WTO

Establishment of WTO
In order to implement the final of Uruguay round agreement of GATT the WTO was established on 1st January 1995. India is one of the founder members of WTO (Out of 104). The WTO is an organisation GATT is a legal agreement. The WTO was designed to play the role of ‘Watch Dog’.

Objectives of WTO
1. To raise the standard of living of the people
2. To introduce sustainable development
3. To ensure better growth of developing and least developed countries]

Functions of WTO
1. To administer and implement multilateral trade agreements
2. To act as a forum for multilateral trade negotiations
3. To resolve trade disputes
4. To examine national trade policies
5. To cooperate with other international organisations involved in the global economic policy making
6. To maintain trade related database.
7. To act a watchdog of international trade.
8. To act as a management consultant for world trade
9. To provide technical assistance and training for developing countries.
10. To administer trade policy review mechanism

Principles of WTO
1. Transparency
2. MFN treatment (Most Favoured Nation)
3. National treatment
- imported products should be treated on par with the domestic products
4. Free trade principle
5. Dismantling trade barriers (MFAs etc.)
6. Rule based trading system
7. Treatment for LDCs (Least Developed Countries)
8. Competition
9. Environment protection

GATT
1.A set of rules and multilateral agreement
2.Was designed with an attempt to establish international trade organisation
3.It was applied on provisional basis
4.Its rules are applicable to trade in merchandise goods
5.GATT was originally a multilateral instrument
6.Its dispute settlement system was not faster and automatic

WTO
1.A permanent institution
2.It is established to serve its own purpose
3.Its activities are full and permanent
4.Its rules are applicable to trade in merchandise and trade in related aspects of intellectual property
5.Its agreements are almost multilateral
6.Its dispute settlement system is fast and automatic

Impact of GATT & WTO
• Currently there are 149 members.
• Represents 90% of world trade.
• 9 of 10 disputes satisfactorily settled.
• Tariff reduction from 40% to 5%.
• Trade volume of manufactured goods has increased 20 times.

Impact of GATT & WTO to India
Benefits to India
1. The GATT secretariat estimated that largest increase in the level in goods in will be in the areas of clothing (60%), agriculture, foresting and fishery (20%) and processed foods and beverages (19%). India has competitive advantage in these fields.
2. India’s textile and clothing exports will increase due to the removal of Multi Fiber Arrangements (MFA) by 2005.
3. Greater security in international trade
4. Market access to a number of advanced countries
5. The reduction of agricultural subsidies will increase agricultural exports.

Disadvantages to India
1. TRIPs (Trade Related Intellectual Property Rights) is against Indian Patent Act 1970. Only process patents can be granted under this. TRIPs provides also product patents. The duration of patents is 20 years under TRIPs.
2. Plant breeding and seed production will be affected severely
3. It will hike prices in Pharmaceuticals sector.
4. Patents has been extended to large area of micro organizations
5. Application of TRIM will affect the growth of local products.
6. Service sector like insurance, banking, telecommunications, transports are backward in India compared to the developed countries. Therefore inclusion of trade in services is detrimental to interest of India.