World Trade Organization
The Uruguay round of General Agreements on Tariffs and Trade (GATT) (1968-93) gave birth to World Trade Organization (WTO). World Trade Organization was formed as a replacement for General Agreements on Tariffs and Trade in 1995 with the purpose of supervising and liberalizing international trade.
Unlike GATT, World Trade Organization is a permanent organisation which has been established on the basis of an international treaty approved by participating countries. WTO has a total of 157 member countries accounting for over 97% of the world trade.
Objectives of World Trade Organization
- To accept the concept of sustainable development
- To protect the environment
- To ensure optimum utilization of world resources
- To enlarge production and trade of goods
- To ensure full employment and increase in effective demand
- To improve the standard of living of people of member countries
Functions of World Trade Organization
- To deal with regulation of trade between participating countries
- To provide a framework for negotiations and formalization of trade agreements
- It is responsible for enforcing trade laws and agreements
- It monitors trade services and trade related aspects at intellectual property rights
- To assist international organisations such as IMF and IBRD
- To provide a framework for dispute settlement
Structure of World Trade Organization
World Trade Organization is supervised by a highest authority called Ministerial Conference which consist of representatives of all WTO members. It meets at least once in two years to take decisions on all matters of multilateral trade.
WTO consists of a general body called general council which directly reports to the ministerial conference. It delegates responsibilities to 3 bodies –
(a) Council for Trade in Goods
(b) Council for Trade in Services
(c) Council for Trade-related aspects of intellectual property rights
Benefits of World Trade Organization
- The system helps promote peace
- Disputes are handles constructively
- Free trade cuts the cost of living
- Provides more choice of products and quality
- Trade raises incomes and stimulates economic growth
- Governments are shielded from lobbying
- The system encourages good governance
- Trade liberalization has helped in economic growth
- It provides a platform for multilateral discussions
- It has helped in reducing various tariff and non-tariff barriers
- It reviews economic policies and formulate new ones through trade reviews
Drawbacks of World Trade Organization
- Industrialization and decision making are dominated by developed countries.
- Developing nations do not have financial resources to participate in WTO discussions on negotiations
- Very less attention is given to the development of under developed countries
- Rules and regulations cannot be strictly enforced on developed countries who are members of WTO
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