Sunday, October 07, 2012

World Trade Organisation

World Trade Organisation
                The WTO was established on January 1, 1995. It is the embodiment of the Uruguay Round results and the successor to GATT. 76 Governments became members of WTO on its first day. It has now 146 members, India being one of the founder members. It has a legal status and enjoys privileges and immunities on the same footing as the IMF and the World Bank. It is composed of the Ministerial Conference and the General Council.
The Ministerial Conference is the executive of the WTO and responsible for carrying out the functions of the WTO. The Ministerial Conference meets at least once every two years. The General Council is an executive forum composed of representatives of all the Members. The General Council discharges the functions of Ministerial Conference during the intervals between meetings of Ministerial Conference. The General Council has three functional councils working under its guidance and supervision namely:
a) Council for Trade in Goods.
b) Council for Trade in Services.
c) Council for Trade Related Aspects of Intellectual Property Rights (TRIPs).
Director-General heads the secretariat of WTO. He is responsible for preparing budgets and financial statements of the WTO. WTO has now become the third pillar of United Nations Organization (UNO) after World Bank and International Monetary Fund.
Objectives Of WTO
WTO lays down the following objectives:
a)      Relation in the field of trade shall be conducted with a view to raising standards of living, ensuring full employment and large and steadily growing volume of real income and effective demand, and expanding the production and trade in goods and services.
b)      To allow for the optimal use of the world’s resources in accordance with the objective of sustainable development.
c)       To make positive efforts designed to ensure that developing countries especially the least developed among them, secure a share in the growth in international trade.
d)      To achieve these objectives by entering into reciprocal and mutually advantageous arrangements directed towards substantial reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international trade relations.
e)      To develop an integrated, more viable and durable multilateral trading system.
f)       To ensure linkages between trade policies, environment policies and sustainable development.

Functions of WTO
The following are the functions of the WTO:
a)      It facilitates the implementation, administration and operation of the objectives of the Agreement and of the Multilateral Trade Agreements.
b)      It provides the framework for the implementation, administration and operation of the multilateral Trade Agreements relating to trade in civil aircraft, government procurement, trade in diary products and bovine meat.
c)       It provides the forum for negotiations among its members.
d)      It administers the Understanding on Rules and Procedures governing the Settlement of Disputes of the Agreement.
e)      It cooperates with the IMF and the World Bank and its affiliated agencies with a view to achieving greater coherence in global economic policy-making.

Implications for India
After the Uruguay Round, India was one of the first 76 Governments that became member of the WTO on its first day. Different views have been expressed in support and against our country becoming a member of the WTO.
Favourable Factors
a)      Benefits from reduction of tariffs on exports.
b)      Improved prospects for agricultural exports because the prices of agricultural products in the world market will increase due to reduction in domestic subsidies and barriers to trade.
c)       Likely increase in the exports of textiles and clothing due to the phasing out of MFA by 2005.
d)      Advantages from greater security and predictability of the international trading system.
e)      Compulsions imposed on India to be competitive in the world market.
Unfavourable Factors
a)      Tariff reductions on goods of export interest to India are very small.
b)      Less prospects of increase in agricultural exports due to the limited extent of agricultural liberalisation.
c)       There will be hardly any liberalisation of our textile exports during the next 10 years.
d)      India will be under pressure to liberalize the services industries.
e)      There will be only marginal liberalisation to the movement of labour services in which it is competitive.
f)       Increased outflows of foreign exchange due to commitments undertaken in the fields of TRIPS, TRIMS and services.
g)      Technological dependence on foreign firms will increase.
h)      Only a few large firms or transnational corporations may benefit and smaller firms may disappear.

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