World Trade Organisation

The Eighth Uruguay Round was successful and led to the setting up of the WTO. The WTO, was launched on January 1, 1995 replacing the GATT. Naturally, the GATT members became the members of WTO. It administers the agreements contained in the Final Act of the Uruguay Round.

GATT was meant to deal with tariffs and other trade restrictions and prescribe rules for international trade. The removal of trade barriers was sought to be achieved through negotiations among the GATT members. In all GATT had seven rounds of prolonged negotiations, the last one being the Uruguay Round, which was launched in September 1986 and concluded in December 1993.

These negotiations covered not only the traditional subjects such as tariffs and non-tariff restrictions, but also extended to cover seven broad areas:

  1. Market access
  2. Agriculture
  3. Textiles
  4. Trade related intellectual property rights (TRIPS)
  5. Trade related investment measures and services (TRIMS)
  6. Trade in services
  7. Institutional matters

While negotiations on the various aspects of trade related matters were concluded quite successfully by the GATT, it was however realised that the GATT did not have any mechanism for resolving trade disputes among the member nations. Consequently any powerful member could veto any decision arrived at by the organisation and impose its will on the small member countries.

Thus, an organisation was required which could provide a level playing field to all the members and resolve trade disputes with authority and equity. This led to the establishment of the World Trade Organisation (WTO), which offers a far more powerful mechanism for resolving disputes in international trade.

Objectives of WTO

  1. Raising standard of living

  2. Employment generation

  3. Optimal use of world resources

  4. Sustainable development

  5. Ensuring that LDC (Least Developed Countries) secure a better share of growth in international trade

Role of WTO

WTO has been playing an important role in facilitating and promoting international trade.

  1. WTO facilitates international business and promotes international peace.

  2. It has reduced barriers in the conduct of international trade.

  3. WTO agreements have made international trade and relations very smooth and predictable.

  4. Free trade improves the living standard of the people by increasing their income level.

  5. Free trade provides ample scope of getting varieties of qualitative products.

  6. Economic growth has been speeded up because of free trade.

  7. WTO helps fostering growth of developing countries by providing them with special and preferential treatment in trade related matters.