What is World Trade Organization(WTO)

The Uruguay round of the trade negotiations conducted under the aegis of the GATT led to creation in 1995 of the world trade organization. As the responsibilities of the WTO have grown to encompass new areas of work, the organization has gradually expanded to occupy most of the CWR. Delegations from the WTO's member meet in its historic rooms everyday to discuss and negotiate the further development of trade rules and to seek peaceful resolution of trade disputes.

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. The WTO also provide a legal and institutional framework for the implementation and monitoring of these agreement , as well as for setting disputes arising from their interpretation and application. The current body of trade agreements comprising the WTO consists of 16 different multilateral agreements and two different plurilateral agreements.

Basic rules of WTO

1. Protection to domestic industry through tariffs:

The General Agreements on Tariffs and Trade covers international trade in goods. The workings of the GATT agreements are the responsibility of the council for Trade in Goods.

2. Binding of Tariffs:

Eliminate protection to domestic industry/production by reducing tariffs and removing other barrier to trade i multilateral trade negotiations.

3. National Treatment Rule:

The rule prohibits member countries from discriminating between imported products and domestically produced like goods in the matter of internal taxes and in the application of internal regulations.

4. Most favoured nation (MFN) treatment:

The rule lays down the principles of non-discrimination amongst member countries. Tariffs and other regulations should be applied to imported or exported goods without discrimination among countries. Exceptions to the rules, i.e., regional arrangements subjected to preferential or duty free trade agreements Generalized system of preference (GSP) where developed countries apply preferential or duty free rates to imports from developing countries.

Functions of the WTO

1. Implementation, Administration and operation of the covered agreements:

The WTO facilitates the implementation, administration and operation of the WTO agreements and the multilateral trade agreements,and furthers their objectives. It also provides the framework, for those of its members that have accepted them, for the implementation, administration and operation of the plurilateral trade agreements.

2. Forum for Negotiations:

The WTO provides the forum for negotiations on multilateral trade relations in matters covered by its various agreements. It may also, on decision by the ministerial conference, provide a forum for further negotiations, and a framework for the implementation of their results, on other issues arising in the multilateral trade relations among its members.

3. Dispute settlement:

The WTO administers the integrated dispute settlement system, which is a central element in providing security and predictability to the multilateral trading system, serving to preserve the rights and obligations of the members of the WTO.

4. Review of national trade policies:

The WTO administers the trade policy review mechanism, which is designed to contribute to greater transparency and understanding of the trade policies and practices of WTO members, to their improved adherence to the rules, disciplines and commitments of the multilateral trading system, and hence to the smoother functioning of the system.

5. Coherence in global economic policy-making:

A ministerial declaration adopted at the marrakesh ministerial meeting recognizes the role of trade liberalization in achieving greater coherence in global economic policy-making. For this purpose, the WTO cooperates, as appropriate, with the international monetary fund and with the world bank.

Objectives of WTO

Important objectives of WTO are mentioned below:

(i) To implement the new world trade system as visualized in the agreements;

(ii) To promote world trade in a manner that benefits every country;

(iii) To ensure  that developing countries secure a better balance in the sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs;

(iv) To demolish all hurdles to an open world trading system and usher in international economic renaissance because the world trade is an effective instrument to foster economic growth;

(v) To enhance competitiveness among all trading partners so as to benefit consumers and help in global integration;

(vi) To increase the level of the production and productivity with a view to ensuring level of employment in the world;

(vii) To expand and utilize world resources to the best;

(viii) To improve the level of living for the global population and speed up economic development of the member nations.

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