- Created in 1995, the World Trade Organization (WTO) is an international institution that oversees the global trade rules among nations.
Headquarters: Geneva, Switzerland
- It superseded the 1947 General Agreement on Tariffs and Trade (GATT) created in the wake of World War II.
- The General Agreement on Tariffs and Trade (GATT) had its last round in 1986 and it lasted till 1994. This was known as the Uruguay Round and it led to the formulation of the World Trade Organization (WTO).
- It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948.
- The WTO is based on agreements signed by the majority of the world’s trading nations.
- The main function of the organization is to help producers of goods and services, as well as exporters and importers, protect and manage their businesses.
Structure of WTO
- The Ministerial Conference, composed of representatives of all WTO members, can take decisions on all matters under any of the multilateral trade agreements.
- The highest authority of the WTO is the Ministerial Conference, which must meet at least every two years.
- It is composed of all WTO members and is required to report to the Ministerial Conference.
- It works as Dispute Settlement Body and Trade Policy Review Body as well.
Mechanisms of WTO
- General Agreement on Tariffs and Trade (GATT) - is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.
- Trade-Related - It Allows members to have access to affordable life-saving drugs through various provisions like WTO-compliant compulsory licensing procedures (for costly, rare, and patented drugs), voluntary licensing of patents, and pooling of intellectual property for drugs and medical devices.
- Trade Facilitation Agreement - It aims to simplify the border management programs and bring down trade barriers. It is a legally managed agreement and is considered to be one of the biggest reforms taken up by the World Trade Organisation (WTO) since its establishment.
- Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) - It gives members the right to impose trade restrictions for the protection of human, animal, land plant life, or health. Such restrictions should be backed by scientific evidence. If scientific evidence is insufficient, countries can adopt SPS measures based on available relevant information.
- General Agreement on Trade in Services (GATS) -The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO) which entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to the service sector, in the same way, the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade.
- Trade Policy Review Mechanism - It is used by the WTO to monitor the members’ pandemic response. This allows countries to question a specific member’s trade policies and assess whether the pandemic is used as an excuse to deviate from the WTO norms.
- Agreement on Agriculture - It is aimed to remove trade barriers and to promote transparent market access and integration of global markets. The WTO's Agriculture Committee oversees the implementation of the Agreement and provides a forum for members to address related concerns.
- Trade-related aspects of investment Measures (TRIMS) - It aims to promote investment and equality among countries in the sphere of foreign investments. It calls for countries to avoid unnecessary conditions attached to foreign investments.