World Trade Organization

(WTO)
 WTO
• The World Trade Organization (WTO) is a global
international organization dealing with the rules of
trade between nations. The work of WTO moves
around WTO agreements, negotiated and signed by
the bulk of the world's trading nations and ratified
in their parliaments.
• The goal is to help producers of goods and services,
exporters, and importers conduct their business.
 Need For WTO
• It helps to contribute towards international peace, by helping the
trade to flow smoothly and dealing with disputes over trade issues.
• It allows disputes to be handled constructively. With Global
boundaries evading, more and more trade is taking place, and
hence, leading to more chances for disputes. To put forth to the
claim, around 300 cases have been filed since inception of WTO,
and without peaceful and harmonious way to resolve them, they
could have led to a political crisis.
• It is based on rules and has nothing to do with power of the nation.
• It gives consumers more choice and a broader range of qualities to
choose from.
• The fact that there exists a forum to handle crisis, gives confidence
to nations to do more and more trade, thereby increasing the
income, and stimulating economic growth.
• GATT and WTO – differences….
GATT – flexible
member countries can bargain, choose or
avoid - specific discipline.
WTO – rigid
universally applied to all member countries
binding dispute settlement procedures. 
• GATT and WTO - differences ……
WTO - dispute settlement mechanism(power to
impose trade sanctions)
GATT - domestic legislation not permitted

• GATT - provisional legal agreement

WTO - permanent agreement
• GATT : objectives
1. Expansion of international trade
2. Increase of world production by ensuring full
employment in the participating nations
3. Development and full utilisation of world
resources
4. Raising standard of living of the world
community as a whole
• WTO - objectives
• improve the standard of living - member countries
• ensure full employment and increase in demand.
• enlarge production and trade of goods
• increase the trade of services
• ensure optimum utilization of world resources.
• protect the environment
• accept the concept of sustainable development
WTO is directed towards
• Setting and enforcing rules for international
trade
• resolving disputes
• encouraging transparency
• further trade liberalisation, and
• help developing countries benefit fully from
the global trading system
 India And WTO
• India is a founder member of the General Agreement on
Tariffs and Trade (GATT) 1947 and its successor, the
World Trade Organization (WTO), which came into effect
on 1/1/1995 after the conclusion of the Uruguay Round.
• India's participation in an increasingly rule based system
in the governance of international trade is to ensure
more stability and predictability, which ultimately would
lead to more trade and prosperity for itself and the 159
other nations which now comprise the WTO.
• India also automatically avails of MFN and national
treatment for its exports to all WTO members.
• India’s participation
• GATT -1948
• WTO -1995
• Uruguay Round 1986-1994
 Impact Of WTO Agreements On Indian
Economy
• The signing of WTO agreements will have far
reaching effects not only on India’s foreign
trade but also on its internal economy.
• Although the ultimate goal of WTO is to free
world trade in the interest of all nations of the
world, yet in reality the WTO agreements has
benefitted the developed nations more as
compared to developing ones.
 Positive Impacts/Benefits /Advantages /Gains
from WTO
• Increase in Export Earnings:
• Estimates made by World Bank, International
Monetary Fund (IMF) and the WTO Secretariat,
shows that the income effects of the implementation
of the Bali Round package will be an increase in
traded merchandise goods. It is expected that India’s
share in world exports would improve.
 CNTD…
Agricultural Exports:
• Reduction of trade barriers and domestic subsidies in
agriculture is likely to raise international prices of
agricultural products.
• India hopes to benefit from this in form of higher
export earnings from agriculture.
• This seems to be possible because all major
agriculture development programmes in India will be
exempted from the provisions of WTO Agreement
 CNTD…
• Export of Textiles and Clothing:
• With the phasing out of MFA (Multi - Fibre Arrangement),
exports of textiles and clothing increased and this will be
beneficial for India.
• The developed countries demanded a 15 year period of
phasing out of MFA, the developing countries, including
India, insisted that it should be done in 10 years.
• The Uruguay Round accepted the demand latter. But the
phasing out Schedule favoured the developed countries
because a major portion of quota regime was removed
only in the tenth year, i.e. 2005. The removal of quotas
benefited not only India but also every other country.
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• Multilateral Rules and Disciplines:
• The Uruguay Round Agreement has strengthened
multilateral rules and disciplines. The most important
of these relate to anti - dumping, subsidies and
countervailing measures, safeguards and disputes
settlement.
• This is likely to ensure greater security and
predictability of the international trading system and
thus create a more favourable environment for India
in the New World Economic Order
 CNTD…
• Growth to Services Exports:
• Under GATS agreement, member nations have
liberalised service sector. India benefits from
this agreement. E.g. India’s services exports
have increased from about 5 billion US $ in
1995 to 143.5 billion US $ in 2012-13.