WTO AND GATT – EMERGENCE OF WTO, PURPOSE, OBJECTIVES, STRUCTURE, PRINCIPLES AND FUNCTIONS

WTO AND GATT – EMERGENCE OF WTO, PURPOSE, OBJECTIVES, PRINCIPLES AND FUNCTIONS:

 

1. INTRODUCTION:

 

International Trade Law is the law regulating international commerce. The public aspect of International Trade Law seeks to coordinate commercial policies of states; and it is a part of Public International Law. The private aspect of International Trade Law governs international commercial transactions between the people belonging to different states. This is substantially covered under Private International Law. In addition, the bodies like the United Nations Commission on International Trade Law have been trying to develop standard laws on various aspects of transnational transactions and states are expected to incorporate them in their respective legal system. This process is known as unification of laws. In this research paper, the researcher has covered the emergence of WTO from its precursor GATT and its implementation on international trade.

 

The purpose of International Trade Law has been to foster free trade among nations. Free trade in this context means that people should be free to buy and sell goods cutting across national frontiers. In other words, a person should be free to buy a product from anywhere in the world wherein he can get the best quality at the cheapest possible price. Similarly, he should be free to sell his product anywhere in the world at the highest possible price. In brief, it is the globalization of Article 301 of Indian Constitution: Trade, Commerce and intercourse shall be free throughout the territory of India. Before the emergence of modern state system in 17th century, trade was free and merchants moved all over the world to the extent they could buying and selling goods and incidentally spreading knowledge and culture. In this way, they were the harbingers of modern civilization. But once the organized state system came into existence, the governments started interfering into these commercial transactions. To start with, they began to levy tariffs on incoming goods mainly with a view to bolstering their revenues. With the ushering in of Industrial revolution, manufacturing became an important component of national economy. At that stage, states started using tariffs and other devices to protect national economy from foreign competitors. From that time onwards, free trade and protectionism moved side by side: one following the other like a shadow.

 

The governments realized the value of free trade; and made conscious efforts to promote free trade. One can identify three distinct stages in the evolution of international free trade regime. To begin with, states started concluding bilateral treaties, with a view to mutually reducing tariffs with regard to certain specified goods which were of interest to them. Anglo-French Treaty of 1860 was the earliest bilateral treaty calling for a ‘tariff truce’ and aiming at mutual tariff reductions. And this stage continued up to the end of Second World War.

 

By the end of Second World War, having realized the limitations of bilateral approach, the states went for a multilateral approach for the first time. The General Agreement on Tariffs and Trade was the product of this approach. The principle of non-discrimination along with tariff reduction became the basis for this new multilateral regime. The principle of non-discrimination means that states shall not discriminate between goods by reference to their places of origin.

 

In the emergence of multinational corporations and global production chains, national economies are being globalized. Modern digital technology made the integration of production at global level possible. The European Union, the North American Free Trade Area and the World Trade Organization represent the institutional manifestation of this new trend. Along with trade liberalization, these institutions have been pursuing the objective of developing global standards and thereby global governance for intellectual property rights, investment, labor rights, etc. There have been formidable obstacles on the way, but still the effort towards a global regime in trade, investment and related aspects such as technology is going on. Trans-Atlantic Trade and Investment Partnership (TTIP), Transpacific Partnership Agreement (TPPA) and Regional Comprehensive Economic Partnership (RCEP) represent this renewed effort. The basic idea seems to be that even if global consensus is not possible, let us try at substantial regional level.

 

2. A BRIEF HISTORY OF WTO AND GATT:

 

The World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade have been enormously successful over the last 50 years at reducing tariff and other trade barriers among an ever-increasing number of countries. The predecessor to the World Trade Organization (WTO) began in 1947 with only 23 members; today it has 164 members, comprising approximately 97 percent of world trade.

 

Although the World Trade Organization (WTO), established in 1995, is relatively young for an international institution, it has its origins in the Bretton Woods Conference at the end of World War II. At this conference, finance ministers from the Allied nations gathered to discuss the failings of World War I’s Versailles Treaty and the creation of a new international monetary system that would support post-war reconstruction, economic stability, and peace.

 

The Bretton Woods Conference produced two of the most important international economic institutions of the post-war period: the International Monetary Fund and the International Bank for Re-construction and Development. Recognizing that the beggar-thy-Neighbour tariff policies of the 1930s had contributed to the environment that led to war, ministers discussed the need for a third post-war institution, the International Trade Organization, but left the problem of designing it to their colleagues in government ministries with responsibility for trade.

 

By the late 1940s, representatives of the American government had met several times with representatives of other major nations to design a post-war international trading system that would parallel the international monetary system. These meetings had two objectives:

 

1) to draft a charter for the International Trade Organization and

 

2) to negotiate the substance of an International Trade Organization agreement, specifically, rules governing international trade and reductions in tariffs.

 

Although a charter was drafted, the International Trade Organization never came into being. By 1948, support for yet another international organization had waned in the U.S. Congress. Without American participation, the institution would have been greatly weakened and, in the event, the effort to create an organization to manage problems relating to international trade was abandoned. However, although the United States Congress would not support another international institution, in 1945 it had given the United States president the authority to negotiate a treaty governing international trade by extending the 1934 Reciprocal Trade Agreements Act. This led to the establishment of the GATT in 1947-a treaty whereby 23 member countries agreed to a set of rules to govern trade with one another and maintained reduced import tariffs for other members. The GATT treaty did not provide for a formal institution, but a small GATT Secretariat, with a limited institutional apparatus, was eventually headquartered in Geneva to administer various problems and complaints that might arise among members.

 

In the very next 40 years, GATT grew in membership and in its success at reducing barriers to trade and enhance the trading scope. At the Bretton Woods Conference, which create the World Bank (WB) and International Monetary Fund (IMF), there was talk of a third organization i.e., International Trade Organization (ITO).

 

1947: as support for another international organization wanes in the U.S. Congress, the General Agreement on Tariffs and Trade (GATT) is created. The General Agreement on Tariffs and Trade treaty creates a set of rules to govern trade among 23 member countries rather than a formal institution.

 

1950: Formal U.S. withdrawal from the International Trade Organization concept as the U.S. administration abandons efforts to seek congressional ratification of the International Trade Organization.

 

1951–1986: Periodic negotiating rounds occur, with occasional discussions of reforms of GATT. In the 1980s, serious problems with dispute resolutions arise.

 

1986–1994: The Uruguay Round, a new round of trade negotiations, is launched. This culminates in a 1994 treaty that establishes the World Trade Organization.

 

1995: The World Trade Organization is created at the end of the Uruguay Round, replacing GATT.

 

2003: The World Trade Organization (WTO) consists of 164 members, accounting for approximately 97 percent of world trade. known as negotiating rounds. These rounds were primarily focused on negotiating further reductions in the maximum tariffs that countries could impose on imports from other General Agreement on Tariffs and Trade (GATT) members. The success of these rounds is evident. Tariffs on manufactured products fell from a trade-weighted average of roughly 35 percent before the creation of General Agreement on Tariffs and Trade (GATT) in 1947 to about 6.4 percent at the start of the Uruguay Round in 1986. Over the same time period, the volume of trade among General Agreement on Tariffs and Trade (GATT) members surged: In 2000 the volume of trade among World Trade Organization members stood at 25 times its 1950 volume. This growth in the volume of trade is impressive and appears to have accelerated in recent decades.

 

Despite this success, by the 1980s several problems had surfaced with the General Agreement on Tariffs and Trade (GATT) apparatus. Firstly, the dispute resolution mechanism of General Agreement on Tariffs and Trade (GATT) was not functioning as effectively as had been hoped. Countries with longstanding disagreements were unable to reach any sort of resolution on a number of issues, ranging from government subsidies for exports to regulations regarding foreign direct investment. Secondly, a number of commodities, most importantly, agricultural products and textiles, were widely exempt from General Agreement on Tariffs and Trade (GATT) disciplines. Thirdly, it was widely believed that certain forms of administered trade protection antidumping duties, voluntary export restraints, and countervailing duties were restricting trade and distorting trade patterns in many important sectors. Fourthly, trade in services was expanding rapidly and GATT had no rules regarding trade in services. Fifthly, countries that produced intellectual property movies, computer programs, patented pharmaceuticals were becoming increasingly frustrated by the lack of intellectual property protection in many developing nations. Lastly, the rules regarding trade-related investment measures for example, domestic purchase requirements for plants built from foreign direct investment were hotly disputed. To address these problems, a new round of trade negotiations the Uruguay Round was launched in 1986. The goals of the Uruguay Round were far more ambitious than in previous rounds. It sought to introduce major reforms into how the world trading system would function.

 

The treaty negotiated during the Uruguay Round, the GATT treaty of 1994, established the World Trade Organization (WTO) the international institution to govern trade that was first visualized by the attendees of the Bretton Woods Conference 50 years earlier. The new GATT treaty provided for an entirely new and different dispute resolution mechanism to eliminate the gridlock of the old system. Furthermore, the Uruguay Round expanded GATT’s authority to new areas agreements regarding trade in textiles, agriculture, services, and intellectual property were major achievements. Finally, new sets of rules regarding administered protection came into effect with the creation of the WTO in 1995.

 

3. A CONCEPT OF GATT AND WTO:

 

The World Trade Organization is an international organization that establishes rules for international trade through consensus among its member states. It also resolves disputes between the members, which are the signatories to its set of trade agreement. WTO was established in 1995. It manages the agreement negotiated by its members, in particular GATT, GATS and TRIPs. Setting up of WTO was agreed by 125 countries in April 1994. It was established under Marrakesh Agreement. The conclusion of Uruguay round of GATT negotiated after more than 7 years led to the formation of WTO.

 

 

4. PURPOSE OF GATT:

 

According to its preamble, the purpose of the GATT is:

i. The substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.

ii. To expand international trade and bring about economic prosperity.

 

5. OBJECTIVES OF GATT:

 

According to the preamble of GATT 1947, the objectives of the contracting parties include:

 i. Raising standards of living

ii. Ensuring full employment

iii.A large and steadily growing volume of real income and effective demand.

iv. Developing the full use of the resources of the world.

v. Expanding the production and exchange of goods.

 

6. FUNDAMENTAL PRINCIPLES OF GATT:

 

There are four fundamental principles of GATT, they are as follows;

 

1. MFN Treatment:

 

This is the fundamental principle of the GATT and it is not a coincidence that it appears in Article 1 of the GATT 1947. It states that each contracting party to the GATT is required to provide to all other contracting parties the same conditions of trade as the most favourable terms it extends to any one of them, i.e., each contracting party is required to treat all contracting parties in the same way that it treats its ‘most-favoured nation’.

 

Article-1, the Most Favoured Nations treatment, is the corner stone of GATT and various other international treaties. It obliges all contracting parties that customs duties and changes of any kind imposed om or in connection with importation and exportation or imposed on the international transfer 0of payment for or exports and with respect to all matters referred to in paragraphs 2 of and 4 of article iii, any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. The MFN treatment is limited to the importation and exportation of products/goods only. Any concession granted by a contracting party to a product of another country shall be accorded immediately to be like product originating in or destined for the territories of all other contracting parties.

 

Article-xiii- stipulates that quantitative restrictions or tariff quotas on any product must be administered in a non-discriminatory fashion with regard to like product.

There are various exceptions either expressly carved in the GATT Article or by waivers and exceptions granted by GATT to the MFN obligations under Article-i. A brief list of such waivers, both as expressed in Articles of the GATT and as granted by waivers and exceptions, is given below:

a. Waivers granted under Article-XXV (5) under exceptional circumstances approved by a two-third majority votes cast and majority means more than half of the contracting parties- some 100-waiver granted to European and steal Community of 1952 which later blossomed into European Economic community. The second important waiver was introduced in 1955 in favour of all agriculture product at the behest of the United States. The waiver granted to the agriculture products has been subjected to international Agreement on agriculture in WTO dispensation and phase out.

b. Security exception under Article-XXI wherein the contracting parties are not required to furnish information which the member nation considers contrary to its essential security interests or taking any action which, the member country considers necessary for protection of its essential security interest.

c. General exceptions under Article-XX allows exceptions to measure which the contracting party feel necessary to protect:

i. necessary to protect public morals;

ii. necessary to protect human, animal or plant life or health;

iii. relating to the importations or exportations of gold or silver;

iv. necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trademarks and copyrights, and the prevention of deceptive practices;

v. relating to the products of prison labour;

vi. imposed for the protection of national treasures of artistic, historic or archaeological value;

vii. relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;

viii. undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to criteria submitted to the CONTRACTING PARTIES and not disapproved by them or which is itself so submitted and not so disapproved;

ix. involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan;

x. essential to the acquisition or distribution of products in general or local short supply.

d. Article-XXIV: Regional integration may be allowed as an exception to the MFN rule only if the following conditions are fulfilled:

i. Tariff and other trade barriers must be eliminated with respect to all trade within region.

ii. Tariff and other trade barriers applied to outside countries must not be higher or more restrictive than they were prior to regional integration.

 

2. National Treatment:

 

National Treatment stands alongside MFN treatment, under the national treatment rule, members must not accord discriminatory appropriate treatment between imports and like domestic product. This rule prevents countries from taking discriminatory measures on imports on the one hand and to prevent countries from offsetting of tariff through non-tariff measures.

 

The purpose of Article III is to ensure that internal measures such as taxes and other internal changes and laws should not applied to imported or domestic product so that they are affordable. It provides equality in competition between imported and domestic product. It is to treat the imported products in the same way as the domestic products must be treated as like products.

 

Although national treatment is a basic principle under the GATT, the GATT provides for certain exceptions as follows:

 

a) Government Procurement:

 

GATT Article III: 8(a) permits governments to purchase domestic products preferentially, making government procurement one of the exceptions to the national treatment rule. This exception is permitted because WTO Members recognize the role of government procurement in national policy. For example, there may be a security need to develop and purchase products domestically, or government procurement may, as is often the case, be used as a policy tool to promote smaller business, local industry or advanced technologies. While the GATT made government procurement an exception to the national treatment rule, the Agreement on Government Procurement resulting from the Uruguay Round mandates signatories to offer national treatment in their government procurement. However, WTO Members are under no obligation to join the Agreement on Government Procurement. In fact, it has mostly been developed countries that have joined the Agreement. Therefore, in the context of government procurement, the national treatment rule applies only between those who have acceded to the Agreement on Government Procurement, and for others, the traditional exception is still in force.

 

(b) Domestic Subsidies:

 

GATT Article III:8 (b) allows for the payment of subsidies exclusively to domestic producers as an exception to the national treatment rule, under the condition that it is not in violation of other provisions in Article III and the Agreement on Subsidies and Countervailing Measures. The reason for this exception is that subsidies are recognized to be an effective policy tool, and is recognized to be basically within the latitude of domestic policy authorities. However, because subsidies may have a negative effect on trade, the Agreement on Subsidies and Countervailing Measures imposes strict disciplines on the use of subsidies.

 

(c) GATT Article XVIII: C:

 

Members in the early stages of development can raise their standard of living by promoting the establishment of infant industries, but this may require government support and the goal may not be realistically attainable with measures that conform to the GATT. In such cases, countries can use the provisions of GATT Article XVIII: C to notify WTO Members and initiate consultations. After consultations are completed and under certain restrictions, these countries are then allowed to take measures that are inconsistent with GATT provisions excluding Articles I, II and XIII.

 

(d) Other Exceptions to National Treatment:

General Exceptions would also apply on the principle of national treatment. The provisions of GATT Article XX on general exceptions, Article XXI on security exceptions and WTO Article IX on waivers also apply to the national treatment rule.

 

3. Protection through tariffs:

 

GATT generally prohibits quantitative restrictions or quota. Instead, contracting parties are expected to provide protection by means of tariff which are transparent and subject of negotiation in the GATT.

4. Dispute settlement:

 

The dispute resolution and remedies in the international law are not as developed as the substantive remedies available in the domestic law.

 

The founder of GATT understood that dispute could arise between contracting parties and about how to interpreted the code and what to do about violations. No specific provisions were written into article xxiii about how a controversy submitted to the contracting parties was to be resolved except that the contracting parties shall promptly investigate and shall make appropriate recommendation.

 

Further, the emphasis in Article-xxiii is on in jure, i.e., the complaining party must assert and eventually establish that a benefit accruing to it under the General Agreement is being nullified or impaired. No provisions were made in the original GATT or later for a complaint procedure initiated by the organisation itself.

 

6. OBJECTIVES OF WTO:

 

The objectives of WTO are as follows;

     I.         To implement the new world trade system as visualized in the agreement;

   II.         To promote World trade in a manner that benefits every country;

 III.        To ensure that developing countries secure a better balance in the sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs.

 IV.         To demolish all hurls to an open world trading system and usher in international economic renaissance because the trade in an effective instrument to foster economic growth.

 V.          To enhance competitiveness among all trading partners so as to benefit consumers and help in global integration.

 VI.         To increase the level of production and productivity with a view to ensuring level of employment in the world.

VII.        To expand and utilize world resources to the best.

VIII.      To improve the level of living for the global population and speed up economic development of the member nations.

 

7. WTO FUNDAMENTAL PRINCIPLES OF TRADING:

 

The WTO fundamental principle of trading are:

   I.       A trading system should be free of discrimination in the sense that one country cannot privileges a particular trading partner above others within the system, nor can it discriminate against foreign products and services.

   II.       A trading system should tend towards more freedom, that is, toward fewer trade barriers.

 III.       A trading system should be predictable, with foreign companies and governments measures that trade barriers with not be raised arbitrarily and that markets will remain open.

 IV.      A trading system should tend toward greater competition.

 V.        A trading system should be more accommodating for less developed countries, giving them more time to adjust, greater flexibility and more privileges.

 

8. FUNCTIONS OF WTO:

 

The former GATT was not really an organization; it was merely a legal arrangement. On the other hand, the WTO is a new international organization set-up as a permanent body. It is to play the role of a watchdog in the shares of trade in goods, trade in services, foreign investment, intellectual property right, etc. article iii has set out the following five function of WTO;

I. To WTO shall facilitate implementation, administration and operation and further the objectives of this Agreement and of the Multilateral Trade Agreements and shall also provide the frame work for the implementation, administration and operation of the Plurilateral Trade Agreement (means that WTO member countries would be given the choice to are to new rules on a voluntary basis).

II. The WTO shall provide the forum for negotiations along its members concerning their multilateral trade relations matters dealt with under the Agreement in the annexes to this agreement.

III. The WTO shall administer shall administer the understanding on Rules and procedures Governing the settlement of disputes.

IV. The WTO shall administer Trade Policy Review Mechanism.

V. With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriated, with the international Monetary Fund and with the International Bank for Reconstruction named Development (IBRD) and its facilitated agencies.

9. THE EMERGENCE OF WTO:

 

GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s -around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.

 

But all was not well. As time passed new problems arose. The Tokyo Round in the 1970s was an attempt to tackle some of these but its achievements were limited. This was a sign of difficult times to come.

 

GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.

 

The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services not covered by GATT rules was of major interest to more and more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world merchandise trade. In other respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifibre arrangement. Even GATT’s institutional structure and its dispute settlement system were causing concern.

 

These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay round. the Marrakesh Declaration, and the creation of the WTO in the years 1995.

 

10. THE IMPORTANCE OF WTO TO WORLD TRADE:

 

The WTO is at the forefront of efforts to ensure unimpeded global free trade and reduce trade barriers, operating on a rules-based multilateral system. It has made important contributions to the progress made around the world towards promoting global trade. This has led to the growth of a number of economies, the emergence of new market all important factors not only in improving business, but also in lifting people out of poverty.

 

It does this by implementing, regulating and operating trade agreements between countries, and provides a fair forum for trade negotiations between member countries, mediating on disputes as they arise. It aims to help with imports, exports and conducting trade fairly.

 

The WTO also cooperates with the IMF and World Bank to ensure global economic policies are fair and cohesive. Therefore, it isn’t a matter of the WTO being important for international business, but of it being absolutely fundamental. Different countries operate on different regulations and rules between different countries, and it’s not easy for an international business to stay on top of these when it operates in multiple countries. But the job would be a lot more difficult if these rules were unfair or unreliable, or not consistently applied.

 

The importance of a regulatory body such as the WTO is especially pressing at a time of such pronounced global uncertainty several of its members are currently using it to dispute President Trump’s Trade tariffs, while a no-deal Brexit scenario would likely see the UK revert to WTO rule.

 

Understanding the work and nature of the WTO is therefore an important part of remaining aware of the changing landscape of international trading system.

 

11. STRUCTURE/WORKING OF WTO:

 

The world trade organisation came into force on January 1,1995, fully replacing the previous GATT secretariat as the organisation responsible for administering the international trade regime. The basic structure of the WTO includes the following bodies;

 

(a) Ministerial conference:

 

The ministerial conference, which is composed of international trade ministers from all member countries. This is governing body of the WTO, responsible for setting the strategic direction of the organisation and making all final decision on agreement under its wings. The Ministerial Conference meets at least once every two years. Although voting can take place, decision is generally taken by consensus, a process that can at times be difficult, particularly in a body composed of 136 very different members.

 

(b) The General Council:

 

The General Council composed of senior representatives of all members. It is responsible for overseeing the day-to-day business and management of the WTO and is based at the WTO headquarters in Geneva. In practice, this the key decision-making arm of WTO for most issues. Several of the bodies described below report directly to the General Council.

 

(c) The Trade Policy Review Body:

 

The Trade Policy Review body is also composed of all the WTO members, and oversees the Trade Policy Review Mechanism, a product of the Uruguay Round. It periodically reviews the trade policies and practices of all member states. These reviews are intended to provide a general indication of how states are implementing their obligations and to contribute to improve adherence by the WTO parties to their obligations

 

(d) The Dispute settlement Body:

 

The Dispute Settlement body is also composed of all the WTO members. It oversees the implementation and effectiveness of the dispute resolution process for all WTO agreement and the implementation of the decision on EWTO disputes. Disputes are heard and ruled on by dispute resolution panels closed individually for each case, and the permanent Appellate body that was established in 1994. Dispute resolution is mandatory and binding on all members. A final decision of the Appellate body can only be reversed by a full consensus of the Dispute settlement body.

 

(e) The council on trade in Goods and Trade in services:

 

The council on trade in Goods and Trade in services operate under the mandate of the General Council and are composed of all members. They provide a mechanism to oversee the details of the general and specific agreement on trade in goods (such as those on textile and agriculture) and trade in services. There is also a council for all the Agreement on Trade-Related Aspects of intellectual property right, deals with just that agreement and subject area.

 

(f) The secretariate and Director general:

 

The secretariate and Director general of the WTO reside in Geneva, in the old home of GATT. The secretariate now numbers just under 550 people and under takes the administrative functions of running all aspects of the organisation. The secretariate has no legal decision-making powers but provides vital services and often advice, to those who do. The secretariate is headed by the Director General, who is elected by members.

 

(g) The Committee on Trade and development and Committee on Trade and environment:

 

The Committee on Trade and development and Committee on Trade and environment are two of the several committees continued 0or established under the Marrakesh Agreement in 1994. They have specific mandates to focus on these relationships, which are especially relevant to how the WTO deals with sustainable development issues. The committee on Trade and development was established in 1965. The forerunner to the committee on Trade and environment (the Group on Environment Measures and International Trade) was established in 1971 but did not meet until 1992.

 

The structure of the WTO is dominated by its highest authority, the Ministerial Conference, composed of representatives of all WTO members, which is required to meet at least every two years and which can take decisions on all matters under any of the multilateral trade agreement.

 

The day-to-day work of the WTO, however, falls to a number of subsidiary bodies; principally the General Council also composed of all WTO members, which is required to report to the Ministerial Conference. As well as conducting its regular work on behalf of the Ministerial conference, the General Council convince in two particular form-as the Dispute settlement body, to oversee the dispute settlement procedures and as the Trade Policy Review Body to conduct regular reviews of the trade policies of individuals WTO members.

 

The General Council delegates responsibility to three other major bodies namely; the Council Trade in Goods, Trade in services and Trade- Related Aspects of Intellectual Property. The Councils for Goods oversees the implementation and functioning of all the agreements covering trade in goods, though many such agreements have their own specific overseeing bodies. The latter two councils have responsibility for their respective WTO agreements and may establish their own subsidiary bodies as necessary.

 

Three others are established by the Ministerial Conference and report to the General Council. The Committee on Trade and development is concerned with issues relating to the developing countries and especially to the ‘least-developed’ among them. The Committee on Balance of Payments is responsible for consultation between WTO members and countries which take trade-restrictive measures, under Article- xii and xviii of GATT, in order to cope with balance-of-payment difficulties. Finally, issues relating to WTO’s financing and budget are dealt with by a committee on budget.

 

12. CONCLUSION:

 

In this research paper the researcher has research on the emergence of WTO from its precursor GATT and its implementation in the International Trade and concluding the research with the foregoing statements beginning with the early inter-war period, nation states had shown desire to regulate their international trade and finance through institutional efforts. The period between 1914-45 which witnessed severe economic turmoil, further promoted their efforts to cooperate in regulation of trade and finance, in-order to further prevent wars. The inter-war period was characterised by several discriminatory policies adopted by the states, for example- beggar thy neighbour, imperial preferences in regulating tariffs, imposing high tariffs and indulging in competitive devaluation. These practices along with the prevailing macro-economic conditions characterised by the great depression in 1929 and the destruction caused by the two world wars, finally led members of the US, UK and allied powers to convene the Bretton Woods conference. The conference on 1944 has successfully created two institutions for financial regulation and economic development- IMF and IBRD.

 

However, a similar organisation to regulate trade- ITO could not be finalised. The reasons for the failure of ITO’s birth was its ambitious charter, which member states especially the US found too intrusive to domestic regulation. Instead, GATT which was initiated by 23 member states in 1947 continued to gain strength in the period that followed. Despite its provisional application, it created an initial trade package deal, tariff concession and subsequent trade liberalisation, before being finally succeeded by the modern institution of the WTO. Though historical, Bretton Woods and its efforts hold contemporary relevance. It provides an insight into the political economy of the inter-war period. It further emphasis the role of regulation in economic liberalisation, a debate which has resurfaced in the light of the on-going global economic crisis.

 

In abstract, free trade and protectionism represent two ends of spectrum. In practice, no state is likely to identify itself with the extreme ends of the spectrum. States have by and large pursued the policies containing the elements of both: free trade and protectionism. With the establishment of the GATT and the WTO at a later stage, free trade components have become more pronounced in the state policies. The success of East Asian economies is the vindication of their dexterity in conceiving and executing the combinations of free trade and protectionism.

 

The World Trade Organisation or the WTO is the only such global international entity that deals with the rules and regulations related to international trade between different countries. Such regulations and obligations only cover countries that hold membership to the World Trade Organisation. The functioning of the WTO is based on negotiated and signed WTO agreements between member countries. It has to be kept in mind that the WTO agreements will have to be ratified by the parliaments of the member countries. 

 

The WTO is at the forefront of efforts to ensure unimpeded global free trade and reduce trade barriers, operating on a rules-based multilateral system. It has made important contributions to the progress made around the world towards promoting global trade. This has led to the growth of a number of economies, the emergence of new market all important factors not only in improving business, but also in lifting people out of poverty.

 

It does this by implementing, regulating and operating trade agreements between countries, and provides a fair forum for trade negotiations between member countries, mediating on disputes as they arise. It aims to help with imports, exports and conducting trade fairly.

 

The WTO also cooperates with the IMF and World Bank to ensure global economic policies are fair and cohesive. Therefore, it isn’t a matter of the WTO being important for international business, but of it being absolutely fundamental. Different countries operate on different regulations and rules between different countries, and it’s not easy for an international business to stay on top of these when it operates in multiple countries. But the job would be a lot more difficult if these rules were unfair or unreliable, or not consistently applied.