World Trade Organisation - Part 1

February 27, 2018


For Part 2: (Click here) , Part 3: (Click here) and Part 4: (Click here)

The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. 


Why there should be trade between different countries? If yes, then why with low barriers?

This is the basic question which needs to be answered before we look into why there should be World Trade Organisation. There should be trade between countries because trade is beneficial for both the countries. In today's world, no country can fulfil all its needs and thus have to depend on other countries for those products. Even if a country X attempts to produce everything on its own, the quality of its product will not be competitive globally as some country will be producing it better due to the inherent advantages that country might be having. This is known as Theory of comparative advantage given by David Ricardo in 19th century.

Philosophy of WTO:

It offers an opportunity for development to all the countries with the help of trade instead of aid and thus respects the dignity of nations while also alleviating poverty at the same time. Free trade provides opportunities for export promotion, better investments in form of capital and technology and provides avenues for earning foreign exchange.

Functions of WTO:

  1. Rule making body for international trade.

  2. Surveillance body to check 

  3. Dispute settlement body

  4. Capacity building of developing countries especially Least developed countries.

Linakges between trade and environment, protection of human health, animal health, Plant health etc.

 History of WTO:

  1. 1947: 23 countries signed the General Agreement on Tariffs and Trade (GATT) in Geneva, Switzerland.

  2. 1948 : GATT came into force.

  3. 1986 - 93 : GATT trade ministers launch the Uruguay round.The round extended the range of trade negotiations, leading to major reductions in agricultural subsidies, an agreement to allow full access for textiles and clothing from developing countries, and an extension of intellectual property rights.

  4. 1994 : Trade ministers meet for the final time under GATT auspices at Marrakesh, Morocco to establish the World Trade Organization (WTO) and complete the Uruguay Round.

  5. 1995 : The World Trade Organization is created in Geneva.

  6. 2001 : Doha Development round starts.

  7. 2015 : Nairobi Conference 

  8. 2017 : Buenos Aires Ministerial Conference.

WTO Membership:

Since 29 July 2016, WTO is having 164 countries as members with Afghanistan being the last country to join. 



WTO Structure:

Decision Making at WTO:

  1. Decision making is by Consensus i.e. all the members need to agree for any agreement to come into force. However, in practice, Green Room diplomacy which is a kind of backchannel diplomacy is supposed to be in operation. 

 Types of Agreements at WTO:

  1. Multilateral Agreements : All countries agree.

  2. Plurilateral Agreements : These are of interest to few countries.

WTO Principles:

  1. Non-discrimination or Most-favoured-nation (MFN)

  2. National Treatment to Foreign Firms

  3. Reducing Trade barriers

  4. Differential treatment of Least Developed Countries

  5. Linking Trade and Environment.




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