WTO: What It Is, What It Does and Why It Matters
Do you want to know how the world trade works? How countries agree and follow trade rules? How they solve trade conflicts and deal with globalization and development? Then you should learn about the World Trade Organization (WTO), the organization that regulates and facilitates international trade among 164 countries. The WTO is very important and influential, as it affects the trade and development of almost every country and region. In this blogpost, we will tell you what the WTO is, what it does and why it matters. We will also talk about some of the successes and challenges of the WTO, and its impact on trade and development. By reading this blogpost, you will understand better the role and responsibilities of the WTO, and how it shapes global trade and development.
What Is the WTO?
The WTO is an organization that regulates and facilitates international trade. It started in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT), which began in 1947. The WTO has a structure with the Ministerial Conference as its highest decision-making body, which meets every two years. Below it is the General Council, which oversees the daily operations of the WTO and also acts as the Dispute Settlement Body and the Trade Policy Review Body. The General Council has several councils and committees that deal with specific issues and sectors related to trade.
The WTO has a set of agreements that define the rules and obligations of its members in various areas of trade, such as goods, services, intellectual property, dispute settlement, etc. The WTO agreements are the result of negotiations among its members and are ratified by their legislatures. The agreements cover about 98% of world trade.
What Does the WTO Do?
The WTO does many things to facilitate international trade and development. Here are some examples:
The WTO provides a forum for trade negotiations among its members. The negotiations aim to reduce or eliminate barriers to trade, such as tariffs, quotas, subsidies, regulations, etc., and to address new issues such as e-commerce, environment, labour standards, etc. The negotiations are based on reciprocity and consensus.
The WTO monitors the implementation and compliance of its members with their trade commitments. The members have to notify the WTO about their trade policies and measures, such as tariffs, quotas, subsidies, regulations, etc. The WTO also reviews the trade policies and practices of its members regularly through its Trade Policy Review Mechanism (TPRM).
The WTO settles trade disputes among its members through its Dispute Settlement System (DSS). The DSS is a mechanism for resolving trade conflicts that arise when one member thinks that another member is breaking a WTO agreement or commitment. The DSS involves a panel of independent experts who examine the evidence and make a ruling. The ruling can be appealed to an Appellate Body (AB), which can change or confirm the panel's decision.
The final ruling is adopted by Dispute Settlement Body (DSB), unless it is rejected by consensus. The losing party has to comply with the ruling or offer compensation or concessions to the winning party. If not, the winning party can ask the DSB to allow retaliation by suspending trade concessions or obligations. The DSS is based on clear rules and timetables, and ensures that trade rules are enforced and respected.
The WTO provides technical assistance and training for developing countries to help them join and benefit from the global trading system. The WTO offers various programs and activities, such as courses, workshops, seminars, e-learning, publications, etc. The WTO also works with other international organizations, such as the World Bank, the International Monetary Fund (IMF), the United Nations Conference on Trade and Development (UNCTAD), etc., to provide coordinated and coherent support for developing countries.
The WTO works with other international organizations on trade-related matters, such as development, environment, health, labour, etc. The WTO recognizes that trade is not an end but a means to achieve other goals. The WTO also acknowledges that trade can have positive or negative impacts on these goals, depending on how it is done. Therefore, the WTO tries to make sure that its agreements and policies are consistent and compatible with these goals, and that they contribute to sustainable development.
Why Does the WTO Matter?
The WTO matters because it plays a vital role in shaping the global trade and development. Here are some reasons why the WTO matters:
The WTO promotes economic growth and development through trade liberalization and facilitation. Trade liberalization means reducing or eliminating barriers to trade. Trade facilitation means simplifying and harmonizing trade procedures and customs. Trade liberalization and facilitation can increase trade volume and efficiency, lower trade cost, enhance export competitiveness, create jobs and income, stimulate innovation and technology transfer, and foster economic integration and cooperation.
The WTO enhances stability and predictability in the global trading system through its rules-based framework. The WTO rules provide a common set of principles and obligations that govern trade relations among its members. The WTO rules also provide a mechanism for resolving trade disputes in a peaceful and orderly way. The WTO rules create a level playing field for all its members, regardless of their size or development level. The WTO rules also create a platform for further negotiations and reforms to address new challenges and opportunities in world trade.
The WTO protects the interests and rights of its members in world trade through its non-discrimination principle. The non-discrimination principle means that WTO members must treat each other equally and fairly in their trade policies and practices. The non-discrimination principle has two aspects: most-favoured-nation (MFN) treatment and national treatment. MFN treatment means that any advantage or preference given by one member to another member must be given to all other members. National treatment means that imported goods or services must be treated no worse than domestic goods or services once they enter the market. The non-discrimination principle ensures that trade is based on merit and competition rather than on favouritism or protectionism.
The WTO supports development and poverty reduction through its special and differential treatment (SDT) provisions for developing countries. SDT provisions are clauses in the WTO agreements that give developing countries more flexibility.
In implementing their trade commitments, taking into account their development needs and capacities. SDT provisions also include preferential market access, technical assistance and training, and special safeguards for developing countries.
The WTO is not perfect, and it faces some challenges and criticisms, such as being unfair to developing countries, ignoring human rights and environmental standards, favoring multinational corporations, and damaging nature and biodiversity. The WTO also needs to adapt to the changing realities and demands of world trade, such as the rise of new players, the emergence of new technologies, the impact of the COVID-19 pandemic, etc. The WTO needs to reform and revitalize itself to remain relevant and effective in the 21st century.
The WTO is an important and influential organization that affects the trade and development of the world. It is essential for all countries, especially developing countries like India, to understand the role and responsibilities of the WTO, and to participate actively and constructively in its processes and activities. By doing so, they can maximize their benefits and minimize their costs from their membership in the WTO, and also contribute to the common good of humanity.