World Trade Organisation (WTO): Features, Functions and Objectives

Meaning of World Trade Organisation

Before World Trade Organization (WTO), General Agreement on Trade and Tariffs (GATT) was established as a global trade organization in 1948 with 23 countries. GATT was set up to regulate all multilateral trade agreements by granting all nations equal access to the worldwide market for trade purposes. The WTO was established in 1995 to replace the General Agreement on Trade and Tariffs (GATT). 

Features of World Trade Organisation (WTO)

The features of World Trade Organisation (WTO) are as follows:

1. In order to promote international trade, WTO agreements cover trade in goods and services.
2. There are 164 members of WTO at present, and every member is obligated to follow the laws and policies framed under WTO rules.
3. India has been on the frontline of establishing fair international laws and regulations as a significant member of the WTO.
4. India has complied with the WTO's demands and has responsibly liberalized trade by abolishing import restrictions and lowering tariffs. 

Functions of World Trade Organisation (WTO)

👁 Functions of World Trade Organisation (WTO)

1. Implementation of Trade Policy Review Rules:

The member nations of the world organizations have come to an overall consensus due to the stability and assurance of trade agreements. The rules are examined to make sure that the multilateral trading system continues even in the face of continuously changing trade conditions. Additionally, it helps in creating a reliable and transparent foundation for conducting business. 

2. Discussion of Plans of Member Nations:

Trade negotiations within the global trading system are made possible through WTO. Without trade negotiations, the economy may stagnate, and issues related to dumping and tariffs might go unsolved. Consistent trade discussions are also a requirement for further trade liberalization.

3. Administrating and Carrying out Bilateral and Multilateral Trade Agreements: 

The parliaments of different member nations must ratify any bilateral and multilateral trade agreements. The non-discriminatory trading system can not be implemented until such ratification occurs. Every member will be ensured to be treated fairly in the marketplace of other countries due to the signed contracts.

4. Settlement of Trade Disputes:

Trade disputes are addressed by the WTO's dispute settlement process. Independent tribunal specialists interpret the agreements and issue judgments mentioning the essential obligations of the involved member nations. It is advised to consult with other members to resolve disagreements.

5. Best Possible Use of the World's Resources: 

By utilizing the trade capabilities of developing countries, resources all around the world can be used to their maximum potential. For least-developed economies, a special provision in the WTO agreement is necessary. Such initiatives include more significant trading opportunities, a longer duration to implement commitments, and to provide assistance to build infrastructure.

Objectives of World Trade Organisation (WTO)

The objectives of World Trade Organisation (WTO) are:

1. Creating and Enforcing International Trade Regulations:

The General Agreement on Trade in Services, the Trade-Related Aspects of Intellectual Property Rights Agreement, and the Agreement on International Trade in Goods, all serve as the foundation for the World Trade Organization (WTO).
The WTO uses a multilateral dispute settlement system to enforce its rules when one of its member countries violates a trade agreement. The methods and decisions must be respected and adhered to by the members through signed agreements. Creating and Enforcing International Trade Regulations

2. Making the Decision Making Process More Transparent:

The WTO has made an effort to promote transparency in decision-making by encouraging participation and, in particular, the use of the consensus rule. Such measures work together to increase institutional transparency.

3. Collaboration between International Economic Institutions:

The onset of globalization has made strong collaboration amongst multilateral institutions necessary. The World Trade Organization, the International Monetary Fund, the United Nations Conference on Trade and Development, and the World Bank are some international economic institutions These institutions help develop and carry out a framework for international economic policy. Policy making may be disturbed in the absence of regular cooperation and mutual participation.

4. Serving as the World's Leading Forum:

The WTO is the international platform for regulating and negotiating additional trade liberalization. The foundation of WTO liberalization initiatives is based on members' benefits to make the best use of their comparative advantages as a result of a free and fair trade system.

5. Settlements of Trade Disputes:

Before the WTO, trade disputes usually arise from the breach of agreements between the member nations. Such trade disputes are settled through a multilateral system with predetermined rules and regulations.

6. Others:

Some of the other objectives of the World Trade Organisation are as follows:

• To ensure optimum utilization of world resources.
• To protect the environment.
• To ensure full employment and a significant rise in effective demand.
• To raise the level of standard of living for citizens of member nations.
• To embrace the idea of sustainable development.