Japanese
invasion of China only served to highlight the ineffectiveness of
the League of Nations that had been created following the
signing of the Treaty of Versailles. Both the conflicts saw the
involvement of these future Axis powers and it showed that they
could carry out their imperialistic whims with no consequences

3
to be faced from other nations. As a result, the conflict became
inevitable.

Beginning of World War II

World War II began on September 3, 1939, two days after

Hitler’s armies invaded Poland. Poland’s sovereignty was
guaranteed by Britain and France. When the protests by the two
fell on Hitler’s deaf years, they declared war. The war would be
fought between the Axis Powers consisting of Germany, Italy
and Japan and the Allies – Britain, France, the Commonwealth
countries, the United States and the Soviet Union.

Initially, Hitler had signed a nonaggression pact with the Soviet

Union. The Soviet Union launched an invasion of Poland from
the east. It also took over Estonia, Latvia, Lithuania and launched
campaigns against Finland. Nazi Germany followed up its
invasion of Poland with the conquest of Denmark, Norway, and
Belgium in the Spring of 1940. The invasion of France later
lasted from 10 May 1940 – 25 June 1940. It was the pinnacle of
the German ‘Blitzkrieg’ campaign. Only Britain stood against the
full might of Germany. Italy joined the war in June 1940.

To invade Britain, it was necessary to achieve total air

superiority. Thus the German air force, the Luftwaffe, attacked
southeast England and London in daylight raids. In August and
September, the battle of Britain was fought over its skies in
which the numerically inferior British Royal air force defeated
the German air force. It shelved any future plans of the Germans
to invade Britain, but it did not stop bombing campaigns that saw

4
the devastation of many British cities and towns in the following
months.

Expansion of the Conflict

A new battlefront opened in September 1940 when Italian troops

invaded Egypt. They clashed with the British troops stationed
there. By February 1941, the British managed to defeat the
Italian army and even managed to push into Italian held-Libya.
By February 1941, the Italians had been defeated, but German
troops, commanded by Field-Marshal Rommel, then arrived and
managed to push back British troops back to the Egyptian border.

Buoyed by his success in Europe, Hitler declared war on his

former ally, the Soviet Union in June 1941 invading the country
with the help of Finland, Hungary and Romania. By the end of
1941, however, Allied fortunes were about to change as the
United States joined the war, following the unprovoked attack on
its navy at Pearl harbour in Hawaii, by the Japanese air force.

The attack on the Pearl harbour marked the start of the war in the
Pacific and by May 1942, Japan had taken control of Southeast
Asia including Burma, Singapore, the Philippines and New
Guinea, from where they threatened the coast of Australia. The
Japanese also took control of many islands in the Pacific, but by
August 1942, the US Navy had defeated the Japanese at the
battles of the Coral Sea, Midway Island and Guadalcanal and
stopped them from invading any more territory. More victory
followed in which several pacific islands held by the Japanese
fell. This gave them bases from which they could bomb Japan.

5
The Tide turns against the Axis

In Africa, British troops led by Field-Marshal Montogomery won

a decisive battle at El Alamein in October and November 1942.
Montgomery quickly advanced across Libya to meet allied forces
in Morocco and Algeria. The Axis armies trapped between the
Allies were forced to surrender in May 1943.

German troops fighting in Russia fared no better. Although they

had been within sight of Moscow by November 1941, the
Russians had begun to fight back and they had defeated the
Germans at the Battle of Stalingrad. It took until August 1944 to
expel the last German troops from the Soviet Union, by which
time they were needed in the west to defend Germany itself from
an Allied invasion.

The Allied invasion of Europe started on June 6, 1944, and by

July 2 one million troops had landed in Normandy, France and
started to advance towards Germany via Belgium and via the
Netherlands. Reinforced by troops coming from the Soviet
Union, launched a last-ditch counter-attack to reverse their
fortunes in December 1944. But by January 1945, the offensive
had failed. In March 1945 Allied troops had crossed the Rhine
and reached the Ruhr valley, the heartland of Germany’s
manufacturing production. At the same time, the Soviet army
pushed in from the East

Realizing that the war was lost, Hitler committed suicide in his
bunker on April 30, 1945. On May 2nd Soviet Troops captured
Berlin. On May 7th, 1945 World War 2 came to an end with the
surrender of Nazi Germany at Reims in France. This became

6
official when the surrender documents were signed on May 9th
in Berlin.

End of World War II and aftermath

Although the war ended in Europe the fighting in Asia still raged
on. In September 1944, US troops began to recapture the
Philippines and the British troops had begun a push into Burman
following the battle of Imphal and Kohima. An Allied invasion
of Japan was planned for late 1945, but dogged Japanese
resistance led to Allied commanders looking for alternatives. The
alternative came in the form of an atomic bomb dropped on
Hiroshima on August 6, 1945. It was followed by the bombing of
August 9th, 1945 on Nagasaki. The casualties that resulted from
these two events prompted the Japanese government to surrender
on August 14. The war was over.

The wide-scale destruction had caused massive military and

civilian casualties on both sides, but none suffered more than the
Jewish population of Europe. Out of the 9 million Jews that lived
in Europe in 1939, 6 million would perish in concentration camps
set up by the NAzis through Germany and occupied Poland.

After the war, Allied troops occupied the Western half of Europe
while the Soviets occupied eastern Germany. The fragile alliance
between the two would evolve into the Cold war.

What is Bretton Woods Conference?

The Bretton Woods Conference, formally known as the United
Nations Monetary and Financial Conference, was a historic
gathering of 44 Allied nations held in Bretton Woods, New

7
Hampshire, United States, from July 1 to 22, 1944. The primary
objectives of the Bretton Woods Conference were to establish a
new international monetary system and facilitate post-World War
II economic reconstruction and development.
Background of Bretton Woods Conference
In the early 1940s, as World War II raged on, global leaders
began to anticipate the need for a new international economic
order to promote global peace and stability. The Bretton Woods
Conference was convened to address this need and to create a
framework for post-war economic cooperation. The conference
sought to prevent future economic crises and the competitive
devaluations that had contributed to the Great Depression.

Political Principles of Bretton Woods Conference

o Commitment to economic cooperation: The participating
nations agreed to work together to ensure global economic
stability and growth.
o Promotion of free trade: The conference aimed to reduce
trade barriers and promote multilateral trade.
o Exchange rate stability: The conference sought to establish
a stable exchange rate system, with the US dollar as the
main reserve currency.
o Financial assistance for post-war reconstruction and
development: The conference sought to create institutions
to provide financial assistance for rebuilding war-torn
economies and promoting economic growth in developing
countries.
Structure of the Bretton Woods Conference

8
 o Two main committees: The conference was organized into
two main committees, one focusing on the International
Monetary Fund (IMF) and the other on the International
Bank for Reconstruction and Development (IBRD).
o Technical subcommittees: These committees were further
divided into various subcommittees to address specific
issues and concerns.
o Anglo-American partnership: The United States and the
United Kingdom played leading roles in shaping the
conference's outcomes, with John Maynard Keynes
representing the UK and Harry Dexter White representing
the US.
Major Agreements of Bretton Woods Conference
o Establishment of the International Monetary Fund (IMF):
The IMF was created to supervise the new exchange rate
system and provide short-term financial assistance to
member countries.
o Creation of the International Bank for Reconstruction and
Development (IBRD): The IBRD, now part of the World
Bank Group, was established to provide long-term
financial assistance for post-war reconstruction and
development.
o Fixed exchange rate system: Participating countries agreed
to peg their currencies to the US dollar, which was in turn
convertible to gold at a fixed rate. This arrangement aimed
to ensure exchange rate stability and promote international
trade.

9
 o Abolition of Exchange Controls: The conference aimed to
eliminate restrictions on currency convertibility and
promote the free flow of capital.
Importance of Bretton Woods Agreements
Even though it collapsed, the Bretton Woods summit and
agreement have left a lasting impact on the financial world,
notably through the establishment of the IMF and the World
Bank. These institutions continue to play a crucial role in the
global economy. On a broader scale, the agreement united 44
nations globally, fostering collaboration to address an escalating
global financial crisis. It contributed to bolstering the overall
world economy and optimizing profits from international trade.
The Outcome of the Bretton Woods Conference
The outcome of the Bretton Woods Conference in 1944 was the
establishment of the IMF and the IBRD, collectively known as
the "twins of the Bretton Woods Conference." These institutions
played crucial roles in shaping the post-war global economic
order. The conference also led to the adoption of a fixed
exchange rate system, which lasted until the early 1970s when it
was replaced by a system of floating exchange rates.
Importance of Bretton Woods Conference
o The foundation of the modern international monetary
system: The conference laid the groundwork for the global
economic order that persisted throughout the second half
of the 20th century.
o Facilitation of post-war reconstruction and development:
The IMF and IBRD provided financial assistance and

10
 technical expertise for rebuilding war-torn economies and
promoting economic growth in developing countries.
o Promotion of global economic cooperation: The
conference fostered a spirit of international cooperation
and shared responsibility for global economic stability.
o Prevention of competitive devaluations: The fixed
exchange rate system established at Bretton Woods aimed
to prevent competitive devaluations and currency
manipulation that had contributed to the Great Depression.

Ratification of Bretton Woods Final Act and

Savannah Conference
o The Articles of Agreement for the IMF and IBRD, signed
at Bretton Woods, required ratification by countries with at
least 80 percent of the capital subscriptions to come into
force; this threshold was met on December 27, 1945.
o The formal organization of the institutions took place
during an inaugural meeting in Savannah, Georgia, from
March 8 to 18, 1946.
o Notably, the USSR, which had signed the Bretton Woods
Final Act, did not ratify it and was absent from the
Savannah meeting. They rejected the inclusion of the
dollar alongside gold, considering the institutions as
"branches of Wall Street."
o The USSR never became a part of the IMF and IBRD, but
its successor, the Russian Federation, joined in 1992.
o Australia and New Zealand did not actively participate in
the Savannah meeting (Australia sent observers) but later
joined both the IMF and IBRD.

11
What Is the General Agreement on Tariffs and Trade
(GATT)?
The General Agreement on Tariffs and Trade (GATT), signed in
1947 by 23 countries, is a treaty minimizing barriers to
international trade by eliminating or reducing quotas, tariffs, and
subsidies. It was intended to boost economic recovery after
World War II.1
GATT was expanded and refined over the years, leading to the
creation in 1995 of the World Trade Organization (WTO), which
absorbed the organization created to implement GATT. By then,
125 nations were signatories to its agreements, which covered
about 90% of global trade.12
The Council for Trade in Goods (Goods Council) is now
responsible for the GATT and consists of representatives from all
WTO member countries. As of September 2022, the chair of the
Goods Council is Etienne Oudot de Dainville. The council has 10
committees that address subjects including market access,
agriculture, subsidies, and anti-dumping measures.34
KEY TAKEAWAYS
 The General Agreement on Tariffs and Trade (GATT) was
signed by 23 countries in October 1947, after World War
II, and became law on Jan. 1, 1948.
 The purpose of the GATT was to make international trade
easier.
 The GATT held eight rounds in total, from April 1947 to
December 1993, each with significant achievements and
outcomes.5

12
  In 1995, the GATT was absorbed into the World Trade
Organization (WTO), which extended it.
Understanding the General Agreement on Tariffs and Trade
(GATT)
The GATT was created to form rules to end or restrict the most
costly and undesirable features of the prewar protectionist period,
namely quantitative trade barriers such as trade controls and
quotas. The agreement also provided a system to arbitrate
commercial disputes among nations, and the framework enabled
a number of multilateral negotiations for the reduction of tariff
barriers. The GATT was regarded as a significant success in the
postwar years.
One of the key achievements of the GATT was that of trade
without discrimination. Every signatory member of the GATT
was to be treated as equal to any other. This is known as
the most-favored-nation principle, and it has been carried through
into the WTO. A practical outcome of this was that once a
country had negotiated a tariff cut with some other countries
(usually its most important trading partners), this same cut would
automatically apply to all GATT signatories. Escape clauses did
exist, whereby countries could negotiate exceptions if their
domestic producers would be particularly harmed by tariff
cuts.16
Most nations adopted the most-favored-nation principle in setting
tariffs, which largely replaced quotas. Tariffs (preferable to
quotas but still a trade barrier) were, in turn, cut steadily in
rounds of successive negotiations.

13
The GATT instituted the most-favored-nation principle in tariff
agreements among members.6
History of the General Agreement on Tariffs and Trade
(GATT)
The GATT held eight rounds of meetings—the first beginning in
April 1947, the last ending in December 1993. Each of the
conferences had significant achievements and outcomes.
 The first meeting was in Geneva, Switzerland, and
included 23 countries. The focus of this opening
conference was on tariffs. The members established tax
concessions touching more than US$10 billion of trade
around the globe.5
 The second series of meetings began in April 1949 and
were held in Annecy, France. Again, tariffs were the
primary topic. Thirteen countries were at the second
meeting, and they accomplished an additional 5,000 tax
concessions reducing tariffs.57
 Starting in September 1950, the third series of GATT
meetings occurred in Torquay, England. This time 38
countries were involved, and almost 9,000 tariff
concessions passed, reducing tax levels by as much as
25%.7
 Japan became involved in the GATT for the first time in
1956 at the fourth meeting along with 25 other
countries.8 The meeting was in Geneva, and again the
committee reduced worldwide tariffs, this time by US$2.5
billion.5

14
This series of meetings and reduced tariffs would continue,
adding new GATT provisions in the process. In 1964, the GATT
began to work toward curbing predatory pricing policies. These
policies are known as dumping. Then in the 1970s, an
arrangement regarding international trade in textiles, known as
the Multifibre Arrangement (MFA), came into force. The next
big event was the Uruguay Round, which lasted from 1986 to
1993, with the agreements signed in 1994, and created
the WTO.5
The average tariff rate fell from around 22% when the GATT
was first signed in Geneva in 1947 to around 5% by the end of
the Uruguay Round. As the years have passed, the countries
continued to attack global issues, including addressing
agriculture disputes and working to protect intellectual property.9
The latest round of negotiations among WTO members, known
as the Doha Development Round, began in 2001 and is ongoing.
Its aim is to improve the trading prospects of developing
countries by introducing lower trade barriers and revised trade
rules.10
What is the purpose of the General Agreement on Tariffs and
Trade (GATT)?
The General Agreement on Tariffs and Trade (GATT) was set up
to eliminate protectionism, get countries trading freely among
themselves, and help restore economic prosperity following the
devastation of World War II.
Is the GATT a free trade agreement?
That was essentially its goal. The GATT sought to push the
world toward a reality where goods and services are exchanged

15
among countries without tariffs, quotas, and so forth, and without
favoritism and discrimination.
Why was the GATT replaced by the World Trade Organization
(WTO)?
The GATT, though largely successful in its goal, was said to lack
a coherent institutional structure. In short, it was a legal
agreement acting as an international organization. The World
Trade Organization (WTO) incorporates the principles of the
GATT and is better positioned to carry them out because, among
other things, it is better versed in issues like intellectual property,
has a faster dispute settlement system, and wields more
power.1112
The Bottom Line
The world would be a very different place without the GATT. Its
free trade ethos put an end to a dark period of protectionism and
economic hardship that led to World War II, paving the way for
decades of economic growth and increased globalization.
The Uruguay Round was the 8th round of Multilateral Trade
Negotiations (MTN) conducted within the framework of
the General Agreement on Tariffs and Trade (GATT), spanning
from 1986 to 1994 and embracing 123 countries as "contracting
parties". The negotiations and process ended with the signing of
the Final Act of the Marrakesh Agreement in April 1994 at
Marrakesh, Morocco. The round led to the creation of the World
Trade Organization (WTO), with GATT remaining as an integral
part of the WTO agreements. The Uruguay Round was, without a
doubt, the largest trade negotiation ever, and may very well have
been the largest negotiation ever. It set out rules and principles to

16
cover all global trade, from banking to consumer products. The
subjects for negotiations, the widest of any GATT round, were
tariffs, non-tariff measures, tropical products as a priority area,
natural resource-based products, textiles and clothing,
agriculture, review of GATT articles, safeguards, Tokyo Round
agreements ad arrangements, subsidies and countervailing
measures, dispute settlement, trade-related aspects of intellectual
property rights, trade-related investment measures and the
Functioning of the GATT System (FOGS).

The main achievements of the Uruguay Round included:

1- a trade-weighted average tariff cut of 38%;

2- conclusion of the Agreement on Agriculture which brought

agricultural trade for the first time under full GATT disciplines;

3- adoption of the General Agreement of trade in Services

(GATS);

4- the Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS);

5- the Agreement on Trade-Related Investment Measures

(TRIMS);

6- the creation of unified and predictable dispute settlement

mechanism (Dispute Settlement Body-DSB);

7- confirmation f the trade Policy Review Mechanism (TPRM);

8- the establishment of the WTO, which administers 15

multilateral, and four plurilateral trade agreements;

The Uruguay Round had extended considerably the realm of

world trade rules with agreements on intellectual property and
17
trade in services in ex-change for finally tackling agricultural
protectionism on a broader scale and getting rid of the textile and
clothing quotas.

The World Trade Organisation (WTO) Agreement creates an

international trade legal framework for 164 economies globally
and is in charge of around 60 different agreements with the
characteristics of international legal agreements. The WTO
agreements are known as the WTO’s trade rules, and the WTO is
called a “rules-based” system. Agreements of the World Trade
Organization are one of the important topics for the UPSC
Examination.
WTO Agreements is one of the most important economic topics
for the UPSC IAS exam. It also covers a significant part of the
economy subject in the General Studies Paper-3 syllabus.
In this article, let us look at the major trade agreements of WTO,
namely the WTO agreement on agriculture, the WTO trips
agreement and its key aspects, the agreement on Sanitary,
and General Agreement on Tariffs and Trade (GATT) in detail
for the UPSC IAS Examination.
Check out the linked article on Shanghai Cooperation
Organization (SCO) for the UPSC exam.
What are WTO Agreements?
The World Trade Organization (WTO) Agreements establish a
global legal framework for trade involving 164 economies
worldwide. These agreements encompass various aspects such as
goods, services, intellectual property, standards, investment, and
other factors that influence the movement of international trade.

18
Basic principles of the WTO agreements
The foundation of WTO agreements is removing trade
restrictions and upholding non-discriminatory laws. The
fundamental principles of the WTO are stated below.
According to Article I of the GATT, the most advantageous
treatment offered to the products of one country must be given to
the comparable products of all other members immediately and
without exception when it comes to duties, etc., on exports and
imports.
Principle of National Treatment
According to Article III of the GATT, all other members must be
treated equally with domestically produced goods in terms of
internal taxes, domestic laws, and other rules that apply to
imports.
Principle of General Prohibition of Quantitative Restrictions
Quantitative restrictions are typically prohibited, as stated in
Article XI of the GATT, and "no prohibitions or restrictions other
than tariffs, taxes or other charges shall be established or
maintained by any Contracting Party."
Principle regarding Tariffs as Legitimate Measures for the
Protection of Domestic Industries
GATT primarily relies on tariffs to control trade and aims to
lower tariff rates through negotiations. GATT Article XXVIII
involves countries making concessions and binding themselves to
maximum tariff rates. Any tariffs beyond these "bound rates" or
unilateral increases are prohibited. Tariff reductions must be
reciprocal and mutually beneficial as per GATT Article XXVIII.

19
Effect of the WTO on India
Trading is an excellent weapon for any developing country, and
one who uses it rightly wins prosperity and wealth for their
country. India, as a developing nation, does the same. India
is an agricultural country, and most of its GDP depends
upon agriculture, as it exports agrarian products across the
world. Trading can play a huge role in developing any
nation, if adequately used, because it also has harmful
impacts. So, let’s take a look at the good and bad impacts
of the WTO on India.
Positive impacts of the WTO on India
India is a developing country and has a vast geographical area
and population. That’s why it needs more capital to feed its
citizens. India is good in agriculture, as its geographical
condition is very good for crops, so they are self-sufficient
in feeding their people and exporting edible products, but
some things are imported. So, it has a perfect balance of
imports and exports, and India, as one of the founding
members of the WTO, has a very positive impact on it.
There are some points listed below that helped in the
development of India through the World Trade
Organization:
 India’s export competitiveness has been improved by the
WTO.
 The lower tariff has helped integrate with the global
economy more efficiently.
 India’s growth and development have been pursued by
transferring and exchanging technology and ideas.
 There is a reduction in cost and time due to market access.

20
 The WTO helped better settle trade disputes in a well-
defined and structured manner.
Negative impacts of the WTO on India
Every positive impact carries a negative with it. Even after so
many positive things, the WTO has also harmed India in
some ways, which are listed below:
 The TRIPs agreement went against the Indian Patents Act
(1970).
 The introduction of product patents in India by MNCs
caused a hike in drug prices, which left no generic option
for the poor.
 India and its research institutions have been negatively
affected by the extension of intellectual property rights to
agriculture.
 The MFN (most favoured nations )clause proved
detrimental to India’s interests and provided grounds for
the Chinese invasion of the Indian market through
dumping.
 India’s service sectors are backward compared to those in
developed countries
Conclusion
The World Trade Organization is an international organisation
that deals with the rules and regulations of trading
worldwide. Currently, it has a total of 159 countries,
including India. India has been the founding member of
this organisation since 1995. This organisation has helped
many countries to develop with the help of trade. It also
helped India and still does toward making it a developed
country. Trading has a significant impact on any nation’s

21
economy, and it is a part of globalisation. It also has
negative impacts, but they are overshadowed by the
positive impacts. So, for India, the WTO seems like a life-
uplifting organisation.

22