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WORLD TRADE

ORGANIZATION (WTO)

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The General Agreement on Trade and Tariffs

(GATT), the predecessor of WTO, was born in1948 as a result of the international desire toliberalize trade.

The GATT was transformed into a World TradeOrganization (WTO) with effect from January1995.

India is one of the founder member of the WTO.

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WTOWTO reiterates the objectives of GATT which are as

follows: Raising standard of living and income, promoting full

employment, expanding production and trade, andoptimum utilisation of world resources.

Introduce sustainable development a concept

which envisages the development and environmentcan go together.

Taking positive steps to ensure that developingcountries, especially the least developed ones,secure a better share of growth in world trade.

Promote trade flows by encouraging nations to adoptnon-discriminatory and predictable trade policies.

Establish procedures for solving trade disputesamong members.

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WTO came into force on January 1, 1995.

OBJECTIVES :

1. To help trade flow as freely as possible.

2. To achieve further liberalization gradually

through negotiations.

3. To set up an impartial means of settling

disputes.

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In short, WTO is expected to:

1. Administer WTO trade agreements.

2. Provide a forum for trade negotiations.

3. Handle trade disputes.

4. Monitor national trade policies.

5.Provide technical assistance and training fordeveloping countries.

6.Cooperate with other international organizations.

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Trade without discrimination Most-favoured-nation (MFN): treating other people

equally

Under the WTO agreements, countries cannot normallydiscriminate between their trading partners.

Grant someone a special favour (such as a lower customsduty rate for one of their products) and you have to do the

same for all other WTO members.

This principle is known as most-favoured-nation (MFN)treatment

PRINCIPLES

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National treatment: Treating foreignersand locals equally

imported and locally-produced goods should betreated equally at least after the foreign goodshave entered the market.

The same should apply to foreign and domesticservices, and to foreign and local trademarks,

copyrights and patents.

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Freer trade: gradually, through negotiation -

Lowering trade barriers is one of the mostobvious means of encouraging trade.

The barriers concerned include customs duties

(or tariffs) and measures such as import bans orquotas that restrict quantities selectively.

From time to time other issues such as red tape

etc have also been discussed.

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Predictability: through binding andtransparency - Sometimes, promising not to

raise a trade barrier can be as important aslowering one, because the promise givesbusinesses a clearer view of their futureopportunities.

With stability and predictability, investment isencouraged, jobs are created and consumers can fullyenjoy the benefits of competition choice and lowerprices.

The multilateral trading system is an attempt bygovernments to make the business environmentstable and predictable.

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Promoting fair competition - The rules on non-

discrimination

MFN and national treatment

are designed to secure fair conditions of trade.

So too are those on dumping (exporting at below

cost to gain market share) and subsidies.

Many of the other WTO agreements aim to

support fair competition: in agriculture,intellectual property, services, for example.

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Encouraging development and economic

reform - The WTO system contributes todevelopment.

Over three quarters of WTO members are

developing countries and countries intransition to market economies.

During the seven and a half years of theUruguay Round, over 60 of these countriesimplemented trade liberalization programmes

autonomously

Shumeet K. Grewal