WTO (World Trade Organisation)

WTO
( World Trade
Organisation )
International Trade Organization(ITO)-
A Failed Attempt
It was decided in the Bretton woods conference that Multinational Organisation
will be established by the name ITO.
A draft Agreement was prepared at Havana conference in 1948 for the
establishment of ITO.
This was called Havana Charter, it was signed by 53 out of 56 countries.
In order to get implemented, Havana charter was required to get ratified by
American congress.
In 1950 America made it clear that it will not ratify the agreement. So ITO could
not implemented.
General Agreement on Trade and Tariff
(GATT)
Temporary Agreement on multinational tariff reductions until the ITO was
formed.
It was signed by 23 countries in January 1948.
This temporary agreement provided the basis for the international trading
system for 47 years.
It was not an Organization but an agreement. Participating countries were not
called members but “CONTRACTING PARTIES”.
Limited to removal of Tariff in the trade of GOODS.
Trade in Agriculture and Textile was excluded from GATT.
Objectives of GATT
To provide equal opportunities to all countries in international Market for

Trading.
To increase the effective demand for real income growth and goods.
To minimize tariffs on trade for ensuring mutual benefits.
To provide proper solution to the disputes related to international trade.
To ensure a better living standards in the world as a whole.
GATT-
Trade Rounds
1. Geneva Round (Switzerland)
• Year : 1947
• Subject covered : Tariffs
• No. of countries : 23
• Features : Tariff cuts for 45000 products worth $10 billion of trade
on an annual basis.
2. Annecy Round (France)
• Year : 1949
• Subject covered : Tariffs
• Features : Custom duty was reduced for another 50000 items of goods.
3. Torquay Round (Britain)
• Year: 1951
• Subject covered: Tariffs
• No. of countries:38
• Features: Adopted 8700 tariff reduction
4. Geneva Rounds (Switzerland)
• Year: 1955-56
• Features : Further cut duties for worth $2.5 billion.
5. Dillon Round (Geneva)
• Year: 1960-61
• Features: Custom duty changed for 4000 items worth $5 billion
6. Kennedy Round (Geneva)
• Year : 1964-67
• Subject covered : Tariffs, antidumping measures
• Features : Cut tariff for industrial goods upto 50%
7. Tokyo Round (Japan)
• Year : 1973-79
• Subject covered : Tariffs, non-tariff measures, framework agreement
• Features : Ended at Geneva, participants cut custom duties by 20%-30%
for goods traded.
8. Uruguay Round
• Year : 1986-94
• Subject covered : Tariff, non-tariff measures, services, Intellectual
property Rights, dispute settlements, textile, agriculture, creation of
WTO
• Features : Led to the formation of WTO
Formation of WTO
 WTO was born with the conclusion of Marrakesh
Agreement in the Uruguay Round of Multinational Trade
Negotiations in 1994.
 The WTO came into existence on 1 January 1995,with a

membership of 128 countries.
What led to the replacement of GATT
with WTO ?
GATT deal with only Tariff barriers but by 1970s Non-Tariff Barriers has also
started increasing.
GATT deal with trade in Goods. But by 1980s Developed countries started
having comparative advantages in trade in services.
By 1980s, Developing Countries started Pursuing Export-Oriented Growth.
With these new demands, it was clear that the agenda of the GATT was going to
expand well beyond the traditional issue-areas of tariffs on goods.
“Grand Bargain”
Developed countries Agreed to Developing countries allowed

include Trade in Agriculture and Inclusion of Service and
Textile under WTO with some Intellectual Property Right under
exception WTO
The Fundamental Principles WTO
Reciprocity: Mutual lowering of trade barriers, thus countries that lowered their
tariffs could expect their trading partners to do the same.
Most Favoured Nation(MFN): The MFN principle holds that the tariff preference
granted to one state must be granted to all others in other words there could be
no “favoured nation” among members.
National Treatment: National treatment means that foreign goods are treated
equally with domestic goods, and that countries are not able to enact such
polices that give their domestic product any advantage over foreign product.
Objectives of WTO
To set and enforce rules for international trade.
To provide a forum for negotiating and monitoring further trade liberalization.
To resolve trade disputes
To increase the transparency of decision-making processes.
To cooperate with other major international economic institutions involved in
global economic management.
To help developing countries benefit fully from the global trading system.
Difference Between WTO and GATT
GATT WTO
 Just a multi-lateral Treaty, an  An International Organization with
Agreement Membership
 Applied on provisional basis  No provisional Application, No
protocol for provisional Application Grandfather’s right
 GATT concerned with Tariff Barriers in  Non-Tariff Barriers, Trade in Service,
Trade of Goods. Intellectual property Rights
 Very Weak Dispute Settlement  Strong Dispute Settlement Mechanism
Mechanism
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WTO (World Trade Organisation)

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WTO

To provide equal opportunities to all countries in international Market for

 The WTO came into existence on 1 January 1995,with a

Developed countries Agreed to Developing countries allowed

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