Introduction to WTO

Objectives, Scope and Functions

Faculty:
Dr. (Mrs.) Vijaya Katti
Professor & Chairperson (MDPs)
Indian Institute of Foreign Trade
New Delhi - 110016
For CPEIM (Online) 2014
(Session on 27th July 2014)

GATT 1947
US proposals made in 1945

World economy to be organized around three corner

stones: IMF, IBRD, and ITO
Plans for the ITO were abandoned
GATT negotiated in 1947, in force from January 1948
GATT 1947 was, consequently, a treaty without its planned
administering organization
123 bilateral agreements covering 50,00,000 items

GATT Rounds
Name

Dates

Subject

Geneva

1947

Annency, France

1949

Torquay, England

1951

Tariffs

Geneva

1956

Tariffs

Geneva (Dillon)

1960-61

Tariffs

Geneva (Kennedy)

1964-67

Tariffs

Adoption of GATT

Tariffs

Tariffs
GATT negotiations rules
Across the board tariff
reduction
Antidumping measures

GATT Rounds (Contd)

Name

Dates

Tokyo

1973-79

Subject
Overall reduction of tariffs
Non-tariffs barrier codes
- Customs valuation
- Government procurement
- Subsidies and countervailing
measures
- Antidumping
-Standards
-Import licensing
Enabling clause for differential
treatment

The eighth round: the

Uruguay round
1986-93

The longest trade round further cuts in

industrial

tariffs,

export

subsidies,

licensing, and customs valuation.

Divergent Subjects Covered
Participating countries : 123

Founding Members of the GATT

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Australia
Belgium
Brazil
Burma (now Myanmar)
Canada
Ceylon (now Sri Lanka)
Chile
China
Cuba
Czechoslovakia
France
India

13
14
15
16
17
18
19
20
21
22
23

Lebanon
Luxembourg
The Netherlands
New Zealand
Norway
Pakistan
Southern Rhodesia
(now Zimbabwe)
Syria
South Africa
United Kingdom
United States

Emergence & Agreement

establishing of WTO
Emergence of WTO
on 1st January
1995
The
agreement
establishing
WTO
calls for a single
institutional
framework
Ensures a single
undertaking
approach

Achievements
Formation of a Permanent Body
World Trade Organisation - WTO
The Dispute Settlement Mechanism
Strengthening the Multilateral Trading System
Addressing tariff and non-tariff measures
Agreements to tackle different NTMS
Agriculture and textiles brought under the
mainstream of multilateral trade rules
Trade-related investment measures agreed upon
Agreement on trade-related intellectual property
rights
Agreement on services

WTO = GATT + More

GATT was ad hoc and provisional and the WTO and its
agreements are permanent.
GATT was not ratified by contracting parties in
parliaments - WTO members have ratified thus, giving
a sound legal basis
GATT dealt with trade in goods only.
The WTO dispute settlement system is an improved
version - faster and more automatic and rule based

WTO vs. GATT: Main differences

Nature
Scope
Approach
Dispute settlement

Basic principles of
GATT/WTO
Market access

Reduction and binding of tariffs

General elimination of quantitative restrictions
on imports and exports

Non-discrimination
MFN

National treatment

WTO: Trade without discrimination

MFN-clause
(Most-Favoured-Nation):
art.I
Members are bound to grant to the
products of other Members treatment
not less favourable than that accorded
to the products of any other country
Exceptions:
Regional
Agreements, GSP

Trade

 National Treatment: Art. III

Once goods have cleared customs, imported
goods must be treated no less favourably that
the equivalent domestically-produced goods.

Binding /Commitments
A country commits itself to ensure an
agreed level of access to its market, on an
MFN basis, for supplying countries

Prohibition of QRs
The use of QRs (Quantitiative
Restrictions) is prohibited
Prohibition of QRs GATT Article XI
Non-discrimination of QRs and TRQs
GATT Article XIII
Prohibition of QRs GATS Article XVI

The structure of WTO

Highest authority-ministerial conference

The general council delegates responsibility to three other

major bodies namely the councils for
Trade in goods,
Trade in services and
Trade-related aspects of intellectual property rights.
Committee on trade and development
Committee on BOP restriction
Committee on budget, finance, and administration

The structure of WTO

(Contd)
Committee on Regional Trade Agreement 1996

Bodies set under limited membership Plurilateral Trade

Agreement
Committee on market access
Working party on accession
Working groups on relationship between
Trade and investment
Trade and competition policy
Transparency in government procurement

Scope
The WTO agreement (which some have described
as a mini charter) is strictly institutional and
procedural in character and has no substantive
rules or principles other than those which are
included in the annexed agreements.

Functions
Administering

and

implementing

the

multilateral

and

plurilateral trade agreements which together make up the

WTO
Acting as a forum for multilateral trade negotiations

Seeking to resolve trade disputes

Overseeing national trade policies
Cooperating with other international institutions involved in

global economic policy making

Assisting

developing

countries

in trade policy

issues,

through technical assistance and training programmes

Relationship
Enjoys

equal

status

as

other

international

organizations
Cooperates with other international institutions to
achieve a greater coherence in global policy
making

The Secretariat
Headed by the Director General
Carries out WTOs administrative
work
Responsible for serving the WTO
bodies with respect to negotiations
and
implementation
of
the
agreements
Providing
technical
support
to
developing countries

Director-General Roberto Azevdo meets the DirectorGeneral of the International Labour Organization (ILO),
Guy Ryder, at the offices of the ILO in Geneva.

Budget and contributions

Annual budget presented by the Director General
to

the

committee

on

budget,

finance,

and

members

are

administration
Contribution

from

individual

calculated on the basis of their shares in the total

trade conducted by WTO members

The Structure of the Legal Text: Marrakesh

Agreement Establishing the World Trade
Organization

Article I Establishment of the organization

Article II Scope of WTO

Article III Functions of WTO
Article IV Structure of WTO

Article V Relations with other organizations

Article VI The Secretariat
Article VII Budget and contributions

Article VIII Status of WTO

Article IX Decision making

Marrakesh agreement
(Contd)
Article X Amendments
Article XI Original membership
Article XII Accession
Article XIII Non-application of multilateral
trade agreements between particular members
Article XIV Acceptance, entry into force and
deposit
Article XV Withdrawal
Article XVI Miscellaneous provisions

Annex 1
Annex 1A

Multilateral agreement
on trade in goods

Annex 1B

General agreement on
trade in services and
annexes

Annex 1C

Agreement on traderelated aspects of

intellectual
property
rights

Annex 1A: Multilateral

agreement on trade in goods
GATT 1994
Agreement on
Agreement on
Agreement on
Agreement on
Agreement on

agriculture
application of SPS measures
TBT
textiles & clothing
TRIMS

Annex 1A: Multilateral agreement

on trade in goods (Contd)
Agreement on the implementation of article VI of
GATT 1994
Agreement on pre-shipment inspection
Agreement on rules of origin

Agreement on import licensing procedures

Agreement
measures

on

subsidies

Agreement on safeguards

and

countervailing

Annexes 1B and Annexes 1C

Annex 1B General agreement on Trade in
Services
Annex 1C Intellectual property and its rights What they imply?

Annexes
Annex 2 - Understanding the rules and
procedures governing the settlement of dispute
Annex 3 - Trade policy review mechanism
Annex 4 Plurilateral trade agreement
Agreement on trade in civil aircraft
Agreement on government procurement

Withdrawal from the WTO

Any Member may withdraw from the WTO, such
withdrawal applying to both the WTO and the
WTO and the Multilateral Trade Agreements, by
sending a formal written notice of withdrawal to
the Director General of the WTO. The actual
withdrawal will take place six months after
receipt of the notice.

WTO : A dynamic work

programme

Ongoing business Tasks

defined by agreements
themselves

a) specialized meetings
b) Regular reviews of
national trade policies

WTO: A dynamic work

programme (Contd)
The built in Agenda
a) Agriculture, Services
b) Talks on new subjects Trade Competition Policy,
Investment
c) Trade Problems of LDCs Not to undertake
commitments/concessions inconsistent with their
development/financial and trade needs
d) Trade and Environment Committee on Trade and
Environment
Two Continuing Tasks (1) Dispute Settlement (2)
Accession

Ministerial conferences
First Ministerial Singapore (1996)

Second Ministerial Geneva (1998)

Third Ministerial Seattle (1999)
Fourth Ministerial Doha (2001)
Fifth Ministerial Cancun (2003)
Geneva Framework Mexico (July 2004)
Sixth Ministerial Hong Kong (2005)
Seventh Ministerial Geneva (November 2009)
Eighth Ministerial Geneva (December 2011)
Ninth Ministerial - Bali, 3-6 December 2013

Summary
WTO is different than GATT.

It is an institution with specific objectives, scope, and

functions.
Marrakesh Agreement is followed by four annexes and 31
volumes of schedules of concessions.
160 members and no withdrawal as on 26 June 2014.
WTO has dynamic work programme.
Ninth ministerial held so far.

Thank You