WTO and GATT

WTO and GATT

WTO and GATT

The WTO is a new international organization set up as a permanent body and is designed to play the role of a watchdog in the spheres of trade in goods, trade in services, foreign investments, intellectual property right etc. In short, WTO is a new globally reorganized trade organization with the new name succeeding GATT or renewed agreements and having a new vision and strong enforcement power to promote international trade.

Functions of WTO

The WTO agreement provides the legal ground rules for international commerce. It entered agreement on trade goods, trade in services, intellectual property rights, dispute settlements, trade policy review and multilateral trade agreement. It has the following five functions as set out in article III –

1. The WTO shall facilitate the implementation, administration and operation and further the objectives of this agreement and of the multilateral trade agreements and shall also provide the framework for implementation, administration and operation of the plurilateral trade agreements.
2. The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreement in the annexes to this agreement.
3. WTO shall administer the understanding on rules and procedures governing the settlement of disputes.
4. The WTO shall administer the trade policy review mechanism.
5. With a new of achieving greater coherence in global policy making, the WTO shall co-operate, as appropriate, with the IMF and with the IBRD and its affiliated agencies.

Objective of world trade organization

The agreement while establishing the WTO adopted the following objectives in its preamble of WTO-

1. The primary objective of WTO is to implement new trade policy in agreement.
2. To eliminate discriminatory treatment in international trade relations.
3. To improve standard of living of people in the member countries.
4. To enhance production and trade of goods.
5. To develop multilateral organized trade system.
6. To ensure full employment and broad increase in effective demand.
7. To ensure the reduction of tariffs and other barriers of trade.
8. To facilitate the optimal use of the world’s resources for sustainable development.
9. To ensure optimum utilization of world resources.
10. To enlarge production and trade of services.
11. To procured environment.

Difference between WTO and GATT

1. While the GATT was a set of rules a multilateral agreement without institutional foundation with only a small associated secretariat which had its against in the attempt to establish an international trade organization in the 1940, which however, did not see the light of the day, the WTO is a permanent institution with its own full-fledged secretariat located in Geneva, head by a director general, four deputy directors general and over 450 of staff.
2. Even after more than four decades, the GATT was applied, on a ‘provisional basis’, on the contrary, the WTO commitments are full during and permanent.
3. The GATT rules applied to trade in merchandise goods. The scope of the WTO is wider because in addition to goods it covers trade in services and related aspect of intellectual property.
4. While the GATT was a multilateral instrument by 1980s. Many new agreements of pluri-lateral and therefore relative nature were added rendering its functioning complexes and often difficult. The agreements which constitute the WTO are almost multilateral involving commitments for the entire membership.
5. The WTO dispute settlements are faster, more automatic and consequently much less susceptible to blockages than the old GATT system. The implementation of the WTO dispute findings wills also is more easily assured.
6. Unlike GATT, the WTO is a permanent organization created by international treaty ratified by the government moments and legislature of the member states. As the principal international body concerned with solving trade problems between countries and providing a forum for multilateral trade negotiations, it has global status similar to that of the international monetary fund and the World Bank. However, it needs to be stressed that unlike the IMF and the World Bank, it is not a United Nations agency although it has a co-operative relationship with the United Nations.

Important links

• World Trade Organization (WTO)- Features, Structure etc.
• WTO Agreement (World Trade Organization)
• Sustainable development- Meaning, Goals & Relationships
• Economic Growth- Features, Types, Limitation etc. 
• Business competition & Competition Act, 2002
• Components of Competition Act 2002
• Combination & Competition Act

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