WORLD TRADE ORGANIZATION

(WTO)
& GENERAL AGREEMENT
BETWEEN TRADE AND TARIFF
(GATT)

World Trade Organization

The World Trade Organization (WTO) is the principal
international organization governing world trade.
It was established in 1995 as a successor institution to the
General Agreement on Tariffs and Trade (GATT) which was a
post-World War II institution.
WTO has 153 member countries, representing 95% of world
trade
Head quarters Geneva , Switzerland
Created in Uruguay round negotiation (1986-1994)
Goal is to improve the welfare of the peoples of the member
countries.

Aim of WTO
It aims to provide fair and stable conditions for the conduct of
international trade with a view to encouraging trade and
investment that will raise living standards worldwide.

WTO is a forum where countries continuously negotiate

exchanges of trade concessions to further lower the trade
barriers all over the world.

Decisions
Decisions within the WTO are made by member countries, not
by staff and by consensus, not by formal vote.
High-level policy decisions are made by the Ministerial
Conference, which is a body of political representatives (trade
ministers) which meet at least every two years.
Operational decisions are made by the General Council
(representative from each member country) which meets
monthly and chair rotates annually.

General agreement between trade and

tariff (GATT)
GATT came into force in1948 with 23 founding members.
It was intended to promote nondiscrimination in trade among
countries, with the view that open trade was crucial for
economic stability and peace.
Different trade rounds were held so as to liberalize the trade.

GATT & WTO Trade Rounds

1st Round -

Geneva in 1947
23 Countries participated
Decided to cut 45,000 trade tariffs

2nd Round -

France in 1949
13 Countries participated
Proposed further reductions in 5,000 tariffs

3rd Round -

Britain in 1950-51
38 Countries participated
Proposed further reductions in 8,700 tariffs

4th Round -

Geneva in 1955-56
26 Countries participated
Proposed to Cut Custom Tariffs with a total value of US$2.5 bn

5th Round -

(Dillion Round) in Geneva in 1960-62

26 Countries participated
Proposed to cut 4,400 tariffs covering US$.9 bn worth of trade

6th Round -

(Kennedy Round) in Geneva in 1964-67

62 Countries participated
Decided on substantial tariffs reductions on all industrial
products covering US$40bn of trade.

 7th Round - (Tokyo Round) in Geneva in 1973-79

102 countries participated
-Customs cuts averaging 20% to 30% covering US$300
bn
- Improved framework for subsidies, customs rates and
technical obstacles to trade.
8th Round - (Uruguay Round) started in Uruguay ended in Morroco 1986-94
123 countries participated
The round led to the creation of WTO, and extended the
range of trade negotiations, leading to major reductions in tariffs (about 40%) and
agricultural subsidies, an agreement to allow full access for textiles and clothing
from developing countries, and an extension of intellectual property rights.
9th Round - (Doha Round) started - in Doha in 2001 ( at forth Ministerial
Conference)

- in Cancun in 2003 (at fifth

Ministerial Conference)

- in Hong Kong in 2005 (at sixth

Ministerial Conference)

- in Geneva in July 2006 (at seventh

Ministerial Conference
Not yet concluded.
141 countries participated,
Subject covered are tariffs, non-tariffs measures,
agriculture,environment, competition, investment, transparency, patents, etc.

Why GATT replaced by WTO?

GATT was just provisional agreement;
GATT dispute settlement system is slow;
GATT rules applied to trade only in merchandise
goods.

Structure of WTO
The WTO is run by its member governments. All
major decisions are made by the membership as a
whole, either by ministers, who meet al least once
every 2 years. Decisions are normally taken by
consensus.
The WTO is different from some other international
organizations such as WB and IMF. In the WTO,
powet is not delegated to a board of directors or the
organizations head.

Objectives:
Trade without discrimination
To set and enforce rules for international trade
To provide forum for negotiating and monitoring
international trade
To resolve trade disputes
To increase the transparency of decision-making
processes
To cooperate with other major international economic
institutions involved in global economic management
To help developing countries benefit fully from the
global trading system

Functions of WTO:
WTO shall facilitate the implementation, administration and operation

of the plurilateral trade agreement.

WTO shall provide a forum for the negotiation among its members
concerning their multilateral trade relations
WTO shall administer the understanding on rules and procedures
governing the settlement of disputes
WTO shall administer the trade policy review mechanism
WTO shall cooperate as appropriate with IMF AND IBRD and with the
affiliated agencies
It oversees the implementations of issues related to tariff cut an non
tariff measures agreed to in the trade negotiations

Principles of Trade system

First Principle: Non-discrimination
Second principle: Free Trade
Third principle: Fair trade

WTO Agreements:
Agreement on Agriculture
Agreement on Textiles & Clothing (ATC)
Agreement on Subsidies and Countervailing Measures
Agreement on Anti-Dumping
Agreement on Safeguards

Agreement on Trade Related Investment Measures (TRIMs)

Agreement on Custom Valuation
Agreement on Technical Barriers to Trade (TBT) and on Sanitary and Phytosanitary
Measures (SPS)

Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)

General Agreement on Trade in Services (GATS)
Understanding on Dispute Settlement (DSU)
Special & Differential Treatment ( S& D )

Advantages of WTO
Free trade cuts the costs of living
Trade raises incomes
It gives consumers more choice and a broader
range of qualities to choose from
Trade stimulates economic growth and that can
be good news for employment
The system allows disputes to be handled
constructively
A system based on rules rather than power
makes life easier for all

Disadvantages of WTO
The WTO dictates policy
The WTO is for free trade at any coast
Small countries are powerless in the
organization
Weaker countries are orced to join the WTO