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UPSC Notes-WTO: Everything You Need To Know

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August 2, 2024

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Introduction

1. Establishment:
   • The WTO was established on January 1, 1995, following the Uruguay Round of trade negotiations (1986-1994).
   • It succeeded the General Agreement on Tariffs and Trade (GATT), which was created in 1948 to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.
2. Headquarters:
   • Geneva, Switzerland.
3. Membership:
   • As of 2024, the WTO has 164 member countries, representing over 98% of global trade.

Objectives

1. Trade Liberalization:
   • Promote free trade by reducing trade barriers such as tariffs, quotas, and subsidies.
2. Non-Discrimination:
   • Ensure that member countries treat trading partners equally (Most Favored Nation principle) and that foreign and domestic goods are treated equally once they enter a market (National Treatment principle).
3. Predictability and Stability:
   • Provide a transparent and predictable trading environment to foster economic growth and development.
4. Encouraging Development and Economic Reform:
   • Assist developing countries in their trade and economic reform efforts through special provisions and capacity-building measures.

Functions

1. Administering Trade Agreements:
   • Oversee the implementation, administration, and operation of the covered agreements.
2. Forum for Negotiations:
   • Provide a platform for trade negotiations among member countries.
3. Dispute Settlement:
   • Offer a mechanism for resolving trade disputes between member countries to ensure smooth and predictable trade relations.
4. Trade Policy Review:
   • Conduct periodic reviews of the trade policies and practices of member countries to ensure transparency and adherence to WTO agreements.
5. Technical Assistance and Training:
   • Provide technical assistance and training for developing and least-developed countries to help them integrate into the global trading system.

Structure

1. Ministerial Conference:
   • The highest decision-making body, meeting at least once every two years, comprising representatives from all member countries.
2. General Council:
   • Conducts day-to-day operations and meets regularly to carry out the functions of the WTO, including acting as the Dispute Settlement Body and the Trade Policy Review Body.
3. Council for Trade in Goods, Council for Trade in Services, Council for TRIPS:
   • Oversee the implementation of specific WTO agreements related to goods, services, and intellectual property rights.
4. Secretariat:
   • Headed by the Director-General, the Secretariat provides technical and administrative support for the activities of the WTO.

Key Agreements

1. GATT (General Agreement on Tariffs and Trade):
   • Focuses on the trade of goods, aiming to reduce tariffs and other trade barriers.
2. GATS (General Agreement on Trade in Services):
   • Covers trade in services, aiming to remove barriers and ensure non-discrimination.
3. TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights):
   • Establishes minimum standards for the protection and enforcement of intellectual property rights.
4. AoA (Agreement on Agriculture):
   • Aims to reform trade in agriculture by making policies more market-oriented.
5. TBT (Agreement on Technical Barriers to Trade):
   • Ensures that technical regulations and standards do not create unnecessary obstacles to trade.
6. SPS (Agreement on Sanitary and Phytosanitary Measures):
   • Sets out the basic rules for food safety and animal and plant health standards.

Special Provisions for Developing Countries

1. Special and Differential Treatment (S&D):
   • Provides developing countries with special rights and exemptions to help them achieve their development objectives.
   • Includes longer time periods for implementing agreements and commitments, measures to increase trading opportunities, and provisions to safeguard their trade interests.
2. Technical Assistance and Capacity Building:
   • The WTO provides technical assistance and training to help developing countries build their trade capacity and implement WTO agreements.

Dispute Settlement Mechanism

1. Process:
   • Consultation: Parties involved in a dispute first try to resolve their differences through consultations.
   • Panel: If consultations fail, the dispute can be referred to a panel for a ruling.
   • Appellate Body: Parties can appeal the panel’s decision to the Appellate Body.
   • Implementation: The losing party is expected to comply with the rulings. If they fail to do so, the winning party may seek compensation or authorization to impose trade sanctions.
2. Significance:
   • Provides a structured and legalistic approach to resolving trade disputes, ensuring that international trade rules are upheld.

Criticisms and Challenges

1. Developing Countries’ Concerns:
   • Developing countries often find it challenging to fully participate in WTO negotiations and dispute settlements due to limited resources and expertise.
   • Concerns over whether the benefits of globalization and trade liberalization are equitably distributed.
2. Dispute Settlement System Issues:
   • The Appellate Body has faced challenges due to the blocking of appointments, which has hampered its functioning.
3. Stalled Negotiations:
   • The Doha Development Round, launched in 2001 to address the needs of developing countries, has seen limited progress due to disagreements on key issues like agricultural subsidies, market access, and trade facilitation.
4. Emerging Trade Issues:
   • The WTO faces challenges in addressing emerging issues like digital trade, e-commerce, and the impact of climate change on trade.

Recent Developments

1. Trade Facilitation Agreement (TFA):
   • Entered into force in February 2017, aims to expedite the movement, release, and clearance of goods across borders.
   • Expected to benefit developing countries by reducing trade costs and enhancing participation in global trade.
2. E-commerce and Digital Trade:
   • Ongoing discussions on rules and regulations for digital trade and e-commerce to adapt to the changing global trade landscape.
3. Reform Discussions:
   • Increasing calls for reforming the WTO to make it more responsive to current global trade challenges, improve its dispute settlement system, and enhance its functioning.

India’s Role and Perspective

1. Active Participation:
   • India is an active participant in the WTO and advocates for the interests of developing countries.
   • Focuses on issues like agricultural subsidies, food security, and special and differential treatment for developing countries.
2. Trade Policy:
   • India’s trade policy aims to balance the benefits of globalization with the need to protect domestic industries and promote inclusive development.
   • Emphasizes the importance of a fair and equitable multilateral trading system.
3. Dispute Settlements:
   • India has been actively involved in the dispute settlement process, both as a complainant and respondent, to protect its trade interests.