WTO

The WTO (World Trade Organization) is a global intergovernmental organization whose mission is to regulate and facilitate international trade. Through the United Nations System, governments establish, revise and enforce the rules governing international trade when they cooperate effectively. The WTO was established in 1995 by the Marrakesh Agreement of 1994, which replaced the GATT of 1948. With 164 member states comprising more than 98% of global commerce and GDP, the World commerce Organization (WTO) is the largest international economic organization in the world.

The WTO facilitates trade in goods and services and intellectual property between WTO members by providing a platform for the negotiation of trade agreements, which typically seek to reduce or eliminate tariff rates, quotas, and other barriers; these agreements are negotiated by member governments’ representatives and ratified by their governments’ legislatures. The WTO also oversees independent dispute resolution in order to ensure that participants follow trade agreements and resolve trade-related disputes. The organization forbids trading partner discrimination but makes exceptions for environmental protection, national security, and other important goals.

The WTO is headquartered in Geneva, Switzerland. The highest decision-making organ is the Ministerial Conference which is made up of all Member States and usually meets twice a year. Consensus is a key factor in all decisions. The General Council, which is made up of representatives from all members, handles day-to-day operations. Administrative, professional, and technical services are provided by a Secretariat of over 600 people led by the Director-General and four deputies. The WTO’s annual budget is approximately 220 million USD, with members contributing based on their share of international trade.

According to studies, the WTO has increased trade and reduced trade barriers. It has also had an impact on trade agreements in general; according to a 2017 study, the vast majority of preferential trade agreements (PTAs) up to that point explicitly referenced the WTO, with significant portions of text copied from WTO agreements. Goal 10 of the UN Sustainable Development Goals also mentioned WTO agreements as tools for reducing inequality. However, critics argue that the benefits of WTO-facilitated free trade are not distributed equally, citing the outcomes of negotiations and data that show a growing disparity between rich and poor countries.

Functions

The WTO performs the following five distinct functions:

• The WTO shall facilitate the implementation, administration, and operation of Multilateral Trade Agreements and further their objectives, as well as provide the framework for the implementation, administration, and operation of Plurilateral Trade Agreements.
• The WTO shall serve as a forum for its members to negotiate multilateral trade relations in matters covered by the Agreements.
• The ‘Understanding on Rules and Procedures Governing Dispute Settlement’ will be administered by the WTO.
• The WTO shall administer the ‘Trade Review Mechanism’.
• To achieve greater coherence in global economic policymaking, the WTO will work with the IMF, IBRD, and its affiliated agencies as needed.

Benefits of WTO

1. GATT/WTO has significantly reduced the tariff and non-tariff barriers to trade. Developing nations have also benefited greatly from it.
2. The liberalization of investments has been fostering economic growth in a number of countries.
3. The liberalization of trade and investment has been resulting in an increase in competition, efficiency of resource utilization, improvement in quality and productivity and fall in prices, and acceleration of economic development.
4. The World Trade Organization (WTO) acts as a platform for international economic dialogue between countries.
5. It has a system in place to settle international trade disputes.

Drawbacks/Criticisms

As previously stated, the WTO has faced a number of criticisms. Important drawbacks/criticisms include the following:

• The developed countries dominate WTO negotiations and decision-making.
• Many developing countries lack the financial and knowledge resources to participate effectively in WTO discussions and negotiations.
• Because developing countries are dependent on developed countries, developed countries fall back on arms-trotting tactics.
• Many policy liberalizations are implemented without taking into account the developing countries’ susceptibility and the potential negative effects that could result for them.ng substantially from it.
• The WTO has failed to impose its disciplines on developed countries. 
• Developing countries have, on the whole, been treated unfairly by the WTO.

WTO and Developing Countries

As with previous Rounds, developing countries are generally dissatisfied with the outcome of the Uruguay Round.

Do Developing Countries Suffer in the WTO System?: True, the Uruguay Round primarily benefits developed countries. That does not mean that developing countries like India are losing — their gain is limited as compared to that of the developed countries. Certain indiscriminate liberalizations do indeed harm the interests of developing countries, particularly the most vulnerable, such as LDCs, and further liberalization by developed countries is required for developing countries to benefit from globalization.

Special Consideration: The Agreement, however, lays down that member countries imposing trade restrictions for balance of payment purposes should do so in a way that causes minimum disruption to international trade, and quantitative restrictions should be avoided as far as possible. The Hong Kong Ministerial Meet held in December 2005 also has recognized the need for special consideration for developing countries. The WTO should take developing countries’ problems more seriously.

Agricultural Trade Liberalisation: It would be the developed countries that would suffer most by the liberalization of the agricultural sector. But to argue that the developed countries should completely liberalize agriculture without any reciprocity on the part of the developing countries is clearly illogical. As a matter of fact, the UR proposals in respect of agriculture, as in several other cases, give special consideration to developing countries. Developed countries will, however, be hit hard. The WTO has failed to impose its disciplines on developed countries. Developing countries have, on the whole, been treated unfairly by the WTO.

While the liberalization of agricultural trade and the increase in agricultural prices due to cut in producer subsidies in developed countries would benefit agricultural exporters, the increase in food prices due to cuts in subsidies may adversely affect the food importers. More than 100 of the developing nations are reported to be net food importers. Nonetheless, it is reasonable to anticipate that rising food costs will boost the competitiveness of food production in these nations, resulting in higher output. It may be noted here that it has been alleged that the subsidization of production and export of farm production in developed countries would have the effect of discouraging their production in developing countries where farmers have not been able to compete with the imported stuff bearing artificially low price because of the subsidies. It is estimated that since subsidized agricultural exports cannot be dumped on the world market, international agricultural prices could go up by as much as 10 per cent.

Textiles Trade Liberalisation: International trade in textiles was estimated to be worth $240 billion a year. Estimates are that after the phasing out of MFA, world exports of textiles may go up by $25 billion a year. With a 2.2 per cent share in the world textile trade, India’s share in the additional exports could be $0.55 billion. However, the true benefit will depend on the nation’s capacity to contend with leaders in the textile sector, such as China, Hong Kong, Taiwan, South Korea, etc.

Services Trade Liberalisation: The plan to liberalize trade in services caused great concern among developing countries. Fortunately, the service sector remained largely unaffected by the differences in opinion between the US and the EC on this matter.