BRIEF INTRODUCTION

FORMATION JANUARY 1 1995

TYPE INTERNATIONAL TRADE ORGANISATION
PURPOSE REGULATE INTERNATIONAL TRADE
HEADQUARTER GENEVA
MEMBERSHIP 164
DIRECTOR GENERAL ROBERTO AZEVEDO
WHY WTO?

REPLACING THE GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT), WHICH COMMENCED IN 1948.

IT IS THE LARGEST INTERNATIONAL ECONOMIC ORGANIZATION IN THE WORLD.

THE WTO DEALS WITH REGULATION OF TRADE IN GOODS, SERVICES AND INTELLECTUAL PROPERTY BETWEEN
PARTICIPATING COUNTRIES BY PROVIDING A FRAMEWORK FOR NEGOTIATING TRADE AGREEMENTS AND
A DISPUTE RESOLUTION PROCESS AIMED AT ENFORCING PARTICIPANTS' ADHERENCE TO WTO AGREEMENTS,
WHICH ARE SIGNED BY REPRESENTATIVES OF MEMBER GOVERNMENTS AND RATIFIED BY THEIR PARLIAMENTS.
PRINCIPLES
NON-DISCRIMINATION - IT HAS TWO MAJOR COMPONENTS:
THE MOST FAVOURED NATION (MFN) RULE, AND
THE NATIONAL TREATMENT POLICY.
BOTH ARE EMBEDDED IN THE MAIN WTO RULES ON GOODS, SERVICES, AND INTELLECTUAL PROPERTY, BUT
THEIR PRECISE SCOPE AND NATURE DIFFER ACROSS THESE AREAS.
THE MFN RULE REQUIRES THAT A WTO MEMBER MUST APPLY THE SAME CONDITIONS ON ALL TRADE WITH
OTHER WTO MEMBERS, I.E. A WTO MEMBER HAS TO GRANT THE MOST FAVORABLE CONDITIONS UNDER
WHICH IT ALLOWS TRADE IN A CERTAIN PRODUCT TYPE TO ALL OTHER WTO MEMBERS. "GRANT SOMEONE A
SPECIAL FAVOUR AND YOU HAVE TO DO THE SAME FOR ALL OTHER WTO MEMBERS.
"NATIONAL TREATMENT MEANS THAT IMPORTED GOODS SHOULD BE TREATED NO LESS FAVORABLY THAN
DOMESTICALLY PRODUCED GOODS (AT LEAST AFTER THE FOREIGN GOODS HAVE ENTERED THE MARKET)
AND WAS INTRODUCED TO TACKLE NON-TARIFF BARRIERS TO TRADE (E.G. TECHNICAL STANDARDS,
SECURITY STANDARDS ET AL. DISCRIMINATING AGAINST IMPORTED GOODS).
 RECIPROCITY. IT REFLECTS BOTH A DESIRE TO LIMIT THE SCOPE OF FREE-RIDING THAT MAY ARISE BECAUSE
OF THE MFN RULE, AND A DESIRE TO OBTAIN BETTER ACCESS TO FOREIGN MARKETS. A RELATED POINT IS
THAT FOR A NATION TO NEGOTIATE, IT IS NECESSARY THAT THE GAIN FROM DOING SO BE GREATER THAN
THE GAIN AVAILABLE FROM UNILATERAL LIBERALIZATION; RECIPROCAL CONCESSIONS INTEND TO ENSURE
THAT SUCH GAINS WILL MATERIALISE.

BINDING AND ENFORCEABLE COMMITMENTS. THE TARIFF COMMITMENTS MADE BY WTO MEMBERS IN A
MULTILATERAL TRADE NEGOTIATION AND ON ACCESSION ARE ENUMERATED IN A SCHEDULE (LIST) OF
CONCESSIONS. THESE SCHEDULES ESTABLISH "CEILING BINDINGS": A COUNTRY CAN CHANGE ITS BINDINGS,
BUT ONLY AFTER NEGOTIATING WITH ITS TRADING PARTNERS, WHICH COULD MEAN COMPENSATING THEM
FOR LOSS OF TRADE. IF SATISFACTION IS NOT OBTAINED, THE COMPLAINING COUNTRY MAY INVOKE THE WTO
DISPUTE SETTLEMENT PROCEDURES.
 TRANSPARENCY. THE WTO MEMBERS ARE REQUIRED TO PUBLISH THEIR TRADE REGULATIONS, TO MAINTAIN
INSTITUTIONS ALLOWING FOR THE REVIEW OF ADMINISTRATIVE DECISIONS AFFECTING TRADE, TO RESPOND
TO REQUESTS FOR INFORMATION BY OTHER MEMBERS, AND TO NOTIFY CHANGES IN TRADE POLICIES TO THE
WTO. THESE INTERNAL TRANSPARENCY REQUIREMENTS ARE SUPPLEMENTED AND FACILITATED BY PERIODIC
COUNTRY-SPECIFIC REPORTS (TRADE POLICY REVIEWS) THROUGH THE TRADE POLICY REVIEW MECHANISM
(TPRM). THE WTO SYSTEM TRIES ALSO TO IMPROVE PREDICTABILITY AND STABILITY, DISCOURAGING THE USE
OF QUOTAS AND OTHER MEASURES USED TO SET LIMITS ON QUANTITIES OF IMPORTS.

SAFETY VALUES. IN SPECIFIC CIRCUMSTANCES, GOVERNMENTS ARE ABLE TO RESTRICT TRADE. THE WTO'S
AGREEMENTS PERMIT MEMBERS TO TAKE MEASURES TO PROTECT NOT ONLY THE ENVIRONMENT BUT ALSO
PUBLIC HEALTH, ANIMAL HEALTH AND PLANT HEALTH.
THE IMPORTANT OBJECTIVES OF WTO
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.

THE MAIN FUNCTIONS OF WTO
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.

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.
WTO AND INDIA
INDIA IS A FOUNDER MEMBER OF WORLD TRADE ORGANIZATION AND ALSO TREATED AS THE PART OF
DEVELOPING COUNTRIES GROUP FOR ACCESSING THE CONCESSIONS GRANTED BY THE ORGANIZATION. AS A
RESULT, THERE ARE SEVERAL IMPLICATIONS FOR INDIA FOR THE VARIOUS AGREEMENTS THAT ARE SIGNED
UNDER WTO DISCUSSED AS FOLLOWS:

(I) REDUCTION OF TARIFF AND NON-TARIFF BARRIERS: THE AGREEMENT INVOLVES AN OVERALL
REDUCTION OF PEAK AND AVERAGE TARIFFS ON MANUFACTURED PRODUCTS AND PHASING OUT THE
QUANTITATIVE RESTRICTIONS OVER A PERIOD. THE IMPORTANT IMPLICATION IS THAT THE FIRMS THAT HAVE
COMPETITIVE ADVANTAGE WOULD BE ABLE TO SURVIVE IN THE LONG RUN.
(II) TRADE RELATED INVESTMENT MEASURES (TRIMS): THE AGREEMENT PROHIBITS THE HOST COUNTRY TO
DISCRIMINATE THE INVESTMENT FROM ABROAD WITH DOMESTIC INVESTMENT I.E. AGREEMENT REQUIRES
INVESTMENT TO BE FREELY ALLOWED BY NATIONS.

(III)TRADE RELATED INTELLECTUAL PROPERTY RIGHTS (TRIPS): AN INTELLECTUAL PROPERTY RIGHT

SEEKS TO PROTECT AND PROVIDE LEGAL RECOGNITION TO THE CREATOR OF THE INTANGIBLE ILLEGAL USE OF
HIS CREATION. THIS AGREEMENT INCLUDES SEVERAL CATEGORIES OF PROPERTY SUCH AS PATENTS,
COPYRIGHTS, TRADEMARKS, GEOGRAPHICAL INDICATIONS, DESIGNS, INDUSTRIAL CIRCUITS AND TRADE SECRETS.
SINCE THE LAW FOR THESE INTANGIBLES VASTLY VARIED BETWEEN COUNTRIES, GOODS AND SERVICES TRADED
BETWEEN COUNTRIES WHICH INCORPORATED THESE INTANGIBLES FACED SEVERE RISK OF INFRINGEMENT.
THEREFORE THE AGREEMENT STIPULATED SOME BASIC UNIFORMITY OF LAW AMONG ALL TRADING PARTNERS.
THIS REQUIRED SUITABLE AMENDMENT IN THE DOMESTIC INTERNATIONAL PROPERTY RIGHTS (IPR) LAWS OF
EACH COUNTRY OVER A PERIOD OF TIME. AS A RESULT PATENTS ACT, TRADE AND MERCHANDISE MARK ACT
AND THE COPYRIGHT RIGHT ACT WERE AMENDED IN INDIA. THE MAIN IMPACT OF THIS IS ON INDUSTRIES SUCH
AS PHARMA AND BIO-TECHNOLOGY. FURTHER, THE TECHNOLOGY TRANSFER FROM ABROAD IS EXPECTED TO
BECOME COSTLY AND DIFFICULT.
(IV)AGREEMENT ON AGRICULTURE (AOA): THE AGREEMENT ON AGRICULTURE BROADLY DEALS WITH
PROVIDING MARKET ACCESS, REDUCTION OF EXPORT SUBSIDIES AND GOVERNMENT SUBSIDIES ON AGRICULTURE
PRODUCTS BY MEMBER COUNTRIES. THE REDUCTION OF TARIFFS AND SUBSIDY IN EXPORT AND IMPORT ITEMS
WOULD OPEN UP COMPETITION AND PROVIDE A BETTER ACCESS TO INDIAN PRODUCTS ABROAD.
(V) AGREEMENT ON SANITARY AND PSYTO-SANITARY MEASURES (SPM): THIS AGREEMENT REFERS TO
RESTRICTING EXPORTS OF A COUNTRY THAT DO NOT COMPLY WITH THE INTERNATIONAL STANDARDS OF
GERMS/BACTERIA ETC. SINCE ALLOWING SUCH PRODUCTS INSIDE THE COUNTRY, THERE WOULD BE SPREAD OF
DISEASE AND PEST IN THE IMPORTING COUNTRY. THE IMPLICATION OF THESE AGREEMENTS IS THAT THERE IS
AN URGENT NEED TO EDUCATE THE EXPORTERS REGARDING THE CHANGING SCENARIO AND STANDARDS AT
THE INTERNATIONAL ARENA ESPECIALLY IN FOOD PROCESSING, MARINE FOOD AND OTHER PACKED FOOD
INDUSTRIES.
(VI) MULTI-FIBER AGREEMENT (MFA): THIS AGREEMENT IS DISMANTLED WITH EFFECT FROM 1 JANUARY 2005.
THE RESULT WAS REMOVAL OF QUANTITATIVE RESTRICTIONS (QRS) ON THE TEXTILE IMPORTS IN SEVERAL
EUROPEAN COUNTRIES. AS A CONSEQUENCE A HUGE TEXTILE MARKET IS OPENED UP FOR DEVELOPING
COUNTRIES LIKE INDIA. IN ORDER TO TAKE ADVANTAGE OF OPENING UP BETTER PREPAREDNESS IS REQUIRED IN
TERMS OF MODERNIZATION, STANDARDIZATION, COST EFFICIENCY, AND CUSTOMIZATION TO MEET CHALLENGES
OF FOREIGN CUSTOMERS.
BESIDES THESE MAJOR AGREEMENTS THERE ARE SEVERAL OTHER AGREEMENTS SUCH AS AGREEMENT
ON MARKET ACCESS, WHICH PROPAGATES FREE MARKET ACCESS TO PRODUCTS AND REDUCTION OF
TARIFF AND NON-TARIFF BARRIERS; AGREEMENT TO HAVE SAFEGUARD MEASURES IF THERE IS AN
IMPORT SURGE AND IT IS LIABLE TO AFFECT THE DOMESTIC INDUSTRIES IN THE TRANSITION ECONOMIES.
THESE MEASURES CAN INCLUDE IMPOSING QUANTITATIVE RESTRICTIONS (QRS) FOR A CERTAIN PERIOD
AND ALSO IMPOSING TARIFFS ON THE CONCERNED PRODUCTS, AGREEMENT ON COUNTER-VEILING
DUTIES (CVD), ANTI-DUMPING DUTY (ADD) AGAINST IMPORTED PRODUCTS IF THE CHARGES OF
DUMPING ARE PROVED AGAINST THE EXPORTING COUNTRY.

CONCLUSION:

THE INDIAN ECONOMY HAS EXPERIENCED A MAJOR TRANSFORMATION AS A RESULT OF THE CHANGING
MULTILATERAL TRADE DISCIPLINE WITHIN WTO FRAMEWORK. IT IS EXPECTED THAT THE SECTORS SUCH
AS TEXTILES, CLOTHING, LEATHER AND LEATHER PRODUCTS, AND FOOD, BEVERAGES, AND TOBACCO ETC
WOULD EXPERIENCE GROWTH IN OUTPUT AND EXPORTS. HOWEVER, THERE IS A SERIOUS AND URGENT
NEED TO RE-LOOK THE STRATEGIES FOLLOWED BY INDIVIDUAL FIRMS IN THE CHANGING CONTEXT OF
INCREASING COMPETITION AND OPENED MARKETS.