And it’s Impact on India
FUNCTIONS OF WTO
1. The WTO facilitates the implementation, administration and operation, and furthers the objectives, of this Agreement and the Multilateral Trade Agreements, and also provide framework for the implementation, administration and operation of the Plurilateral Trade Agreements. 2. The WTO provides the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreements and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference. 3. The WTO administers the Understandings on Rules and Procedures governing the Settlement of Disputes. 4. The WTO administers the Trade Policy Review Mechanism (TPRM). 5. With a view to achieving greater coherence in global economic policy-making, the WTO cooperates as appropriate, with the International Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (World Bank) and its affiliate agencies. Four Basic Rules
1. Protection to Domestic Industry through Tariffs:
a. The General Agreement on Tariffs and Trade (GATT) covers international trade in goods. The workings of the GATT agreement are the responsibility of the Council for Trade in Goods (Goods Council) which is made up of representatives from all WTO member countries. GATT requires the member countries to protect their domestic industry/production through tariffs only.
b. It prohibits the use of quantitative restrictions, except in a limited number of situations.
2. Binding of Tariffs: The member countries are urged to
a. Eliminate protection to domestic industry/ production by reducing tariffs and removing other barriers to trade in multilateral trade negotiations.
b. The reduced tariffs are bound against further increases by listing them in each country's national schedule.
c. The schedules are an integrated part of the GATT legal system.
3. Most Favoured –Nation (MFN) Treatment:
a. The rule lays down the principles of non-discrimination amongst member countries.
b. Tariff and other regulations should be applied to imported or exported goods without discrimination among countries.
c. Exceptions to the rules i.e., regional arrangements subjected to preferential or duty free trade agreements, Generalized System of Preferences (GSP) where developed Countries apply preferential or duty free rates to imports from developing countries.
4. National Treatment Rule:
The rule prohibits member countries from discriminating between imported products and domestically produced like goods in the matter of internal taxes and in the application of internal regulations. Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.
Developing Countries and WTO
Developing countries have little power within the WTO framework for the following reasons: 1.
Although developing countries make up three-fourths of WTO membership and by their vote can in theory influence the agenda and outcome of trade negotiations, they have never used this to their advantage. Most developing country economies are in one way or another dependent on the U.S., or Japan in terms of imports, exports, aid, security, etc. Any obstruction of a consensus at the WTO might threaten the overall...
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