What is the WTO?

The World Trade Organization (WTO) is the only global international organization dealing with
the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by
the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help
producers of goods and services, exporters, and importers conduct their business. Its main
function is to ensure that trade flows as smoothly, predictably and freely as possible.
The World Trade Organization (WTO) is an organization that intends to supervise
and liberalizeinternational trade. The organization officially commenced on January 1, 1995
under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT),
which commenced in 1948. The organization deals with regulation of trade between participating
countries; it provides a framework for negotiating and formalizing trade agreements, and a
dispute resolution process aimed at enforcing participants' adherence to WTO agreements which
are signed by representatives of member governments and ratified by their parliaments.[4][5] Most
of the issues that the WTO focuses on derive from previous trade negotiations, especially from
the Uruguay Round(1986–1994).

The organization is currently endeavoring to persist with a trade negotiation called the Doha
Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable
participation of poorer countries which represent a majority of the world's population. However,
the negotiation has been dogged by "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. At this time, the future of
the Doha Round is uncertain."[6]

The WTO has 153 members,[7] representing more than 97% of total world trade[8] and 30
observers, most seeking membership. The WTO is governed by a ministerial conference, meeting
every two years; a general council, which implements the conference's policy decisions and is
responsible for day-to-day administration; and a director-general, who is appointed by the
ministerial conference. The WTO's headquarters is at the Centre William
Rappard, Geneva, Switzerland. The International trade is based on multilateral trading system. It
is a system involving trade amongst various countries. it is therefore, necessary that the rules and
regulation of such system are properly define. In the year 1947, an attempt was made by 23
countries in the world to define the basic norms for conduct of international trade. The trade
negotiation amongst these 23 countries in multilateral treaty called general agreement On Traffic
and Trade (GATT) in the year 1948. The GATT was established to secure the conduct of
international trade based on the principles of non-discrimination, transparency and liberalization.
Fact file

Location: Geneva, Switzerland

Established:1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 153 countries on 23 July 2008
Budget: 194 million Swiss francs for 2010
Secretariat staff: 637
Head: Pascal Lamy (Director-General)

The result is assurance. Consumers and producers know that they can enjoy secure supplies and
greater choice of the finished products, components, raw materials and services that they use.
Producers and exporters know that foreign markets will remain open to them.

The result is also a more prosperous, peaceful and accountable economic world. Virtually all
decisions in the WTO are taken by consensus among all member countries and they are ratified
by members' parliaments. Trade friction is channelled into the WTO's dispute settlement process
where the focus is on interpreting agreements and commitments, and how to ensure that countries'
trade policies conform with them. That way, the risk of disputes spilling over into political or
military conflict is reduced.

By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples
and nations.

At the heart of the system — known as the multilateral trading system — are the WTO’s
agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified
in their parliaments. These agreements are the legal ground-rules for international commerce.
Essentially, they are contracts, guaranteeing member countries important trade rights. They also
bind governments to keep their trade policies within agreed limits to everybody’s benefit.

The agreements were negotiated and signed by governments. But their purpose is to help
producers of goods and services, exporters, and importers conduct their business.

The goal is to improve the welfare of the peoples of the member countries

The World Trade Organization is the most powerful legislative and judicial body in the world. By
promoting the "free trade" agenda of multinational corporations above the interests of local
communities, working families, and the environment, the WTO has systematically undermined
democracy around the world.

In the ten years of its existence, WTO panels composed of corporate attorneys have ruled that: the
US law protecting sea turtles was a barrier to "free trade"; that US clean air standards and laws
protecting dolphins are too; that the European Union law banning hormone-treated beef is illegal.
According to the WTO, our democratically elected public officials no longer have the rights to
protect the environment and public health.Unlike United Nations treaties, the International Labor
Organization conventions, or multilateral environmental agreements, WTO rules can be enforced
through sanctions. This gives the WTO more power than any other international body. The
WTO's authority even eclipses national governments.In November 1999, 50,000 people went to
Seattle to challenge this corporate agenda and to demand a more democratic, socially just and
environmentally sustainable global economy. The protests succeeded in shutting down the trade
talks and derailing the expansion of the WTO.

Objective of World Trade Organization (WTO)

* To ensure the conduct the international trade on non-discrimination basis.
* To raise standard of living and income, ensuring full employment
* To expend production and trade
* Protecting environment
* Ensuring better share for developing countries.

Function of World Trade Organization (WTO)

• Administering World Trade Organization (WTO) trade agreement
* Forum the trade negotiation
* Handling trade disputes
* Monitoring national trade policy
* Technical assistance and training for developing countries
* Co-operation with other international organization (like help from World Bank and
IMF).

Other 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.[28][29]

It provides a forum for negotiations and for settling disputes.[30][31]

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.[29][31] Another priority of the WTO is the assistance of developing, least-developed
and low-income countries in transition to adjust to WTO rules and disciplines through technical
cooperation and training.[32]

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.[33] Finally, the WTO cooperates closely with the two other components of the
Bretton Woods system, the IMF and the World Bank.[30]
Legal framework of World Trade Organization (WTO)
* Protection through import traffic
* Reduction in traffic and binding against further increase
* Conduct of trade according to M.F.N. clauses
* Commitment to national treatment rule.

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.[34] Five principles are of
particular importance in understanding both the pre-1994 GATT and the WTO:

1. 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.[34] "Grant someone a special favour and you have to do the
same for all other WTO members."[35] 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).[34]
2. 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.[36]
3. 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.[35][36]
4. 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).[37]The WTO system tries also to
improve predictability and stability, discouraging the use ofquotas and other measures
used to set limits on quantities of imports.[35]
5. Safety valves. In specific circumstances, governments are able to restrict trade.
There are three types of provisions in this direction: articles allowing for the use of trade
measures to attain noneconomic objectives; articles aimed at ensuring "fair competition";
and provisions permitting intervention in trade for economic reasons.[37] Exceptions to
the MFN principle also allow for preferential treatment of developing countries,
regional free trade areas and customs unions

Dispute settlement

In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994.[44] Dispute
settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as a
"unique contribution to the stability of the global economy".[45] WTO members have agreed that,
if they believe fellow-members are violating trade rules, they will use the multilateral system of
settling disputes instead of taking action unilaterally.[46]

The operation of the WTO dispute settlement process involves the DSB panels, the Appellate
Body, the WTO Secretariat, arbitrators, independent experts and several specialized institutions.
[47]
Bodies involved in the dispute settlement process, World Trade Organization. Several
commentators have pointed out the practical difficulty in establishing legal elements required to
bring trade remedy claim under WTO law.[48]
Doha Round
Main article: Doha Round

The Doha Development Round started in 2001 and continues today.

The WTO launched the current round of negotiations, the Doha Development Agenda (DDA) or
Doha Round, at the fourth ministerial conference in Doha, Qatarin November 2001. The Doha
round 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. [24] The initial agenda comprised
both further trade liberalization and new rule-making, underpinned by commitments to strengthen
substantial assistance to developing countries.[25]

The negotiations have been highly contentious and agreement has not been reached, despite the
intense negotiations at several ministerial conferences and at other sessions. Disagreements still
continue over several key areas including agriculture subsidies.[26]

The most recent round of negotiations, 23–29 July 2008, broke down after failing to reach a
compromise on agricultural import rules.[3] After the breakdown, major negotiations were not
expected to resume until 2009.[4] Nevertheless, intense negotiations, mostly between the USA,
China, and India, were held in the end of 2008 in order to agree on negotiation modalities.
However, these negotiations did not result in any progress.
Four Basic Rules

1. Protection to Domestic Industry Through Tariffs:

a. The General Agreement on Tariffs and Trade (GATT) covers international trade in goods. The
workings of the GATT agreement are the responsibility of the Council for Trade in Goods
(Goods Council) which is made up of representatives from all WTO member countries. GATT
requires the member countries to protect their domestic industry/production through tariffs only.

b. It prohibits the use of quantitative restrictions, except in a limited number of situations.

2. Binding of Tariffs: The member countries are urged to

a. Eliminate protection to domestic industry/ production by reducing tariffs and removing other
barriers to trade in multilateral trade negotiations.

b. The reduced tariffs are bound against further increases by listing them in each country's
national schedule.

c. The schedules are an integrated part of the GATT legal system.

3. Most Favoured-Nation(MFN) Treatment:

a. The rule lays down the principles of non-discrimination amongst member countries.

b. Tariff and other regulations should be applied to imported or exported goods without
discrimination among countries.
c. Exceptions to the rules i.e., regional arrangements subjected to preferential or duty free trade
agreements, Generalized System of Preferences (GSP) where developed
countries apply preferential or duty free rates to imports from developing countries.

4. 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.