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WORLD TRADE ORGANIZATION

1. World Trade Organization has got a lengthy history. It goes back to 1944 when Brettenwoods
conference created IBRD, World Bank, IMF and International Trade Organization. USA
agreed for the creation of the first three but rejected ITO. But it agreed to retain General
Agreement on Tariff and Trade. WTO has been created under the provisions of GATT.
2. When the western countries realized that their trade was facing protectionism in the 1980’s
from developing countries, they wanted to use UNO to make the developing countries to open
their markets. The developed countries hit upon the idea of creating an organization under
UNO to compel all countries to open their markets for multilateral trade. They revived the
long forgotten GATT to create a new organization ,WTO. For achieving this they had to
engage themselves in seven rounds of negotiations starting in 1984,and to decide on the
structure and powers of this new organization. In the eighth round which was held in 1995,
(Uruguay Round) they succeeded in creating WTO.WTO came into existence in 1995. There
are 149 members of WTO.
3. WTO was created as a multilateral trade promotion organization. It lays down the rules for
global trading system. For this purpose, GATT principles and agreements were adopted.
WTO is expected to promote FREER trade among member countries by discouraging trade
barriers, to prevent trade barriers and trade discrimination among member countries and to
encourage competition in trade among member countries.
4. WTO is structured with a Ministerial Conference to be held once in every two years, General
Council, Dispute Settlement Body, Trade Policy Review Body, Council for Trade in Goods,
Council for Trade in Related Aspects of Intellectual Property Right, and Council for Trade in
Services and four other subsidiary bodies. WTO is headed by a Director –General supported
by a group of Experts drawn from Member countries to provide secretarial service to all the
above bodies Its head-quarters are located in Geneva.
5. All trade negotiations are made through negotiations among member countries and decisions
are made on consensus basis not on majority voting basis.
RULES AND REGULATIONS OF WTO
1. All trade arrangements under WTO are negotiated among member countries according the
rules laid down in the original agreement.
2. Agreement on Agriculture has created box type specifications for reducing ‘domestic support’
(subsidies) to agriculture. ‘Green Box’ contains items mostly related to environment protection
for which subsidies may continue. ‘Amber Box’ contains items on which ‘domestic support’ has
to be reduced but need not be eliminated. ‘ Blue Box’ includes items on which ‘domestic
support’ may be increased.
3. Under ‘Marker Access’, tariffs on traded goods by developed countries should be reduce by
36%, with a minimum reduction of 15% over five years and developing countries should reduce
by 24%, with a minimum reduction of 10% over nine years. Least developed countries were
exempted from tariff reduction.
4. Under Export subsidies, developed countries were expected to reduce subsidies by 35% (value)
or 21% (volume) by 2000.
5. General Agreement on Trade in services was agreed to be extended to movement of SERVISES
as well as PERSONS.
6. Agreement on Trade Related Aspects of Intellectual Property Rights was extended to cover
copyrights, patents, trade marks, and geographical indications through legislative enactments.
7. Agreement on the Application of Sanitary and Phytosanitary Measures were agreed to be
extended through mutual negotiations.
8. No doubt, WTO regime has strengthened the negotiating power of developing countries .Many
decisions of the Trade Related Dispute Settlement Body have gone in favour of developing
countries and against developed countries particularly against USA.
9. Though WTO is a rule based multilateral regulatory body for trade in goods and services, the
evasive attitude of developed countries to implement the agreed terms of multilateral trade
relating to reduction of subsidies to agriculture and exports has made WTO another helpless
UNO organization in the face of dominant developed countries.
10. It is unfortunate that some NGOs and Leftists oppose WTO on the ground that it promotes
globalization which is mistakenly believed to harm the developing countries. Both China and
India which are developing countries have benefited under WTO and by the globalization
process. Globalization instead of enabled the MNCs of developed countries to acquire
industries of the developing countries, it has enabled the industrial houses of China and India to
acquire the industries of the developed countries which has created commotion in those
countries.