Introduction

The World Trade Organization is a Multi-lateral organization which facilitates the free flow of goods and services across the world and encourages fair trade among nations. The result is that the global income increases due to increased trade and there is supposed to be overall enhancement in the prosperity levels of the member nations. To put it in brief WTO encourages a multi-lateral trading system within its member countries.

Origin and Evolution of WTO: - GATT to Uruguay

WTO is of a very recent origin, it came into formal existence on January 1st 1995. As an organization it has vast powers and functions than what its predecessor GATT (General Agreement on Tariffs and Trade) had, the objectives and goals of both being broadly the same. GATT came into existence in the year 1948, after long negotiations to form an organization called ITO immediately after the Second World War did not materialize. The ITO was supposed to be the third international organization in the "Golden Triangle" that was supposed to come into existence, the first two being IMF and World Bank. To begin with 23 countries became founding GATT members (officially, "contracting parties"). GATT remained the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995. There were several controversies on whether the GATT had actually contributed to enhancement of world trade and did it serve its purpose of a multi-lateral trading organization. The liberalization of international trade during GATT era in its true sense was always debatable. However, it is very clear that over the period of 47 years of its existence, GATT was successful in initiating a process of tariff cutting in several groups of manufactured goods. Moreover the signatories in the GATT increased from 23 to more than 100 in a short span, ratifying the fact that being in the system was proved and considered more beneficial than not being in it. On the other front, the internal and domestic economic problems and fluctuations made some economies to go back to increase the levels of protection and increase trade barriers to enable faster domestic growth and recovery. The problem was not just a deteriorating trade policy

environment, but some other serious issues. GATT negotiations did not include services and agricultural trade in its gamut. As the world trade grew in size, the share of services trade along with that of merchandise started to increase leading to the insufficiency of the GATT principles to cover the expanding aspects of ever evolving global trade. As a result, these loopholes were taken as advantage by many trading countries, resulting in a lopsided development of world trade. These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO

What WTO stands for

Non-discrimination A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.

More open Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.

Predictable and transparent Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition choice and lower prices.

More competitive Discouraging unfair practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries Giving them more time to adjust, greater flexibility and special privileges; over threequarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions.

Protect the environment The WTOs agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

HISTORY

The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not approved by the U.S. and a few other signatories and never went into effect. In the absence of an international organization for trade, the GATT would over the years "transform itself" into a de facto international organization.

GATT rounds of negotiations

The GATT was the only multilateral instrument governing international trade from 1946 until the WTO was established on January 1, 1995. Despite attempts in the mid 1950s and 1960s to create some form of institutional mechanism for international trade, the GATT continued to operate for almost half a century as a semi-institutionalized multilateral treaty regime on a provisional basis.

From Geneva to Tokyo

Seven rounds of negotiations occurred under GATT. The first real GATT trade rounds concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought about a GATT anti-dumping Agreement and a section on development. The Tokyo Round during the seventies was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely new ground. Because these plurilateral agreements were not accepted by the full GATT

membership, they were often informally called "codes". Several of these codes were amended in the Uruguay Round, and turned into multilateral commitments accepted by all WTO members. Only four remained plurilateral (those on government procurement, bovine meat, civil aircraft and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.

Uruguay Round

Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing world economy. In response to the problems identified in the 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 the Uruguay Round was launched in September 1986, in Punta del Este, Uruguay. It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed April 15, 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement. The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994). GATT 1994 is not however the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions and understandings was adopted. The agreements fall into a structure with six main parts: The Agreement Establishing the WTO Goods and investment the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures (TRIMS) Services the General Agreement on Trade in Services

 Intellectual property the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Dispute settlement (DSU) Reviews of governments' trade policies (TPRM). In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986-1994 talks.

Doha Round (The Doha Agenda)

The WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries. The negotiations have been highly contentious. Disagreements still continue over several key areas including agriculture subsidies, which emerged as critical in July 2006. According to a European Union statement, "The 2008 Ministerial meeting broke down over a disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports." The position of the European Commission is that "The successful conclusion of the Doha negotiations would confirm the central role of multilateral liberalisation and rule-making. It would confirm the WTO as a powerful shield against protectionist backsliding." An impasse remains and As of June 2012, agreement has not been reached, despite intense negotiations at several ministerial conferences and at other sessions.

GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)

The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement regulating international trade. According to its preamble, its purpose is the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. The original GATT text (GATT 1947) is still in effect under the WTO framework, subject to the modifications of GATT 1994.

GATT and the World Trade Organization In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO). The 75 existing GATT members and the European Communities became the founding members of the WTO on 1 January 1995. The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members have joined and 29 are currently negotiating membership. There are a total of 155 member countries in the WTO, with Montenegro and Samoa being new members as of 2012 Of the original GATT members, Syria and the SFR Yugoslavia has not rejoined the WTO. Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in two), is not recognised as a direct SFRY successor state; therefore, its application is considered a new (non-GATT) one. The General Council of WTO, on 4 May 2010, agreed to establish a working party to examine the request of Syria for WTO membership. The contracting parties who founded the WTO ended official agreement of the "GATT 1947" terms on 31 December 1995. Serbia and Montenegro are in the decision stage of the negotiations and are expected to become the newest members of the WTO in 2012 or in near future. Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to include trade within the service sector and intellectual property rights. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.

OBJECTIVES AND OPERATION

The WTO has six key objectives: (1) to set and enforce rules for international trade, (2) to provide a forum for negotiating and monitoring further trade liberalization, (3) to resolve trade disputes, (4) to increase the transparency of decision-making processes, (5) to cooperate with other major international economic institutions involved in global economic management, and (6) to help developing countries benefit fully from the global trading system. Although shared by the GATT, in practice these goals have been pursued more comprehensively by the WTO. For example, whereas the GATT focused almost exclusively on goodsthough much of agriculture and textiles were excludedthe WTO encompasses all goods, services, and intellectual property, as well as some investment policies. In addition, the permanent WTO Secretariat, which replaced the interim GATT Secretariat, has strengthened and formalized mechanisms for reviewing trade policies and settling disputes. Because many more products are covered under the WTO than under the GATT and because the number of member countries and the extent of their participation has grown steadilythe combined share of international trade of WTO members now exceeds 90 percent of the global totalopen access to markets has increased substantially. The rules embodied in both the GATT and the WTO serves at least three purposes. First, they attempt to protect the interests of small and weak countries against discriminatory trade practices of large and powerful countries. The WTOs most-favoured-nation and nationaltreatment articles stipulate that each WTO member must grant equal market access to all other members and that both domestic and foreign suppliers must be treated equally. Second, the rules require members to limit trade only through tariffs and to provide market access not less favourable than that specified in their schedules (i.e., the commitments that they agreed to when they were granted WTO membership or subsequently). Third, the rules are designed to help governments resist lobbying efforts by domestic interest groups seeking special favours. Although some exceptions to the rules have been made, their presence and

replication in the core WTO agreements were intended to ensure that the worst excesses would be avoided.

FUNCTIONS

Among the various functions of the WTO, these are regarded by analysts as the most important: It oversees the implementation, administration and operation of the covered

agreements. It provides a forum for negotiations and for settling disputes.

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 global economic policy-making. Another priority of the WTO is the assistance of developing, leastdeveloped and low-income countries in transition to adjust to WTO rules and disciplines through technical 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 reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

PRINCIPLES OF THE TRADING SYSTEM The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

Non-discrimination: It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods).

Reciprocity: It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise.

Binding and enforceable commitments: The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.

Transparency: The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports. Safety valves: In specific circumstances, governments are able to restrict trade. The WTOs agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. There are three types of provision in this direction: articles allowing for the use of trade measures to attain non-economic objectives; articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies. provisions permitting intervention in trade for economic reasons. Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions

ORGANIZATIONAL STRUCTURE The General Council has the following subsidiary bodies which oversee committees in different areas:

1. Council for Trade in Goods: There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only 10 members. The body also has several groups relating to textiles.

2. Council for Trade-Related Aspects of Intellectual Property Rights: Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field.

3. Council for Trade in Services The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required.

4. Trade Negotiations Committee The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's director-general. As of June 2012 the committee was tasked with the Doha Development Round. The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The General council has several different committees, working groups, and working parties. There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed

Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.

INDIAS ROLE IN FORMING WTO

When the Uruguay round of GATT talks was in progress during early 1990s, Indian economy was ailing and was totally out of track. Under this compelling situation, India adopted new economic reforms (NERS) in 1991 based on Rao-Manmohan Model as a crisis driven strategy. Macro Economic Stabilization (MES) which covered reforms in monetary policy, fiscal policy and external sector was brought to provide immediate relief to ailing economy. But, structural reforms, also called SAP(Structural Adjustment Programmes), was meant for long term reform process which covered components of industrial policy reform, PSU reform, financial sector reform and trade & capital flow reforms. Then crisis-driven reforms has now reached to consensus driven under second generation of our reform policies. These changes in Indian economy based on LPG gave rise to a new market economy that brought growth and development in India. In this context, the emergence of WTO as multilateral trade body to make trade friendly environment at the global level and Indian attachment to this body could be understood.

India one of the founder member of WTO, had its own expectations as well as reservations about the new economic order. While it unleashed great opportunities for agriculture and textiles sectors by improving their access to developed countries (as provided by AoA Agreement on Agriculture and phasing out of MFA- Multi Fiber Agreement), it has some grey areas in the form of provisions for patent regime and services sector. As the events gradually unfolded, India, like other developing countries recognized that the rules of the game were not favorable to them and they must play on active role within the permissible limits to minimize the damage. In the last decade, our economic agenda and the policies to be pursued have been largely shaped by the WTO commitments.

India adopted the process of globalization and WTO rulings as a facet of structural reforms. It brought devaluation in currency in 1991 and also adopted convertibility system in Indian rupees in different stages. Trade and current account have been made fully convertibility regime, though cautious and as a long term objective. Various steps have been taken towards import liberalization in India, for example, de-licensing, de-canalization &expansion of OGL

(open general license),removing quantitative restriction, lowering peak custom rate, etc,. India has also adopted a very liberal policy towards foreign capital to attract direct foreign investment and portfolio investment. Insurance and print media have been opened for private competition. India has made following changes in the economy as mandated by WTO. Quantitative restrictions have been completely phased out in 2000-01 and only the

tariff structure remains which itself has been lowered considerably, with 67% of the tariff lines being bound. Patent law has been reformed with amendment of Patent act (2006). It provides for

product patent in pharmaceutical and farm products. Under the TRIMS agreement, restrictions on entry of foreign investment and

conditions upon various aspects have been removed and relaxed. Except a few sectors, FDI is being allowed upto 100% though automatic route and Indian companies are also free to invest abroad. Under the GATS (General Agreement on Trade in Services), India has made

commitment in 33 activities where Foreign Service providers are allowed to enter keeping in view national interests. Indias legislation on Custom Valuation rules, 1998 has been amended to bring it in

conformity with the provisions of WTO agreements on implementation of article VII of GATT 1994 and the Customs Valuation Agreement. A survey of last 15 years since adoption of new economic reforms and especially after joining WTO, it is now clear that we have done well and still a lot of scope remained for further development. The process of globalization and the provision of WTO have had, no doubt, some important positive implications. Under this process, a platform has been created for different types of multilateral agreements. Multilateral regulation and discipline have been established & imposed and up to certain extent, trade friendly environment has been created. Disputes are being solved & managed and trading activities are getting protection. India is also getting the benefits of this emerging trade friendly environment. Indian exports, especially exports of agricultural good, have been increased. The Doha development Agenda, though passing through hard times; is built on the long term objective of the AOA to establish a fair and a market oriented trading system. India could be highly advantaged with DDA. During the ongoing negotiations, India and other developing countries

have sought a special safeguard mechanism (SSM) for addressing situations of import surges or swings in international prices of agricultural products. Other measures concerning developing countries in the WTO agreements include: Extra time for developing countries to fulfill their commitments (in many of the WTO Provisions designed to increase developing countries trading opportunities through

agreements)

greater market access (e.g. in textiles, services, technical barriers to trade) Provisions requiring WTO members to safeguard the interests of developing countries

when adopting some domestic or international measures (e.g. in anti-dumping, safeguards, technical barriers to trade) Provisions for various means of helping developing countries (e.g. to deal with

commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors). The WTO agreements, which were the outcome of the 198694 Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. Among the gains are export opportunities. They include: Fundamental reforms in agricultural trade Phasing out quotas on developing countries exports of textiles and clothing Reductions in customs duties on industrial products Expanding the number of products whose customs duty rates are bound under the Phasing out bilateral agreements to restrict traded quantities of certain goodsthese

WTO, making the rates difficult to raise grey area measures (the so-called voluntary export restraints) are not really recognized under GATT-WTO.

CONCLUSION
The world has changed a good deal over those six decades and so too has the multilateral trading system. Globalization has brought economic interaction among nations closer than ever before, thanks in no small part to revolutions in information and transport technology and growing openness in government policy. The trend towards increased inter-dependency has rendered international economic co-operation more complex and multi-faceted. Cooperation among nations has become harder to manage and more influential in shaping the circumstances in which people live. The subject matter covered by the system has expanded significantly and many more players are involved in shaping the system. The 23 original signatories of the GATT have now become the 151 Members of the WTO. Governments embrace varying objectives at different times, reflecting, among other things, the relative standing of their economies in the international order, and the priorities imposed by their level of economic development. By demonstrating the sheer heterogeneity of interests at stake, the report highlights the fragile and incomplete nature of cooperative endeavors in a changing and uncertain world in other words, the continuing challenge of shaping and maintaining mutually advantageous co-operative arrangements. Effective cooperation among diverse economies with differing priorities requires clarity of thought and foresight, as well as a willingness to seek accommodation. A failure to secure co-operative outcomes may well disadvantage all parties to a potential agreement in one way or another, but deals can nevertheless prove elusive. An additional requirement for sustainable and stable co-operation is that governments find ways of addressing adjustment costs and the redistributional impact of change in other words, of managing the challenges of globalization. Adjustment and income distribution have not been explored here, and they pose challenges that go well beyond the impact of trade policy changes in an economy. An historical review of trade relations prior to the establishment of the GATT/WTO strongly points to the importance of building and sustaining institutional arrangements to underwrite international trade relations. International institutions can become moribund, with shrinking relevance, if governments do not take care of them, and institutional decline will likely be harder to reverse the further it goes. At the same time, it has been repeatedly demonstrated that if institutions do not adapt to change, they will wither, becoming increasingly regarded as

vestiges of an older world driven by different interests than those that shape the present.Even when governments show willing to adapt and refashion their co-operative arrangements in recognition of changing circumstances, there will always be a sense in which trade agreements remain incomplete. Agreements cannot foresee every eventuality. So while institutions and contractual provisions can mitigate the uncertainties connected with contractual incompleteness, they can hardly eliminate them. This brings with it two implications. One is that disputes are a natural outflow of contractual incompleteness. The other is that dealing with incompleteness requires a delicate balance between flexibility and adaptation on the one hand, and the preservation of predictability and stability on the other. An unvarnished look at the less than fully resolved issues of the past, the outstanding challenges, and the successes as attempted in this report will, we hope, stimulate thought on how best to manage the future.