World Trade Organization

The World Trade Organization (WTO) is intended to perform the function of supervising and liberalizing international trade. Any dispute over trade between member countries is brought before the WTO and is solved through a series of negotiations. The organization is driven by its members, and all decisions are made by member governments. The agreements signed by various nations under WTO play an important role when forming laws and policies related to international trade.

Founded:	1995
Headquarters:	Centre William Rappard, Geneva
Country:	Switzerland
Employees:	629
Website:	wto.org
Facebook:	WTO Facebook
LinkedIn:	WTO LinkedIn
Twitter:	@wto_omc
Key People
Pascal Lamy, Director-General

History

• The World Trade Organization supplanted GATT, or the General Agreement on Tariffs and Trade, which was signed into law in October 1947 by 23 countries in order to reduce custom tariffs between them.

• Afterwards, proposal for establishment of International Trade Organization was out forward by delegates from fifty-six countries in November 1947 at Havana, Cuba.

• On January 1, 1995, the World Trade Organization was established.

• From 1947 until 1994 GATT acted as the provider of rules for most of the trading houses all over the world. Although it seemed to be well established for those 47 years, it was actually a provisional organization and agreement. So, the GATT’s fundamental official principles were almost the same since the time it was established. There were a few additions in the year 1960 and 1970 with the goal to reduce the tariffs.

• However, major changes occurred during the Tokyo Round which lasted from 1973 to 1979 and saw around 102 countries participating. Tit was held with major improvements in mind, however it received mixed reviews and in most of the cases, there was relatively low participation.

• During the early 1980s the world trade did not find GATT’s principles as applicable to the realities as they used to find it in the 1940s.

• The number of member states in the WTO grew 150 when Vietnam became a member on January 11, 2007. Presently it has 153 member states.

• The first Ministerial Conference was held in 1996 in Singapore.

Trading System Principles

The principles of WTO agreements are the basis of mutual trading arrangements that occur between traders who deal with textiles, agriculture, telecommunications, banking, etc. They are:

Trade sans discrimination

Countries should treat each and everyone equally. There should be no discrimination and no country should get extra favor from some other country. Local and imported goods must be considered one and the same.

Freer trade

Including the lowering of custom duties and tariffs.

Predictability

Binding deals and transparency in the trades make it more predictable and hence increase the benefits.

The case for Open Trade

The case designed for open trading system is very simple and is based on some logical commercial sense. It is logical to assume that all countries grow according to the assets they have and the utilization of their assets. Some countries have assets but they do not have the means to utilize them. Some have over-utilized their assets.

So, open trade practice makes it possible for countries to share their strengths as well as weaknesses so that both of them grow and prosper. Hence, freer trade leads to better economic growth.

The Uruguay Round

The Uruguay round started in 1982 and took place over seven and a half years, which was twice the actual allotted time. Around 123 countries took part in it. Although during the early times of the round it seemed to fail, it gradually brought about the largest improvement in the trading field all over the world.

In 1986, the GATT members gradually accepted the negotiating program that enclosed almost all the outstanding issues of the trade policy.

In 1988, the agenda for the remaining two years was discussed.

Functions

The World Trade Organization performs a variety of functions, including:

Trade Negotiations

The organization plays an indispensible role in the area of trade negotiations. The agreements signed by WTO include goods, intellectual property. Exceptions that are permitted during the international trade are also mentioned in these agreements. An important feature of these agreements is that they are not static. The organization continuously revises the terms and conditions mentioned in the agreement such that they are better suited to the changing needs and requirements of countries participating in international trade.

Monitoring and Implementations

The WTO agreements lay down rules and conditions for member companies. The company is not only responsible for formulating laws but it also monitors whether the companies are following them properly or not. Periodically, the organization makes a check on member companies and ensures that each of the laws is implemented to the best extent possible.

Settlement of Disputes

In order to make sure that international trade takes place smoothly and harmony is maintained amongst member companies the organization performs the function of dispute settlement as well. if any of the member companies experience problem while carrying out trade then they can bring the matter to the WTO without giving a second thought. The organization has appointed some experts who can carry out this task efficiently.

Reaching Out to People

The organization does not work by keeping itself isolated from other firms in the market; instead, the organization maintains contact with non-government organizations and media such that it can stay aware of happenings taking place in different parts of the world. Moreover, it helps the organization in fetching support whenever required.

The organization plays a key role in improving trade capacity of member countries as well.