World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade. The World Trade Organisation officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade(GATT), which commenced in 1948.As an organization it has vast powers and functions than what its predecessor GATT (General Agreement on Tariffs and Trade) had, the objectives and goals of both being broadly the same.The World Trade Organization is a Multi-lateral organization which facilitates the free flow of goods and services across the world and encourages fair trade among nations. The result is that the global income increases due to increased trade and there is supposed to be overall enhancement in the prosperity levels of the member nations.
Features of World Trade Organisation
- It is an international organization to promote multilateral trade.
- It has replaced GATT.
- It promotes free trade by removing tariff and non-tariff barriers in international trade.
- It has fixed set of rules and regulations and it has a legal status. Its rules and regulations are mutually designed and agreed upon by member nations.
- Agreements agreed by member-countries are binding on all members of WTO and if any member does not follow such agreements, then its complaint can be lodged with the Dispute Settlement Body of WTO.
- It includes trade in goods, trade in services, protection of intellectual property right rights, foreign investment etc.
- Unlike International Monetary Fund(IMF) and the World Bank.WTO is not an agent of United Nations.
- Unlike IMF and World Bank, there is no weighted voting (on the basis capital). Rather all the WTO members have equal voting rights (One Country, One Vote).
- WTO has large Secretariat and huge organizational set up.
Objectives of World Trade Organisation
- The primary aim of WTO is to implement the new world trade agreements.
- To promote multilateral trade i.e. trade among many nations.
- To promote free trade by abolishing tariff and non tariff barriers.
- To promote world trade in a manner that benefits every member country.
- To ensure that developing countries get a better share in the advantages resulting from the expansion of international trade corresponding to their development needs.
- To remove all hurdles to an open world trading system and use world trade as an effective instrument to boost economic growth.
- To enhance competitiveness among all trading partners so as to benefit consumers.
- To expand and utilize world resources in the most optimum manner.
- To improve the level of living for the global population and speed up economic development of the member nations.
- To take special steps for the development of poorest nations.
Functions of World Trade Organisation
- Laying down code of conduct aiming at reducing tariff and non-tariff barriers in international trade.
- Implementing WTO agreements and administering the international trade.
- Cooperating with IMF and World Bank and its associates for establishing coordination in Global Trade Policy-Making
- Settling trade related disputes among member nations with help of its Dispute Settlement Body (DSB).
- Reviewing trade related economic policies of member countries with the help of its Trade Policy Review Body (TPRB).
- Providing technical assistance and guidance related to management of foreign trade and fiscal policy to its member nations.
- Acting as form for trade liberalization.