WTO: PRINCIPLES, OBJECTIVES &

ORGANIZATIONAL STRUCTURE
Project submitted in partial fulfillment of course in
Economics of Global Trade and Finance
At
M.Com. Part I
2014-2015
By:
Name : Alekha Mittal
Roll no: 31
Guiding Teacher:
Dr. CVS RANGSAI
M.A, M.Phil, D.E.M.,M.D., Ph.D

Dr. V. Kurusu
M.A., B.Ed., P.G.C.P.S., PGDPS, M.Phil, Ph.D., L.L.B., M.B.A

University Of Mumbai
Kets V.G.Vaze College of Arts, Science & Commerce,
Mumbai

WTO: PRINCIPLES, OBJECTIVES & ORGANIZATIONAL

STRUCTURE
(Sub. Economics of Global Trade and Finance)

Project Submitted to

Kets V.G.Vaze College of Arts, Science & Commerce

Mumbai University
For the Degree of Master in Commerce

By
ALEKHA MITTAL
ROLL NO. 31

Under the Guidance of

Dr. CVS RANGSAI
M.A, M.Phil, D.E.M.,M.D., Ph.D

Dr. V. Kurusu
M.A., B.Ed., P.G.C.P.S., PGDPS, M.Phil, Ph.D., L.L.B., M.B.A

2014

DECLARATION

I hereby declare that the Project titled A Study of WTO: PRINCIPLES, OBJECTIVES
& ORGANIZATIONAL STRUCTURE Submitted by me is based on actual work carried
out by me under the guidance and supervision of .The contents of project are not
copied from any other source such as internet, earlier projects, text book etc. It is
further to state that this work has not been submitted for any other degree of this or
any other university.

Date :
PLACE: MULUND

ALEKHA MITTAL
M.Com
Roll no. 31

Dr. CVS RANGSAI

M.A, M.Phil, D.E.M.,M.D., Ph.D.

GUIDE
Dr. V. Kurusu
M.A., B.Ed., P.G.C.P.S., PGDPS, M.Phil,
Ph.D., L.L.B., M.B.A

GUIDE

CERTIFICATE
This is to certify that the project Titled WTO: PRINCIPLES, OBJECTIVES
& ORGANIZATIONAL STRUCTURE

is being submitted by me in partial

fulfillment of the course in Economics of Global Trade and Finance at

M.Com. Part I during 2014-15.
Date:
ALEKHA MITTAL
Guiding Teacher
Signature

Guiding Teacher
Signature

External Examiner
Signature

ACKNOWLEDGEMENT:

The present work is an effort to throw some light on WTO: PRINCIPLES,

OBJECTIVES & ORGANIZATIONAL STRUCTURE. The work would not have
been possible to come to the present shape without the able guidance, supervision
and help to me by number of people. With deep sense of gratitude I acknowledge
the encouragement and guidance received by our faculty guide,
I convey my heartfelt affection to all those people who helped and supported me
during the course of completion of my Project Report.

SUMMARY
Over the past 60 years, the WTO, which was established in 1995, and its
predecessor organization the GATT have helped to create a strong and prosperous
international trading system, thereby contributing to unprecedented global
economic growth. The WTO provides a forum for negotiating agreements aimed at
reducing obstacles to international trade and ensuring a level playing field for all.
The WTO also provides a legal and institutional framework for the implementation
and monitoring of these agreements, as well as for settling disputes arising from
their interpretation and application.
The WTO currently has 160 members, of which 117 are developing countries or
separate customs territories. WTO activities are supported by a Secretariat of some
700 staff, led by the WTO Director-General. The Secretariat is located in Geneva,
Switzerland, and has an annual budget of approximately CHF 200 million
($180 million, 130 million). The three official languages of the WTO are English,
French and Spanish.
Decisions in the WTO are generally taken by consensus of the entire membership.
The highest institutional body is the Ministerial Conference, which meets roughly
every two years. A General Council conducts the organization's business in the
intervals between Ministerial Conferences. Both of these bodies comprise all
members. Specialised subsidiary bodies (Councils, Committees, Sub-committees),
also comprising all members, administer and monitor the implementation by
members of the various WTO agreements.
The WTO's founding and guiding principles remain the pursuit of open borders,
the guarantee of most-favoured-nation principle and non-discriminatory treatment
by and among members, and a commitment to transparency in the conduct of its
activities. The opening of national markets to international trade will encourage
and contribute to sustainable development, raise people's welfare, reduce poverty,
and foster peace and stability. At the same time, such market opening must be
accompanied by sound domestic and international policies that contribute to
economic growth and development according to each member's needs and
aspirations
6

OBJECTIVE
a. To know about WTO
b. To know about GATT and subsequent change to WTO
c. To study about objectives, functions & organizational structure

INDEX
7

Sr.no

Chapters

1.

Introduction

2.

Topic name

WTO

3.

Agreements of
WTO

Introduction

Historical background of Trade

Negotiation that led birth of WTO

11

Bretton Woods Conference

GATT
Uruguay Round of Trade Negotiation

11
12
14

Functions of WTO

15

Principles of WTO
Objectives of WTO
Benefits of WTO
Structure of WTO
Definition & Meaning
Tariff Cuts
Agriculture

17
19
21
23
32
33
33
34
35
36
37
37

Services
Intellectual Property
Trademark

4.
5.

Conclusion
Webliography

CHAPTER 1: INTRODUCTION
8

Page no.

1. OBJECTIVES
This Unit would give you an Introduction to GATT & WTO by explaining
Introduction.
Historical background of Trade Negotiation that led birth of WTO
Bretton Woods Conference
GATT
Uruguay Round of Trade Negotiation

2. INTRODUCTION
The World Trade Organization (WTO) is an organization that intends to
supervise and liberalize international trade. The World Trade Organization
was founded on 1st January 1995 to replace the General Agreement on
Tariffs and Trade (GATT). This multilateral organization aims to lower
tariffs and non-tariff barriers so as to increase international trade. The 160
member states meet in ministerial sessions at least once every two years. The
World Trade Organization (WTO) is an international, multilateral
organization, which sets the rules for the global trading system and resolves
disputes between its member states, all of whom are signatories to its about
60 agreements. WTO headquarters are located in Geneva, Switzerland.
Roberto Azevedo is the current Director-General. As of now, there are 160
members in the organization, with. All WTO members are required to grant
one another most favoured nation status, such that ( with some exceptions )
trade concessions granted by a WTO member to another country must be
granted to all WTO members. Since its inception in 1995, the WTO has been
a major target for protests by the anti-globalization movement. The WTO
was born out of negotiations, and everything the WTO does is the result of
negotiations. The bulk of the WTOs current work comes from the 198694
negotiations called the Uruguay Round and earlier negotiations under the
General Agreement on Tariffs and Trade (GATT). The WTO is currently the
host to new negotiations, under the Doha Development Agenda launched in
2001. Where countries have faced trade barriers and wanted them lowered,
the negotiations have helped to open markets for trade.
But the WTO is not just about opening markets, and in some circumstances
its rules support maintaining trade barriers - for example, to protect
9

consumers or prevent the spread of disease. At its heart are the WTO
agreements, negotiated and signed by the bulk of the worlds trading
nations. These documents provide the legal ground rules for international
commerce. They are essentially contracts, binding governments to keep their
trade policies within agreed limits. Although negotiated and signed by
governments, the goal is to help producers of goods and services, exporters,
and importers conduct their business, while allowing governments to meet
social and environmental objectives. The systems overriding purpose is to
help trade flow as freely as possible - so long as there are no undesirable side
effects - because this is important for economic development and well-being.
That partly means removing obstacles. It also means ensuring that
individuals, companies and governments know what the trade rules are
around the world, and giving them the confidence that there will be no
sudden changes of policy. In other words, the rules have to be transparent
and predictable. Trade relations often involve conflicting interests.
Agreements, including those painstakingly negotiated in the WTO system,
often need interpreting. The most harmonious way to settle these differences
is through some neutral procedure based on an agreed legal foundation. That
is the purpose behind the dispute settlement process written into the WTO
agreements.

3. Historical background of Trade Negotiation that led birth of

WTO
The need for an International Economic Order, goes back to the economic
crisis of the late 1920s and early 1930s. It was classic long-term
10

depression, with very low growth, in some years negative growth,

fall in international trade and an unstable international monetary
situation.

4. BRETTON WOODS CONFERENCE

With a view to avoid recurrence of the chaos that the world economic
crisis of 1930s had produced, the non socialist, industrial, capitalist
countries along with some Asian, African and Latin American
countries had met at Bretton Woods in New Hampshire (USA) in
July, 1944 to discuss the establishment of an International Economic
Order.
In the Bretton Woods Conference, an organizationally managed international
economic framework was developed. The Bretton Woods conference was
sponsored by, the United States, United Kingdom, France, erstwhile USSR
and China. However, at the time of finalizing various international
arrangements ,Soviet Union came out of these negotiations primarily due
to the engulfing cold war.
This group of countries established two central instruments for international
financial monetary cooperation. The first instrument was the International
Bank for Reconstruction and Development (IBRD), also known as World
Bank. The second instrument, which the Bretton Woods group, established
was the International Monetary Fund (IMF). The voting rights in these two
institutions were determined by the size of the quota of the country

A need was felt for a separate organization for problems of commodities,

their fluctuating prices and the consequent vulnerability of the under
developed nations to such fluctuations in international market. Accordingly,
the Havana charter was framed and signed in 1948 in Cuba. This Havana
charter was to establish the International Trade Organization (ITO). But it
could not be established due to resistance from the US Senate. In its place,
however, a protocol of Provisional Application was signed by 23 original
members; India was one of the 23 members. The protocol ushered in
11

General Agreement on Tariffs and Trade (GATT) on 1stJanuary, 1948 to

bring international trade in order.

5. General Agreement on Tariffs and Trade (GATT)

The GATT has been the only multilateral body around, from 1948 to1994
that provided rules for much of the World Trade. The contracting parties of
GATT continuously expanded the area and scope of the rules during the
successive trade rounds.
The guiding principles of GATT were:
1. Trade should be on a non-discriminatory basis.
2. Domestic industry should only be protected by means of customs tariffs.
3. The aim of consultations should be to avoid damage to the interest of the
members.
4. GATT should serve as a forum within which negotiations could be held to
reduce tariffs and other trade.
In the earlier rounds of talks only relatively simple issues were discussed
and thus a negotiated settlement was found.
During the first 30 years of the GATTs existence, seven major trade
negotiations took place: The Geneva Round (Switzerland, 1947); Annecy
Round (France, 1949); Torquay Round (England, 1951); Geneva Round
(Switzerland, 1956); Dillon Round (Switzerland, 1960-62); Kennedy Round
(Switzerland, 1964-67) and Tokyo Round (Japan, 1973-79). Finally, the
Uruguay Round, the eighth round of negotiations commenced in September,
1986

Year

1947
1949
12

THE GATT TRADE ROUND

Place of the
Subject covered
round
Geneva
Annecy

Tariffs
Tariffs

No. of
nation
s
23
13

1951
1960-61
1956
1964-67
1973-79

1986-94

Torquay
Geneva /
Kennedy rd
Geneva
Geneva/
Kennedy rd.
Geneva/Tokyo rd.

Tariffs
Tariffs and anti-dumping
measures
Tariffs
Tariffs & Anti dumping measures

38
26

Tariffs, non-tariff measures

framework agreements

102

Geneva/Uruguay
rd.

Tariffs, non-tariff measures, rules,

123
services, IPRs, dispute settlement,
textiles, agriculture, creation of WTO.

26
62

In the Geneva Round (1947), 20 schedules were established which covered tariff
concessions. In the Torquay Round (1951), tariffs were reduced by 25 per cent in
relation to the 1948 levels. Tariff concessions on a product-wise basis continued to
be made in each successive round.
The earlier trade rounds were primarily focused over cuts in tariffs of goods, but
later these gradually became more ambitious in scope. The Kennedy Round in the
mid-sixties brought about a GATT anti-dumping Agreement and a section on
development. The Tokyo Round during the seventies was the first major attempt to
tackle trade barriers that do not take the form of tariffs, and to improve the system,
by adopting a series of agreements on non-tariff barriers. Because these plurilateral
agreements were not accepted by the full GATT membership, they were often
informally called "codes". Several of these codes were amended in the Uruguay
Round, and turned into multilateral commitments accepted by all WTO members.
Only four remained plurilateral (those on government procurement, bovine meat,
civil aircraft and dairy products), but in 1997 WTO members agreed to terminate
the bovine meat and dairy agreements, leaving only two.

6. URUGUAY ROUND OF TRADE NEGOTIATION

Before GATT's 40th anniversary, its members concluded that the GATT system
was straining to adapt to a new globalizing world economy. In response to the
13

problems identified in the 1982 Ministerial Declaration (structural deficiencies,

spill-over impacts of certain countries' policies on world trade GATT could not
manage etc.), the eighth GATT round known as the Uruguay Round was
launched in September 1986, in Punta del Este, Uruguay.
It was the biggest negotiating mandate on trade ever agreed: the talks were going
to extend the trading system into several new areas, notably trade in services and
intellectual property, and to reform trade in the sensitive sectors of agriculture and
textiles; all the original GATT articles were up for review. The Final Act
concluding the Uruguay Round and officially establishing the WTO regime was
signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and
hence is known as the Marrakesh Agreement.
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a
result of the Uruguay Round negotiations. GATT 1994 is not however the only
legally binding agreement included via the Final Act at Marrakesh; a long list of
about 60 agreements, annexes, decisions and understandings was adopted.
The agreements fall into a structure with six main parts:
The Agreement Establishing the WTO
Goods and investment the Multilateral Agreements on Trade in Goods
including the GATT 1994 and the Trade Related Investment Measures
(TRIMS)
Services the General Agreement on Trade in Services
Intellectual property the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)
Dispute settlement (DSU)
Reviews of governments' trade policies (TPRM)
In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the
Uruguay Round has been successful in increasing binding commitments by both
developed and developing countries, as may be seen in the percentages of tariffs
bound before and after the 19861994 talks.
14

CHAPTER 2: WORLD TRADE ORGANIZATION

(WTO)
1. OBJECTIVES
This Unit would give you an Introduction to WTO by explaining:
Functions of WTO
Principles of WTO
Objectives of WTO
Benefits of WTO
Structure of WTO

2. FUNCTIONS OF WTO
While the WTO is driven by its member states, it could not function
without its Secretariat to coordinate the activities. The Secretariat
employs over 600 staff, and its experts - lawyers, economists, statisticians
and communications experts - assist WTO members on a daily basis to
ensure, among other things, that negotiations progress smoothly, and that
the rules of international trade are correctly applied and enforced. 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 designed to play the role of
a watchdog in the spheres of trade in goods, trade in services, foreign
investment, intellectual property rights, etc. Article III has set out the
following functions of WTO:
Trade Negotiations:
The WTO agreements cover goods, services and intellectual property.
They spell out the principles of liberalization, and the permitted
exceptions. They include individual countries commitments to lower
customs tariffs and other trade barriers, and to open and keep open
services markets. They set procedures for settling disputes. These
agreements are not static; they are renegotiated from time to time and
new agreements can be added to the package. Many are now being
negotiated under the Doha Development Agenda, launched by WTO
trade ministers in Doha, Qatar, in November 2001.
Implementation and Monitoring:
15

WTO agreements require governments to make their trade policies

transparent by notifying the WTO about laws in force and measures
adopted. Various WTO councils and committees seek to ensure that
these requirements are being followed and that WTO agreements are
being properly implemented. All WTO members must undergo
periodic scrutiny of their trade policies and practices, each review
containing reports by the country concerned and the WTO Secretariat.

Dispute Settlement:
The WTOs procedure for resolving trade quarrels under the
Dispute Settlement Understanding is vital for enforcing the rules
and therefore for ensuring that trade flows smoothly. Countries
bring disputes to the WTO if they think their rights under the
agreements are being infringed. Judgments by specially appointed
independent experts are based on interpretations of the agreements
and individual countries commitments.
Building Trade Capacity:
WTO agreements contain special provision for developing
countries, including longer time periods to implement agreements
and commitments, measures to increase their trading opportunities,
and support to help them build their trade capacity, to handle
disputes and to implement technical standards. The WTO
organizes hundreds of technical co-operation missions to
developing countries annually. It also holds numerous courses each
year in Geneva for government officials. Aid for Trade aims to
help developing countries develop the skills and infrastructure
needed to expand their trade.
Outreach:
The WTO maintains regular dialogue with non-governmental
organizations, parliamentarians, other international organizations,
the media and the general public on various aspects of the WTO
and the ongoing Doha negotiations, with the aim of enhancing
cooperation and increasing awareness of WTO activities.

16

3. PRINCIPLES OF WTO
The WTO agreements are lengthy and complex because they are legal
texts covering a wide range of activities. But a number of simple,
fundamental principles run throughout all of these documents. These
principles are the foundation of the multilateral trading system.

Non-discrimination:
Under the WTO agreements, countries cannot normally discriminate
between their trading partners, grant someone a special favor (such as a
lower customs duty rate for one of their products). If you do the same
you have to do that for all other WTO members. This principle is known
as Most Favored Nation (MFN) treatment. It is so important that it is the
first article of the World Trade Organization (WTO), which governs trade
in goods. MFN is also a priority in the General Agreement on Trade in
Services (GATS) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)
Imported and locally produced goods should be treated equally - at
least after the foreign goods have entered the market. The same should
apply to foreign and domestic services, and to foreign and local
trademarks, copyrights and patents. This principle of national
treatment (giving others the same treatment as ones own nationals) is
also found in all the three main WTO agreements (GATT, GATS and
TRIPS), although once again the principle is handled slightly differently
in each of these. National treatment only applies once a product, service
or item of intellectual property has entered the market. Therefore,
charging customs duty on an import is not a violation of national
treatment even if locally produced products are not charged an
equivalent tax.

More Competitive:
17

The WTO is sometimes described as a free trade institution, but that is

not entirely accurate. The system does allow tariffs and, in limited
circumstances, other forms of protection. More accurately, it is a system
of rules dedicated to open, fair and undistorted competition. The rules on
non-discrimination - MFN and national treatment are designed to secure
fair conditions of trade. The issues are complex, and the rules try to
establish what is fair or unfair, and how governments can respond, in
particular by charging additional import duties calculated to compensate
for damage caused by unfair trade. Many of the other WTO agreements
aim to support fair competition in agriculture, intellectual property,
services, for example, the agreement on government procurement (a
pluri-lateral agreement because it is signed by only a few WTO
members) extends competition rules to purchases by thousands of
government entities in many countries.
More Beneficial for Less Developed Countries:
Giving them more time to adjust, greater flexibility and special
privileges; over three quarters of WTO members are developing countries
and countries in transition to market economies. The WTO agreements
give them transition periods to adjust to the more unfamiliar and perhaps
difficult WTO provisions.
Protect the Environment:
The WTOs agreements permit members to take measures to protect not
only the environment but also public health, animal health and plant
health. However, these measures must be applied in the same way to both
national and foreign businesses. In other words, members must not use
environmental protection measures as a means of disguising protectionist
policies.

4. OBJECTIVES OF WTO
18

 To implement the new world trade system as visualized in the

Agreement;

To promote World Trade in a manner that benefits every country;

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.

To demolish all hurdles to an open world trading system and usher

in international economic renaissance because the world trade is an
effective instrument to foster economic growth;

To enhance competitiveness among all trading partners so as to

benefit consumers and help in global integration;

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

To expand and utilize world resources to the best;

To improve the level of living for the global population and speed
up economic development of the member nations.
OTHER OBJECTIVES
To create a knowledge base on various matter concerning various
National and International Trade Laws and Protocols, and their
National and International implications and ramifications.
Carry out research and development and the building up of a
clearing-house of cases on all matters of WTO agreements which
are of national concern including safeguards and redressal
mechanisms and suggesting alternative formulation in national
interest.
Increasing awareness amongst domestic industry, business,
agriculture, service and other sectors on the impacts of trade laws
arising out of WTO agreement and other treaties as member of
WTO.
19

 Co-operating with industry associates, bodies set up by

Government of India on various issues related to tariff, non-tariff
and tactical barriers and undertake drive for awareness campaign
by jointly or severally holding conferences, seminars, group
discussions and other mode of awareness and campaign as also to
develop linkages with overseas organizations.

Exploit all potential provisions of WTO agreement available to the

developing nations and advising and counseling the Government of
India on all such issues of national importance.

To assist the Government in negotiating with the International

Community and to help strengthen the Indian position in these

regards in all possible ways.

Identify areas of non-fulfillment of the WTO agreement which

concern Indian interest and suggest line of action and remedies
open for fulfillment of these obligations.

Initiate discussions on making the domestic trade and export and

import policies more WTO compatible and suggest initiatives to be
taken in this respect at various levels to ensure high growth in
export and economy.

To study the impact and threat perception of WTO agreement on

the growing service sector industries including all those covered
under 'business services' of GATS agreement.

To develop a base of expertise amongst the members of the

Institute on Intellectual Property Rights, TRIPS, Anti-dumping

laws, EXIM Policy matters etc., through seminars, training
programs and such other methods as may be considered effective.

20

5. BENEFITS OF WTO

Helps promote peace within nations:

Peace creates international confidence and co-operation that the WTO
creates and reinforces.
Disputes are handled constructively:
As trade expands in volume, in the numbers of products traded and in the
number of countries and company trading, there is a greater chance that
disputes will arise. WTO helps resolve these disputes peacefully and
constructively. If this could be left to the member states, the dispute may
lead to serious conflict, but lot of trade tension is reduced by organizations
such as WTO.

Rules make life easier for all:

WTO system is based on rules rather than power and this makes life easier
for all trading nations. WTO reduces some inequalities giving smaller
countries more voice, and at the same time freeing the major powers from
the complexity of having to negotiate trade agreements with each of the
member states

Free trade cuts the cost of living:

WTO lowers trade barriers through negotiation and applies the principle of
nondiscrimination. The result is reduced costs of production ( because
imports used in production are cheaper ) and reduced prices of finished
goods and services, and ultimately a lower cost of living.

It provides more choice of products and qualities:

It gives consumer more choice and a broader range of qualities to choose
from.
21

Trade stimulates economic growth:

With upward trend economic growth, jobs can be created and this can be
enhanced by WTO through careful policy making and powers of freer trade.

Basic principles make life more efficient:

The basic principles make the system economically more efficient and they
cut costs. Many benefits of the trading system are as a result of essential
principle at the heart of the WTO system and they make life simpler for the
enterprises directly involved in international trade and for the producers of
goods/services
Governments are shielded from lobbying:
WTO system shields the government from narrow interest. Government is
better placed to defend themselves against lobbying from narrow interest
groups by focusing on trade-offs that are made in the interests of everyone in
the economy.

The system encourages good governance:

The WTO system encourages good government. The WTO rules discourage
a range of unwise policies and the commitment made to liberalize a sector of
trade becomes difficult to reverse. These rules reduce opportunities for
corruption.

22

6. STRUCTURE OF WTO

23

Highest level: Ministerial Conference

The topmost decision-making body of the WTO is the Ministerial
Conference, which has to meet at least every two years. It brings
together all members of the WTO, all of which are countries or customs
unions. The ministerial conference shall carry out the functions of the
WTO and shall have authority to take decision on all matters under any
of the Multilateral Trade Agreement.

Second Level: General Council

The daily work of the ministerial conference is handled by three groups
a) The General Council:
It is the WTOs highest level decision - making body in Geneva,
meeting regularly to carry out the functions of the WTO. It has
representatives (usually ambassadors or equivalent) from all member
governments and has the authority to act on behalf of the ministerial
conference which only meets about every two years. The council acts
on behalf of the Ministerial Council on all of the WTO affairs. The
current chairperson is H.E. Mr. Jonathan FRIED (Canada).
b) The Dispute Settlement Body:
A dispute arises when a member government believes another
member government is violating an agreement or a commitment that it
has made in the WTO. The authors of these agreements are the
member governments themselves the agreements are the outcome
of negotiations among members. Ultimate responsibility for settling
disputes also lies with member governments, through the Dispute
24

Settlement Body. The current chairperson is Fernando DE MATEO

(Mexico)

c) The Trade Policy Review Body (TPRB):

The WTO General Council meets as the Trade Policy Review Body to
undertake trade policy reviews of members under the TRPM. The
TPRB is thus open to all WTO members. The current chairperson is
Mariam MD SALLEH (Malaysia).
Third Level: Councils For Trade:
The Councils for Trade work under the General Council. There are three
councils:
Council for Trade in Goods:
The workings of the General Agreement on Tariffs and Trade (GATT)
which covers international trade in goods, are the responsibility of the
Council for Trade in Goods. It is made up of representatives from all
WTO member countries. The current chairperson is Joakim REITER
(Sweden)
Council for Trade-Related Aspects of Intellectual Property Rights:
Information on intellectual property in the WTO, news and official
records of the activities of the TRIPS Council, and details of the
WTOs work with other international organizations in the field. The
current chairperson is Mr. Palai MOTHUSI (Botswana).
Council for Trade in Services:
The Council for Trade in Services operates under the guidance of the
General Council and is responsible for overseeing the functioning of
the General Agreement on Trade in Services (GATS). It is open to all
25

WTO members, and can create subsidiary bodies as required. The

current chairperson is Seokyoung CHOI (Korea)

Apart from these three councils, FIVE other bodies report to the General Council
reporting on issues:Committee on Trade & Development:
The Trade and Environment Committee is the standing forum dedicated to
dialogue between governments on the impact of trade policies on the environment,
and of environment policies on trade. Created in 1995, the Committee has followed
a comprehensive work programme. The regular committee also looks at the effects
of environmental measures on market access, the intellectual property agreement
and biodiversity, and labeling for environmental purposes.
Committee on Trade and development
The WTO agreements recognize the link between trade and development and
contain special provisions for developing countries. More than two-thirds of WTO
members are classified as developing countries.
At the Doha Ministerial Conference, in November 2001, Trade Ministers launched
the Doha Development Agenda. With this Agenda, WTO members have placed
development issues and the interests of developing countries at the heart of the
WTOs work.
In the Hong Kong Ministerial Declaration of 2005, members emphasized the
central importance of development to the Doha Round. At the same time, the Aid
for Trade Initiative was launched, designed to help developing countries build
supply-side capacity in order to expand trade.
At the Bali Ministerial Conference in December 2013, ministers adopted a number
of decisions under the developmental pillar, including those aimed at boosting
least-developed countries' trade.
26

Regional trade agreements

Regional trade agreements (RTAs) have become increasingly prevalent since the
early 1990s. As of15 June 2014, some 585 notifications of RTAs (counting goods,
services and accessions separately) had been received by the GATT/WTO. Of
these, 379 were in force. What all RTAs in the WTO have in common is that they
are reciprocal trade agreements between two or more partners. Information on
RTAs notified to the WTO is available in the RTA Database.
The WTO also receives notifications from WTO members regarding preferential
trade arrangements (PTAs). In the WTO, PTAs are unilateral trade preferences.
Information on PTAs notified to the WTO is available in the PTA Database.
Working Group on Trade and Transfer of Technology
The Working Group on Transfer of Technology was established by the Ministers in
Doha and aims to examine the relationship between trade and the transfer of
technology from developed to developing countries, and ways to increase the flow
of technology to developing countries. The current chair is Ambassador
Abdolazeez AL-OTAIBI (Saudi Arabia, Kingdom of).
Working Group on Trade, Debt and Finance
Many developing countries face serious external debt problems and have been
through financial crises. WTO ministers decided in Doha to establish a Working
Group on Trade, Debt and Finance to look at how trade-related measures can
contribute to find a durable solution to these problems. This working group will
report to the General Council which will in turn report to the next Ministerial
Conference. The current chairperson is Ambassador Faizel ISMAIL (South Africa)
The Trade Negotiations Committee
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The Trade Negotiations Committee (TNC) operates under the authority of the
General Council. It was set up by the Doha Declaration, which in turn assigned it
to create subsidiary negotiating bodies to handle individual negotiating subjects.
The chairman is Mr Roberto Azevdo.

Under Council for Trade and Goods, following committees are formed:
1) Committee on Agriculture:
The WTOs Agriculture Agreement was negotiated in the 198694 Uruguay
Round and is a significant first step towards fairer competition and a less
distorted sector. WTO member governments agreed to improve market
access and reduce trade-distorting subsidies in agriculture. In general, these
commitments were phased in over a six years from 1995 (10 years for
developing countries). Work on this subject is handled by the Agriculture
Committee, which reports to the Goods Council. The work is officially
recorded in the committees annual reports to the Goods Council and in the
Secretariats summary reports. The current chair is Ms. Miriam CHAVES
(Argentina).
2) Committee on Anti-dumping:
If a company exports a product at a price lower than the price it normally
charges on its own home market, it is said to be dumping the product. The
WTO Agreement does not regulate the actions of companies engaged in
"dumping". Its focus is on how governments can or cannot react to dumping
it disciplines anti-dumping actions, and it is often called the Antidumping Agreement. The Committee on anti-dumping practices is the
focus on WTO work in this area. The current chair is Ms. Parima
DAMRITHAMANIJ (Thailand).
3) Committee on Sanitary and phytosanitary measures
The Agreement on the Application of Sanitary and Phytosanitary
Measures (the "SPS Agreement") entered into force with the establishment
of the World Trade Organization on 1 January 1995. It concerns the
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application of food safety and animal and plant health regulations. Work on
this subject is handled by the SPS Committee, which reports to the Goods
Council. The work is officially recorded in the committees annual reports to
the General Council and in summary reports (equivalent to minutes) of the
committees meetings. The current chair is Mrs. Lillian BWALYA (Zambia).
4) Committee on Market Access
The General Council established the WTO Committee on Market Access
with the following terms of reference:
The Committee on Market Access shall:
(a) in relation to market access issues not covered by any other WTO body:
supervise the implementation of concessions relating to tariffs and nontariff measures;
provide a forum for consultation on matters relating to tariffs and nontariff measures;
(b) Oversee the application of procedures for modification or withdrawal of
tariff concessions;
(c) Ensure that GATT Schedules are kept up-to-date, and that modification,
including those resulting from changes in tariff nomenclature, is reflected;
(e) Oversee the content and operation of, and access to, the Integrated Data
Base;
(f) Report periodically and in any case not less than once a year to the
Council on Trade in Goods.
The current chair is Mrs. Alana HUDSON (New Zealand).
5) Committee on Technical barriers to trade

The Agreement on Technical Barriers to Trade tries to ensure that

regulations, standards, testing and certification procedures do not create
unnecessary obstacles, while also providing members with the right to
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implement measures to achieve legitimate policy objectives, such as the

protection of human health and safety, or the environment. Work on
technical regulations, standards and a conformity assessment procedure in
the WTO is handled by the TBT Committee, which reports to the Council
for Trade in Goods. Discussions are officially recorded in summary reports
(minutes) of the Committees meetings and in its annual reviews.

6) Committee on Subsidies and countervailing measures

The WTO Agreement on Subsidies and Countervailing Measures disciplines
the use of subsidies, and it regulates the actions countries can take to counter
the effects of subsidies. Under the agreement, a country can use the WTOs
dispute-settlement procedure to seek the withdrawal of the subsidy or the
removal of its adverse effects. Or the country can launch its own
investigation and ultimately charge extra duty (countervailing duty) on
subsidized imports that are found to be hurting domestic producers.
The Subsidies and Countervailing Duties Committee supervises the
implementation of the Agreement. It meets at least twice a year. The current
chair is Mr. Marcus BARTLEY JOHNS (Australia).
7) Committee on Customs Valuation
The WTO agreement on customs valuation aims for a fair, uniform and
neutral system for the valuation of goods for customs purposes. The
Committee on Customs Valuation of the Council for Trade in Goods (CGT)
carries out work in the WTO on customs valuation, in the context of a range
of measures for trade facilitation. The current chair is Ms. Joanna K.Y.
CHEUNG (Hong Kong, China)
8) Committee on Import licensing
The Agreement on Import Licensing Procedures says import licensing
should be simple, transparent and predictable so as not to become an
obstacle to trade. For example, the agreement requires governments to
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publish sufficient information for traders to know how and why the licenses
are granted. It also describes how countries should notify the WTO when
they introduce new import licensing procedures or change existing
procedures.
Work on this subject is handled by the Committee on Import Licensing. The
committee supervises the implementation of the Agreement. It reviews at
least once every two years the implementation and operation of the
Agreement. Members are required to notify the Committee of any changes
in their laws and regulations concerning import licensing. The

current

chair is Mr. Tsotetsi MAKONG (Lesotho)

9) Committee on Safeguard measures
The Committee on Safeguards monitors, and reports annually to the Goods
Council, on the general implementation of the agreement. A member
affected by a safeguard measure may ask the committee to make a finding
on whether the measure complies with the agreements procedural
requirements. At the request of members, the committee may assist
consultations, or review proposals for retaliatory action. It monitors the
phase-out of the notified grey-area measures, and reviews all safeguard
notifications. The current chair is Mr. Alex YUN-HSING NI (Chinese
Taipei).
Under Council for Trade in Services, following committees are formed:
1) The Committee on Financial Services
The Committee on Trade in Financial Services carry out discussions on
matters relating to trade in financial services and formulate proposals or
recommendations for consideration by the Council. It is responsible for the
continuous review and surveillance of the application of the GATS with
respect to this sector, and serves as a forum for technical discussions and
examination of regulatory developments affecting financial services trade.
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2) The Working Party on Domestic Regulation

The Working Party on Domestic Regulations is drafting disciplines relating
to technical standards, licensing and qualification requirements for all
services sectors.
3) The Working Party on GATS Rules
The Working Party on GATS Rules continues its work on subsidies,
government procurement and safeguards

CHAPTER 3: AGREEMENTS of WTO

I.

OBJECTIVES

This Unit would give you insight about agreement of WTO by

explaining:
Definition & meaning
Tariff cuts
Agriculture
Services
Intellectual property
The WTO agreements cover goods, services and intellectual property.
They spell out the principles of liberalization and the permitted
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exceptions. They include individual countries commitments to lower

customs tariffs and other trade barriers, and to open and keep open
services markets. They set procedures for settling disputes. They
prescribe special treatment for developing countries. They require
governments to make their trade policies transparent by notifying the
WTO about laws in force and measures adopted, and through regular
reports by the secretariat on countries trade policies. These agreements
are often called the WTOs trade rules, and the WTO is often described
as rules-based, a system based on rules.
An agreement starts with three broad principles:
i.

GENERAL AGREEMENT ON TARIFFS & TRADE (GATT)

ii.

GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)

iii.

TRADE-RELATED ASPECTS OF INTELLECTUAL

PROPERTY RIGHTS (TRIPS)

TARIFFS CUTS:

Developed countries tariff cuts were for the most part phased in over five
years from 1 January 1995. The result is a 40% cut in their tariffs on
industrial products, from an average of 6.3% to 3.8%. The value of imported
industrial products that receive duty-free treatment in developed countries
will jump from 20% to 44%. There will also be fewer products charged high
duty rates. The proportion of imports into developed countries from all
sources facing tariffs rates of more than 15% will decline from 7% to 5%.
The proportion of developing country exports facing tariffs above 15% in
industrial countries will fall from 9% to 5%. On 26 March 1997, 40
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countries accounting for more than 92% of world trade in information

technology products, agreed to eliminate import duties and other charges on
these products by 2000 (by 2005 in a handful of cases). As with other tariff
commitments, each participating country is applying its commitments
equally to exports from all WTO members (i.e. on a most favored nation
basis), even from members that did not make commitments.
Developed countries increased the number of imports whose tariff rates are
bound (committed and difficult to increase) from 78% of product lines to
99%. For developing countries, the increase was considerable:- from 21% to
73%. Economies in transition from central planning increased their bindings
from 73% to 98%. This all means a substantially higher degree of market
security for traders and investors.
AGRICULTURE:
The objective of the Agriculture Agreement is to reform trade in the sector
and to make policies more market-oriented. This would improve
predictability and security for importing and exporting countries alike.
The features of Agreement on Agriculture are:
a. Market Access:
This includes tariffication, tariff reduction and access opportunities.
Tariffication means that all non-tariff barriers need to be abolished and
converted into an equivalent tariff. Ordinary tariffs are to be reduced
by an average of 36% with minimum rate of reduction of 15% for
each tariff item over a 6 year period. Developing countries are
required to reduce tariffs by 24% in 10 years.

b. Export Subsidies:
The agreement contains provisions regarding members commitment
to reduce Export Subsidies. Developed countries are required to
reduce their export subsidy expenditure by 36% and volume by 21%
in 6 years, in equal installment (from 1986-1990 levels). For
developing countries the percentage cuts are 24% and 14%
respectively in equal annual installment over 10 years. The agreement
also specifies that for products not subject to export subsidy reduction
commitments, no such subsidies can be granted in the future. The
agreement does allow governments to support their rural economies,
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but preferably through policies that cause less distortion to trade.

Developing countries do not have to cut their subsidies or lower their
tariffs as much as developed countries, and they are given extra time
to complete their obligations.
SERVICES:
The General Agreement on Trade in Services (GATS) is the first and only set
of multilateral rules governing international trade in services. Negotiated in
the Uruguay Round, it was developed in response to the huge growth of the
services economy over the past 30 years.
The General Agreement on Trade in Services has three elements:
The main text containing general obligations and disciplines;
Annexes dealing with rules for specific sectors;

Individual countries specific commitments to provide access to

their markets,
The development of new transmission technologies facilitating the supply of
services (e.g. satellite communication, electronic banking, tele-education),
the opening of monopolies in many countries (e.g. voice telephony), and
gradual liberalization of hitherto regulated sectors like transport, banking
and insurance combined with changes in consumer preferences, enhanced
the tradeability of services. These developments increased international
services flows and created a similar need for multilateral disciplines as in
the area of goods. Thus, the main purpose for the creation of the General
Agreement on Trade in Services (GATS) was to create a credible and
reliable system of international trade rules, which ensured fair and equitable
treatment of all countries on the principles of non-discrimination.
IMPORTANCE OF GATS:
a. Economic performance:
Presence of an efficient services infrastructure is a precondition for
economic success. Services such as tele-communications, banking,
insurance and transport, supply strategically important inputs for all
sectors, both in goods and services.
b. Development:- Access to world class services help exporters and
producers in developing
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countries to capitalize on their competitive strength, whatever goods and

services they are selling.
c. Consumer Choice:- There is strong evidence in many services, e.g:
Telecom, that liberalization leads to lower prices, better quality and wider
choice for consumers
d. Technology Transfer:- Services liberalization encourages, foreign direct
investment (FDI). Such FDI generally brings with it new skills and
technologies that spill over into the wider economy in various ways.
INTELLUCTUAL PROPERTY:The Agreement on Trade Related Aspects of Intellectual Property Rights
(TRIPS) is an international agreement administered by the World Trade
Organization (WTO) that sets down minimum standards for many forms of
intellectual property (IP) regulation as applied to nationals of other WTO
Members. The TRIPS agreement introduced intellectual property law into
the international trading system for the first time and remains the most
comprehensive international agreement on intellectual property to date
Intellectual property rights included in TRIPS are:

Copyrights & related rights:- Copyright is a right given by the law to

creators of literary, dramatic, musical and artistic works and producers of
cinematograph films and sound recordings. It is a bundle of rights including,
inter-alia, rights of reproduction, communication to the public, adaptation
and translation of the work. There could be slight variations in the
composition of the rights depending on the work.

Trademark:
Trademark is a distinctive sign which identifies certain goods or services as
those produced or provided by a specific person or enterprise. . A trademark
provides protection to the owner of the mark by ensuring the exclusive right
to use it to identify goods or services or to authorize another to use it in
return for a payment. The period of protection varies, but a trademark can be
renewed indefinitely beyond the time limit on payment of additional fees.

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Geographical Indications:
Geographical Indications of goods are defined as that aspect of intellectual
property which refers to the geographical indication referring to a country or
to a place situated therein as being the country or place of origin of that
product.

Industrial Designs:
Industrial designs are an element of intellectual property. Industrial designs
refer to creative activity, which result in the ornamental or formal
appearance of a product. Design rights refer to a novel or original design that
is accorded to the proprietor of a validly registered design.

Patents:
A Patent is an exclusive right granted by a country to the inventor to make,
use, manufacture and market the invention that satisfies the conditions of
novelty, innovativeness and usefulness. Patents shall be granted for any
inventions, whether products or processes, in all field of technology,
provided they are new, involve an inventive step and are capable of
industrial application.

CONCLUSION:
The Uruguay Round and the establishment of the WTO changed the
character of the trading system. The World Trade Organization (WTO) deals
with the global rules of trade between nations. Its main function is to ensure
that trade flows as smoothly, predictably and freely as possible. At its heart
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are the WTO agreements, negotiated and signed by the bulk of the worlds
trading nations and ratified in their parliaments. The goal is to help
producers of goods and services, exporters and importers conduct their
business. Its main aim is to To create economic peace and stability in the
world through a multilateral system based on consenting member states,
which have ratified the rules of the WTO in their individual countries as
well. The GATT was very much a market access oriented institution. The
dynamic worked less well for developing countries, where the burden of
liberalization rested much more heavily on the shoulders of governments.
Even if they wanted to, their scope to use the GATT was often limited
because exporters had fewer incentives and were less powerful than in
industrial countries. WTO helped to cover up loopholes of GATT. WTOs
work and performance on agreements like anti-dumping agreement, GATS,
TRIP, agriculture, etc. were explained earlier. Thus, WTO has worked on its
founding and guiding principles of open borders, the guarantee of most
favored nation principle and nondiscriminatory treatment by and among
members and a commitment to transparency in the conduct of its activities

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WEBLIOGRAPHY
o Introduction of WTO: e-book: Introduction to WTO & Opportunities
for CA for International Trade Laws & WTO
o WTO: www.slideshare.com
o Structure of WTO: www.wto.org
o Committees of WTO www.wto.org
o Agreement of WTO www.slideshare.com
o Agreement of WTO www.wto.org

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