World Trade Organization (WTO) — Structure and Functions

2.1 Background — GATT to WTO

GATT (General Agreement on Tariffs and Trade, 1947): An international agreement — not a formal international organisation — signed by 23 countries in Geneva. GATT conducted 8 negotiating rounds to reduce tariff and non-tariff barriers. The most important was the Uruguay Round (1986-1994), which produced the Marrakesh Agreement creating the WTO.

Uruguay Round Achievements:

• Established the WTO as a formal international organisation (replacing GATT's informal structure)
• Brought agriculture and textiles into multilateral rules (previously excluded)
• Created the Trade-Related Intellectual Property Rights (TRIPS) agreement
• Created the Trade-Related Investment Measures (TRIMS) agreement
• Established the General Agreement on Trade in Services (GATS)
• Created the dispute settlement system with binding rulings and an Appellate Body

2.2 WTO — Key Facts

Parameter	Detail
Established	1 January 1995
Predecessor	GATT 1947 (8 rounds; 1947-1994)
Headquarters	Geneva, Switzerland
Director-General	Ngozi Okonjo-Iweala (Nigeria) — since March 2021; first African and first woman DG
Members	166 (as of 2024)
Observer Countries	25 (including Iran, Iraq; must begin accession within 5 years)
India's Status	Founding member; active in G-20 and G-33 coalitions
Budget	Approx. CHF 197 million/year
Agreements Administered	16 multilateral + 2 plurilateral

2.3 WTO's Core Principles

1. Most Favoured Nation (MFN) Principle (GATT Art. I, GATS Art. II):
A concession granted to one WTO member must be extended to all other members immediately and unconditionally. You cannot discriminate between trading partners — if you lower tariffs for one country, you must do so for all WTO members.

• Exceptions to MFN: Free Trade Agreements (FTAs), Customs Unions, Generalised System of Preferences (GSP) for developing countries, national security (GATT Art. XXI)

2. National Treatment (GATT Art. III, GATS Art. XVII):
Foreign goods, services, or service providers must be treated no less favourably than domestic equivalents once they have entered the market. Prevents domestic regulatory discrimination.

3. Trade Without Discrimination:
Combined MFN + National Treatment creates a non-discriminatory trading environment.

4. Reciprocity:
Trade concessions are negotiated on a reciprocal basis — you lower your tariffs in exchange for other countries lowering theirs.

5. Transparency:
Members must notify the WTO of trade policies, regulations, and tariff changes; WTO conducts Trade Policy Reviews (TPR) of each member.

6. Special and Differential Treatment (S&DT) for Developing Countries:
Developing countries and LDCs (Least Developed Countries) get more flexibility — longer implementation periods, lower tariff reduction commitments, and technical assistance. India consistently argues for stronger S&DT provisions.

2.4 WTO Agreements — Key Agreements

On Goods:

• GATT 1994: Core goods trade rules — tariff bindings, non-discrimination, MFN
• Agreement on Agriculture (AoA): Disciplines on domestic support, market access, export subsidies; India's key interest — exemption for Minimum Support Price (MSP) and public distribution
• Agreement on Textiles and Clothing (ATC): Phased out the Multi-Fibre Arrangement (MFA) quotas; trade is now under full GATT rules
• Agreement on Subsidies and Countervailing Measures (ASCM): Defines prohibited (export subsidies), actionable, and non-actionable subsidies
• Anti-Dumping Agreement: Allows countries to impose anti-dumping duties when dumping (exporting below cost) causes material injury

On Services:

• GATS (General Agreement on Trade in Services): Covers 4 modes: Mode 1 (cross-border — e.g., call centres), Mode 2 (consumption abroad — e.g., medical tourism), Mode 3 (commercial presence — e.g., foreign bank branches), Mode 4 (movement of natural persons — e.g., IT professionals abroad)

On Intellectual Property:

• TRIPS (Trade-Related Intellectual Property Rights): Minimum IP protection standards — patents (20 years), copyrights, trademarks. India modified patent law (Section 3d of Patents Act) to allow compulsory licensing and restrict "evergreening" — key for affordable generic medicines.

Doha Round (2001 onwards):

• Formally: Doha Development Agenda (DDA) — launched November 2001 in Doha, Qatar
• Goal: Development-friendly trade reform — reducing agricultural subsidies in rich countries, improving market access for developing countries
• Status: Effectively stalled since 2008 — collapse of July 2008 Geneva talks due to US-India disagreement on special safeguard mechanism (SSM) for agricultural imports
• Major India-WTO confrontation: India blocked TFA at Bali MC9 (2013) — sought permanent fix for public stockholding before signing TFA. Compromise: "Peace Clause" — WTO members will not challenge food security subsidies until permanent solution found (now ongoing at MC12/13 negotiations)

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