The economic policy of 1991 has changed the scenario of business in India, it has started spreading its wings beyond boundaries. Due to a sharp increase in the international business and removal of trade and tariff barriers, it became more important to regulate the trade so that business can progress effectively. This was the reason where a proper organization was required to administer it. To ensure proper functioning of trade operations, various organizations were formed among different countries. The
World Trade Organization (WTO) was formed in 1995 by about 77 countries (including India) to facilitate multilateral trade arrangements between different countries. Before the establishment of WTO, the countries followed a legal arrangement known as the General Agreement on Tariffs and Trade (GATT) to facilitate international trade.
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| Image credit: brics-info.org |
GATT was formed on 30th October 1947 when a conference was held in Geneva. It came into real existence and started functioning from 1st January 1948. 80% of world trade is influenced by the functions of GATT. It is neither an organization nor a court of justice, it is a decision-making body. Here, the members meet from time to time to discuss and solve their problems and establish a friendly relation among its members.
The WTO is a successor to GATT and has
153 members which represent more the 95% of total world trade. It is governed by a Ministerial Conference, which meets every two years; a General Council which implements the conference’s policy decisions and is responsible for day-to- day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO’s headquarters is in Geneva, Switzerland.
Few objectives of WTO have been mentioned below;
- It eliminates discriminatory treatment in international trade relations.
- It facilitates the optimal use of the world’s resources for sustainable development.
- It helps in ensuring reduction on tariffs and other barriers to trade operations.
- It facilitates higher standards of living, full employment, increase in production and trade in goods and services of the member nations.
The functions of WTO have been enlisted below;
- It administers the understanding of rules and procedures, governing the settlement of disputes of the agreement.
- It facilitates the implementation, administration, and operation of the objectives of the Multilateral Trade Agreement.
- It cooperates with the IMF and World Bank with a view to achieving a greater coherence in global economic policy.
- It ensures the implementation of the substantive code.
- It acts as a forum for the negotiation of further trade liberalization.
The WTO plays an important role in the economic integration of different countries of the world. Many problems which are faced in International Trade can be solved by these trade organizations. The foremost among them are customs, unions, preferential trade, free trade zones and above all financial problems. India is also likely to benefit from the improved prospects of agricultural exports because world price of agricultural products would be relatively higher than those in India when the developed countries of the world would reduce the agricultural subsidy under the WTO regime.
Article by Anisha Dutta
She is a content evangelist who believes that the Science of today is the Technology of tomorrow.
She can be reached at https://twitter.com/Anisha_Dutta29
