Table of Contents

The World Trade Organization: Features, Structures, Objective and Function of the WTO...........2
1.

Introduction:.............................................................................................................................2

2.

What is the World Trade Organization?...................................................................................2

3.

WTO: The Beginnings/ History:..............................................................................................2

4.

Fact File of WTO:....................................................................................................................3

5.

Features of the WTO:...............................................................................................................3

6.

Structure of the WTO:..............................................................................................................4

7.

Objectives:................................................................................................................................5

8.

Functions:.................................................................................................................................6

9.

WTO Ministerial Conference:..................................................................................................6

10.

WTO Agreements:................................................................................................................6

(a) Goods:.....................................................................................................................................7
(b) Services:.................................................................................................................................7
(c) Intellectual Property:..............................................................................................................8
(d) Dispute Settlement:................................................................................................................8
(e) Policy Review:........................................................................................................................8

The World Trade Organization: Features, Structure, Objectives

Functions and Agreements of the WTO
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1. Introduction:
The World Trade Organization (WTO) came into being on January 1st 1995 under the Marrakesh
Agreement that places the global trading system on a firm constitutional footing with the evolution of
international economic legislation resulted through the Uruguay Round of GATT negotiations.
A remarkable feature of the Uruguay Round was that it paved the way for further liberalization of
international trade with the fundamental shift from the negotiation approach to the institutional
framework envisaged through transition from GATT to WTO Agreement.
The GATT 1947 and the WTO co-existed for the transitional period of one year in 1994. In January
1995, however, the WTO completely replaced the GATT. The membership of the WTO increased from
77 in 1995 to 127 by the end of 1996.

2. What is the World Trade Organization?

The World Trade Organization (WTO) is the only global international organization dealing with the
rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk
of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods
and services, exporters, and importers conduct their business.
3. WTO: The Beginnings/ History:
The World Trade Organization (WTO) came into being on January 1st 1995.
It was the outcome of the lengthy (1986-1994) Uruguay round of GATT negotiations.
The WTO was essentially an extension of GATT.
It extended GATT in two major ways.
First GATT became only one of the three major trade agreements that went into the WTO (the other
two being the General Agreement on Trade in Services (GATS) and the agreements on Trade
Related Aspects of Intellectual Property Rights (TRIPS))

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4. Fact File of WTO:

5. Features of the WTO:

Some of the most important salient features of world trade organisation are as follows:
Non-Discrimination:
This is the most important principle on which WTO has been founded. All trading partners will be
granted the most favoured nation (MFN) status, that is, each member state of WTO will treat every
other member state equally as the most favoured nation doing trade. No discrimination will be done by
a member of state between different trading states who are also members of WTO.
Free Trade:
WTO is to promote free trade among nations through negotiations. For this purpose WTO has to work
for progressive liberalisation of trade through reduction in tariffs and removal of quantitative
restrictions on imports by member countries.
Stability in the Trading System:
Under WTO agreements member states are committed not to raise tariff and non-tariff trade barriers
arbitrarily. This provides stability and predictability to the trading system.
Market Access Commitment:
WTO agreements which seek to establish multilateral trading system require the member countries to
undertake market access commitment on reciprocity basis. In fact, market access is ensured by
abolishing non-tariff barriers as well as by reducing tariffs.
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 Wider Range of Issues:

Another important feature of WTO is that it will deal with not only issues and disputes relating to trade
in goods but also the whole range of issues concerning trade in services and intellectual property rights.
Promotion of Fair Competition:
Rules such as Most Favoured Nation (MFN) treatment to all trading parties, as with nationals ensure
fair competition among trading countries. Besides this, WTO agreement provides for discouraging
unfair competitive practices such as export subsidies and dumping

6. Structure of the WTO:

The organizational structure of the WTO.

The

Ministerial
Conference
(MC) is at the

top

of

the

structural
organization
of

the WTO. It is

the

supreme
governing
body

which

takes ultimate
decisions

on

all matters. It is constituted by representatives of (usually, Ministers of Trade) all the member countries.
The General Council (GC) is composed of the representatives of all the members. It is the real engine
of the WTO which acts on behalf of the MC. It also acts as the Dispute Settlement Body as well as the
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Trade Policy Review Body. There are three councils, viz.: the Council for Trade in Services and the
Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) operating under the GC.
These councils with their subsidiary bodies carry out their specific responsibilities further; there are
three committees, viz., the Committee on Trade and Development (CTD), the Committee on Balance of
Payments Restrictions (CBOPR), and the Committee on Budget, Finance and Administration (CF A)
which execute the functions assigned to them by e WTO Agreement and the GC.
The administration of the WTO is conducted by the Secretariat which is headed by the Director
General (DG) appointed by the MC for the tenure of four years. He is assisted by the four Deputy
Directors from different member countries. The annual budget estimates and financial statement of the
WTO are presented by the DG to the CBFA for review and recommendations for the final approval by
the GC.

7. Objectives:
The important objectives of WTO are:
To improve the standard of living of people in the member countries.
To ensure full employment and broad increase in effective demand.
To enlarge production and trade of goods.
To increase the trade of services.
To ensure optimum utilization of world resources.
To protect the environment.
To accept the concept of sustainable development.

8. Functions:
The main functions of WTO are discussed below:
To implement rules and provisions related to trade policy review mechanism.
To provide a platform to member countries to decide future strategies related to trade and tariff.
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 To provide facilities for implementation, administration and operation of multilateral and bilateral
agreements of the world trade.
To administer the rules and processes related to dispute settlement.
To ensure the optimum use of world resources.
To assist international organizations such as, IMF and IBRD for establishing coherence in
Universal Economic Policy determination.

9. WTO Ministerial Conference:

10. WTO Agreements:

The WTOs rule and the agreements are the result of negotiations between the members. The current
sets were the outcome to the 1986-93 Uruguay Round negotiations which included a major revision of
the original General Agreement on Tariffs and Trade (GATI).
GATT is now the WTOs principal rule-book for trade in goods. The Uruguay Round also created new
rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement and
trade policy reviews.

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The complete set runs to some 30,000 pages consisting of about 30 agreements and separate
commitments (called schedules) made by individual members in specific areas such as, lower customs
duty rates and services market-opening.
Through these agreements, WTO members operate a non-discriminatory trading system that spells out
their rights and their obligations. Each country receives guarantees that its exports will be treated fairly
and consistently in other countries markets. Each country promises to do the same for imports into its
own market. The system also gives developing countries some flexibility in implementing their
commitments.

(a) Goods:
It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower
customs duty rates and other trade barriers; the text of the General Agreement spelt out important,
rules, particularly non-discriminations since 1995, the updated GATT has become the WTO s umbrella
agreement for trade in goods.
It has annexes dealing with specific sectors such as, agriculture and textiles and with specific issues
such as, state trading, product standards, subsidies and action taken against dumping.

(b) Services:
Banks, insurance firms, telecommunication companies, tour operators, hotel chains and transport
companies looking to do business abroad can now enjoy the same principles of free and fair that
originally only applied to trade in goods.
These principles appear in the new General Agreement on Trade in Services (GATS). WTO members
have also made individual commitments under GATS stating which of their services sectors, they are
willing to open for foreign competition and how open those markets are.

(c) Intellectual Property:

The WTOs intellectual property agreement amounts to rules for trade and investment in ideas and
creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify
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products, industrial designs, integrated circuit layout designs and undisclosed information such as trade
secrets intellectual property should be protected when trade is involved.

(d) Dispute Settlement:

The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital
for enforcing the rules and therefore, for ensuring that trade flows smoothly.
Countries bring disputes to the WTO if they think their rights under the agreements are being infringed.
Judgments by specially appointed independent experts are based on interpretations of the agreements
and individual countries commitments.
The system encourages countries to settle their differences through consultation. Failing that, they can
follow a carefully mapped out, stage-by-stage procedure that includes the possibility of the ruling by a
panel of experts and the chance to appeal the ruling on legal grounds.
Confidence in the system is Bourne out by the number of cases brought to the WTO, around 300 cases
in eight years compared to the 300 disputes dealt with during the entire life of GATT (1947-94).

(e) Policy Review:

The Trade Policy Review Mechanisms purpose is to improve transparency, to create a greater
understanding of the policies that countries are adopting and to assess their impact. Many members also
see the reviews as constructive feedback on their policies.
All WTO members must undergo periodic scrutiny, each review containing reports by the country
concerned and the WTO Secretariat.

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