Study Material

WTO – World Trade Organisation: Objectives, Features & More

The WTO is an international organization that manages and develops rules of trade among nations. It must create and administer international trade agreements, solve disputes on trade, and facilitate the smooth flow of trade around the world. Its mission is to make international trade as free and fair as possible while focusing on making sure trade is for the benefit of all people, especially the developing countries.


What is WTO?

The WTO stands for World Trade Organisation. It is an international institution that oversees the rules of trade between nations. WTO’s goal is to reduce trade barriers, encourage transparency, and ensure that trade between countries is as predictable and fair as possible.

The organization establishes the fundamental framework for the creation and development of international trade rules and regulations that regulate the relations of countries as they deal with each other in business operations. Unlike other international organizations that focus on specific issues such as humanitarian aid and development, the WTO deals specifically with issues of trade, market access, tariffs, and non-tariff barriers.

Why Does the WTO Matter?

In today’s global interlinked economy, we cannot overemphasize the importance of the WTO. International trade has played a critical role in the facilitation of economic growth, job creation, and a better standard of living for millions of people as globalization is on the rise. By giving a framework for international trade, the WTO ensures that countries can trade more efficiently, which leads to greater opportunities for businesses and consumers alike.


In Which Year Was WTO Established?

The WTO was established on January 1, 1995. The Uruguay Round of trade negotiations, which was held between 1986 and 1994, is one of the longest and most comprehensive trade negotiations in history. In this round, all member countries negotiated to establish a new global trading system that would give rise to the WTO.

The General Agreement on Tariffs and Trade, which was founded in 1947 to oversee international trade relations, existed before the establishment of the WTO. GATT primarily concentrated on reducing tariffs and increasing international trade. However, as the global economy developed over the years, so did the need for a more structured and comprehensive organization to handle different factors of trade beyond just tariffs.

The designers created the WTO to succeed GATT, providing a more significant framework for world trade. The organization did not only represent goods trade but also services, intellectual property, and even dispute resolution. Establishing the WTO represented an important move forward in the progress of making the global trading system both fairer and more integrated.


Objectives of WTO

The World Trade Organisation has multiple very critical objectives that all contribute towards smooth, predictable, and fair trade among nations. The said objectives are part of a much larger mission for the organization – the facilitation of global economic cooperation and development. Now let’s explore some of the most important objectives of the WTO.

Promoting Free Trade

It reduces trade barriers by providing a set of rules or guidelines for its member nations to adhere to. Barriers may come in various forms, including tariffs quotas, and other restrictive measures that limit countries’ capacity for exchanging goods and services with one another. By cutting these barriers, the WTO makes nations trade more freely, with the ultimate hope of causing more growth and development.

Ensuring Fair Trade

While free trade is an important aspect, fairness also becomes a priority. The WTO aims to ensure that no country is practicing unfair trade practices like dumping, or using protectionism. Setting out clear rules and providing a dispute resolution mechanism holds countries accountable for their trade actions.

Economic Development and Growth

The WTO focuses more on developing economic growth and development, especially in developing countries. By providing a platform to negotiate trade agreements and making sure that those agreements are fair, the WTO ensures that countries, especially the developing ones, access new markets and attract investment.

Providing a Platform for Trade Negotiations

The WTO also is a place where countries sit down and discuss new policies on trade, resolve matters, and negotiate agreements that benefit the global economy, ensuring trade relations are predictable and crucial for long-term economic stability.

Dispute Settlement

The WTO has a well-organized mechanism for settling disputes among its members. If any country feels that another is violating a trade agreement, the WTO offers a structured platform to resolve the dispute through consultations, panels, and appeals. This promotes equity and transparency in international trade.

Features of WTO

The WTO- World Trade Organisation has quite some unique features that are very different from any international organization. The unique features of the WTO ensure properly regulated trade, thereby organizing global commerce.

Comprehensive Membership

The WTO has 164 member countries, which comprise around 98% of world trade. This membership diverseness ensures that the decisions made and policies established in WTO are representative of the worldwide economy. Membership is granted to any country agreeing to play by the rules set out within the WTO and willing to bargain to its trade commitments.

Binding Agreements

Unlike other earlier trade agreements that were merely non-binding or flexible, WTO agreements bind its members in terms of agreements. It binds members to adhere strictly to the conditions they sign by way of agreeing. Members who violate such agreed-upon conditions are referred to dispute settlement panels for proper resolution.

Multilateral Trading System

The WTO operates on a multilateral system where countries collectively negotiate and agree on the rules of trade. Such a system is intended to avoid the formation of an exclusive trade bloc or bilateral trade deal that would eventually give rise to trade discrimination and unfair practices.

Dispute Settlement Mechanism (DSM)

One of the most important features of the WTO is its Dispute Settlement Mechanism. It resolves trade disputes between member countries through a structured process. It prevents trade wars and makes sure that countries follow international trade agreements.

Transparency and Accountability

The WTO fosters transparency in trade practice by making it mandatory for member countries to notify the organization of any trade policy, regulation, or agreement that may influence global trade. The openness ensures trust and accountability between member nations and keeps trade practices fair and uniform.


Functions of WTO

The WTO – World Trade Organisation has several key functions through which it serves to reach its goals. Several key areas break down these roles, and each one ensures the efficient running of global systems for trade.

Trade Negotiation

The WTO is a negotiating platform for member countries on trade agreements. These negotiations center on reducing tariffs, removing non-tariff barriers, and discussing regulations in the trade of goods, services, and intellectual property. The WTO urges members to reach a consensus on matters affecting global trade, and negotiation is the lifeblood of the multilateral trading system.

Dispute Resolution

Perhaps one of the most critical functions of the WTO is the settlement of trade disputes. If a member country believes that another country has violated trade rules or agreements, it can bring this matter before the WTO for resolution. This process ensures that countries adhere to the rules and address unfair trade practices promptly.

Monitoring Trade Policies

The WTO is a negotiating platform for member countries on trade agreements. These negotiations center on reducing tariffs, removing non-tariff barriers, and discussing regulations in the trade of goods, services, and intellectual property. The WTO urges members to reach a consensus on matters affecting global trade, and negotiation is the lifeblood of the multilateral trading system.

Capacity Building and Technical Assistance

The WTO offers technical assistance and capacity-building programs to developing countries. This is an important effort by the WTO in terms of providing support to the developing nations that lack the required resources or expertise to become full participants in the international trading system. By building their trade capacity, the WTO seeks to encourage more inclusive and sustainable economic development.

Administering Trade Agreements

The WTO is an administration of trade agreements, among which the following are considered to be: the General Agreement on Tariffs and Trade, commonly known as GATT. The General Agreement on Trade in Services commonly known as GATS; and the Agreement on Trade-Related Aspects of Intellectual Property Rights, known as TRIPS. All these form a backbone for the international trading system, covering several items, such as tariffs, services, and protection of intellectual property.


WTO FAQs

What is the main objective of the WTO?

The main objective of the WTO is to promote free and fair trade between countries by reducing barriers to trade and ensuring compliance with trade rules.

When did the WTO establish?

The WTO was established on January 1, 1995, following the conclusion of the Uruguay Round of trade negotiations.

What does the WTO dispute resolution mechanism do?

The WTO’s dispute resolution mechanism helps resolve trade conflicts between member countries by providing a platform to address violations of trade agreements.

How many countries are members of the WTO?

The WTO has 164 member countries, representing nearly all nations involved in global trade.

What are the functions of the WTO?

The main functions of the WTO include trade negotiation, dispute resolution, monitoring trade policies, capacity building for developing nations, and administering trade agreements.

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