International Monetary Fund (IMF) and WTO

The International Monetary Fund (IMF) works to achieve sustainable

growth and prosperity for all of its 190 member countries. It does so by
supporting economic policies that promote financial stability and
monetary cooperation, which are essential to increase productivity, job
creation, and economic well-being. The IMF is governed by and
accountable to its member countries.

The IMF has three critical missions:

 furthering international monetary cooperation,

 encouraging the expansion of trade and economic growth, and
 discouraging policies that would harm prosperity.

A core responsibility of the IMF is monitoring the economic and financial

policies of member countries and providing them with policy advice, an
activity known as surveillance. As part of this process, which also takes
place at the global and regional levels, the IMF identifies potential risks
and recommends appropriate policy adjustments to sustain economic
growth and promote financial stability.

IMF monitoring typically involves annual visits to member countries.

During these visits IMF staff have discussions with government and
central bank officials about risks to domestic and global stability and
policies and reforms to address those risks. These discussions focus on
exchange rate, monetary, fiscal, and financial policies, as well as
structural reforms. Discussions also extend to developments in other
areas that are critical for economic and financial stability, such as climate
change or digitalization. After completing their evaluation, IMF staff
present a report to the Executive Board for discussion.

World Trade Organization (WTO)

Before World Trade Organization (WTO), General Agreement on Trade and Tariffs (GATT)
was established as a global trade organization in 1948 with 23 countries. GATT was set up to
regulate all multilateral trade agreements by granting all nations equal access to the
worldwide market for trade purposes. The WTO was established in 1995 to replace the
General Agreement on Trade and Tariffs (GATT).
Features of World Trade Organisation (WTO)
The features of World Trade Organisation (WTO) are as follows:
 To promote international trade, WTO agreements cover trade in goods and services.
  There are 164 members of WTO at present, and every member is obligated to follow
the laws and policies framed under WTO rules.
India has been on the frontline of establishing fair international laws and regulations as a
significant member of the WTO. India has complied with the WTO’s demands and has
responsibly liberalized trade by abolishing import restrictions and lowering tariffs.
Functions of WTO
 Promote trade liberalization: The WTO aims to progressively lower trade barriers
such as tariffs, quotas and subsidies. The goal is to facilitate increased trade among
nations.
 Settle trade disputes: The WTO is a platform for member countries to negotiate and
resolve trade conflicts. This helps create a stable trading environment.
 Increase market access: The WTO works towards eliminating discriminatory
treatment in international trade. The goal is to allow all countries to benefit from
global trade.
 Achieve trade policy transparency: The WTO notification procedures require member
countries to report and share information on trade policies, activities and measures.
This helps create predictability.
 Protect the interests of developing countries: The WTO aims to integrate developing
countries into the multilateral trading system. Special provisions are made for
developing economies.
 Discuss issues related to trade and globalization: The WTO provides a forum for
nations to discuss issues such as the environment, e-commerce, trade facilitation,
competition policy, transparency in government procurement, etc.
 Settle trade rules and obligations: The WTO maintains and enforces the legal
framework of international trading rules and obligations. These cover goods, services
as well as intellectual property.
 Resolve future trade challenges: The WTO aims to deal with new and emerging
challenges in global trade and ensure the continued relevance and effectiveness of the
multilateral trading system.
 It negotiates and administers rules for trade between nations. These rules cover goods,
services and intellectual property.
 It provides a platform for member countries to settle trade disputes. When countries
disagree over trade, they can come to the WTO to resolve these issues.
 It monitors the trade policies of nations and ensures transparency. Each country
reports its trade policies and activities to the WTO.
 It offers training programs to help developing countries understand trade rules and
expand their trade. The aim is to close the gap in trade knowledge between developed
and developing nations.
 It cooperates with other global organizations like the World Bank, IMF, WHO, ILO,
etc., on issues such as trade, finance, health, labour, etc.
 It researches trade and publishes reports on global trade trends and issues. This helps
countries in policymaking.
Objectives of WTO
  Promote trade liberalization: The main goal of the WTO is to liberalize international
trade by removing barriers like tariffs and quotas. This means making it easier for
goods and services to cross borders.
 Establish a rules-based trading system: The WTO aims to establish clear rules and a
dispute resolution mechanism to govern international trade. This provides stability
and predictability for traders and investors.
 Ensure fair competition: The WTO tries to ensure a level playing field for all
members through agreements that prevent unfair trade practices like export subsidies
and dumping.
 Integrate developing countries into the global economy: The WTO seeks to help
developing countries by lowering trade barriers they face and providing them with
technical assistance. This aims to help increase their exports and economic growth.
 Provide a forum for trade negotiations: The WTO acts as a venue for member
countries to negotiate lower trade barriers and resolve trade disputes. This helps
facilitate further trade liberalization over time.
 Increase global output: By reducing trade barriers and facilitating more trade, the
WTO aims to improve production efficiency and allow countries to specialize in what
they produce best. This can increase global output and economic prosperity.
 Improve living standards: By increasing trade and economic growth, the WTO tries to
ultimately help improve living standards and reduce poverty worldwide.
 Create employment: More trade and economic activity created by the WTO system
can lead to more jobs being created, particularly in developing countries where
exports play a prominent role.
 Transfer of technology: Increased trade and investment flows can help facilitate the
transfer of technology and know-how between countries, mainly from developed to
developing nations.
 Environmental sustainability: The WTO promotes trade policies that support
environmental sustainability through various WTO agreements and initiatives.
 Foster development of least-developed countries: The WTO has frameworks and
provisions to help the least-developed countries integrate into the global trading
system and reap the benefits of trade.

Principles of WTO
 Trade without discrimination - The most fundamental principle is that members must
treat imports from other members no less favourably than domestic goods or goods
from any other country. This means no discrimination based on nationality.
 National treatment - Members cannot treat imported goods less favourably than
similar domestic goods once they have passed customs. This ensures fair competition
in the domestic market.
 Binding and transparent commitments - Members make obligatory commitments to
reduce trade barriers and open their markets. These commitments are legally binding
and transparent.
  Freer trade through negotiation - Members negotiate successive rounds of trade
liberalization to further reduce tariffs and other trade barriers. The objective is
progressively freer trade.
 Reciprocity and mutual benefits - Concessions and obligations must provide mutual
benefits to members. Countries reduce trade barriers in exchange for similar
concessions from others, resulting in balanced reciprocity.
 Equal treatment for developing countries - Special provisions are made to grant
developing countries flexibility in implementing agreements and commitments.
Longer transition periods are allowed.
 Promoting development and economic welfare - Members recognize that trade
liberalization can support development and improve living standards, particularly for
developing nations. This is an underlying purpose of the WTO system.
 Peaceful resolution of disputes - The WTO provides a framework for resolving trade
conflicts peacefully through negotiated settlement or adjudication. Using unilateral
action is discouraged.
 Openness and transparency - Members agree to publish trade laws and regulations,
inform other members of new policies and notify the WTO of changes in existing
policies. This promotes transparency.

WTO DISPUTE SETTLEMENT MECHANISM

The World Trade Organization (WTO) is responsible for maintaining the free flow of trade
between its member countries. WTO, in the form of Dispute Settlement Undertaking (DSU),
provides an instrument for the settling of trade disputes between the parties. The dispute
generally arises when any member country violates any provision of WTO agreement which
other member countries think unreasonable.
This dispute settlement process is the outcome of the Uruguay round (1996-1994). This
mechanism provides a speedy resolution of a trade dispute. This settlement system applies to
all disputes covered under the WTO agreement. The Dispute Settlement Body (DSB) is
responsible for DSU to resolve a dispute between parties
Stages in settlement of trade dispute

Stage 1: Consultations
Before referring any dispute to mediation or taking any other actions, both the WTO member
countries shall affirm to resolve their disputes through consultation. If a WTO member
requests for consultation with another Member concerning measures affecting the operations
of the former member, the latter member must accept such request within a period 10 days
after the date of receipt of such request and shall enter into consultation within 30 days.

If the consultation fails to provide a satisfactory solution to the problem within 60 days after
the date of receipt of the request for consultation, then the complaining party may request for
construction of the panel. All such requests for consultation and construction shall be notified
in writing including reasons for such requests to the Dispute Settlement Body by the
complaining member.
Stage 2: Establishment of Panels

If no satisfactory solution is reached through consultation between the member countries, the
complaining member may request for the establishment of panels in writing to the Dispute
Settlement Body including a summary of the case and issues involved. The panel is
established at the second meeting of DSB at which request appears as an agenda item of the
meeting.

The function of the Panel is to aid the Dispute Settlement Body in resolving the matter in
dispute. The panel assesses the entire dispute, including the facts of the case and issues
involved therein and examines whether it conforms with the covered agreement between the
member countries. The Panel shall provide its final report to the parties within 6 months from
the date when panel procedures start.

Selection of panellists

After the establishment of the panel, the next step is to select panellists. The panellists are
selected by the WTO Secretariat. The0. parties cannot oppose the selection unless they state
reasons satisfactory to the Secretariat. The panel shall consist of three panellists. The parties
can agree to have five panellists on board if they consider necessary within 10 days from the
establishment of the panel.

The WTO Secretariat assists the parties in the selection of panellists by creating a list of all
governmental and non-governmental individuals having certain qualifications from which
panellists may be chosen by the parties.

Procedure of Panel

The panellists shall, within one week after the composition of the panel fix a timetable for the
panel process. After this, the panel decides a deadline for written submission to be made by
each party. Each party has to submit its submissions with the secretariat which shall transfer
each submission to the panel and submission made by one party shall be sent to the other
party as well. At the first substantive meeting of the panel, the complaining party shall be the
first to present their case ahead of the responding party.

Where after the examination, a solution has been reached between the parties, the panel shall
submit a written report to the Dispute Settlement Body which shall have a brief description of
the case along with the solution which has been reached. Where the solution has not been
found, the panel shall send a written report to the Dispute Settlement Body mentioning its
findings of the case and recommendations, if any, it makes.

The report has to be sent within six months of its examination. In case of urgency, including
the case of perishable goods, the report has to be sent within three months. The maximum
period during which the report has to send is nine months from the establishment of the
panel.

Appeal

Either of the parties unsatisfied with the ruling of the panel report can appeal to the Standing
Appellate Body established by the Dispute Settlement Body. Only parties to the dispute can
appeal to a panel report and not the third parties. Third parties can be allowed to be heard
only in case such third party has notified in writing to the Dispute Settlement Body of its
substantial interest in such dispute.

The proceeding of the Appellate Body shall not exceed 60 days from the date a party to the
dispute notifies its intention of appealing to the Appellate Body to the Dispute Settlement
Body. In case of delay, the maximum period granted to the Appellate Body is 90 days. The
Appellate Body has to submit in writing to the Dispute Settlement Body its reasons for the
delay together with the period within which the final decision is notified.

The Appellate Body will not re-examine any shreds of evidence, issues or previous
arguments but its examination shall be limited to laws covered in the panel report or legal
interpretation evolved by the panellists. The Appellate Body has the power to uphold, modify
or reverse the panel report and provide a conclusive report.

Time framework for Dispute Settlement

STAGE PERIOD

Consultation 60 days

Establishment of panel and selection of Panellists 45 days

Panel report to parties 6 months

Final panel report to WTO members 3 weeks

Dispute settlement body adopts report (without

60 days
appeal

Total time (without appeal) 1 year

Appellate body report (if an appeal is made) 60-90 days

Dispute settlement body adopts appellate body report 30 days

1 year 3
Total time (with the appeal)
months