WTO - World Trade Organization: Functions and Objectives

The World Trade Organisation or the WTO is the only such global international entity that deals with the rules and regulations related to international trade between different countries. Such regulations and obligations only cover countries that hold membership to the World Trade Organisation. The functioning of the WTO is based on negotiated and signed WTO agreements between member countries. It has to be kept in mind that the WTO agreements will have to be ratified by the parliaments of the member countries. 

In Which Year Was WTO Established? 

The World Trade Organisation was established on January 1, 1995, following the Marrakesh Agreement which was ratified on April 15, 1994. The General Agreement on Tariff and Trade was substituted by the Marrakesh Agreement. 

Do You Know? 

The income in the annual budget of the World Trade Organisation is accumulated from the contribution made by member countries. The formula for the contribution is consistent with the volume of international trade of each member country. India has already made an advance payment to the tune of Rs.33 crores as its due contribution to the WTO for the year 2020. 

Objectives of WTO 

The six key objectives of the World Trade Organization have been discussed below. 

1. Establishing and Enforcing Rules for International Trade 

The international trading rules by the World Trade Organisation are established under three separate agreements – rules relating to the international trade in goods; the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS). 

The enforcement of rules by the WTO takes place by way of a multilateral system of disputes settlement in the instances of violation of trade rules by member countries. The members are obligated under ratified agreements to honor and abide by the procedures and judgments. 

2. Acting As A Global Apex Forum 

World Trade organization is the global forum for monitoring and negotiating further trade liberalization. The premise of trade liberalization measures undertaken by WTO is based on the benefits of member countries to optimally utilize the position of comparative advantage due to a free and fair trade regime. 

3. Resolution Of Trade Disputes 

Trade disputes, before the WTO, usually arise out of deviation from agreements between member countries. The resolution of such trade disputes does not take place unilaterally but through a multilateral system involving set rules and procedures before the dispute settlement body. 

4. Increasing Transparency in The Decision-Making Process 

The World Trade Organisation attempts to increase transparency in the decision-making process by way of more participation in the decision-making and consensus rule, in particular. The combined effect of such measures helps to develop institutional transparency. 

5. Collaboration Between International Economic Institutions 

The global economic institutions include the World Trade Organisation, the International Monetary Fund, the United Nations Conference on Trade and Development, and the World Bank. 

With the advent of globalization, close cooperation has become necessary between multilateral institutions. These institutions are functional in the sector of formulation and implementation of a global economic policy framework. In the absence of regular consultation and mutual cooperation, policymaking may be disrupted. 

6. Safeguarding The Trading Interest of Developing Countries

Stringent regulations are implemented by the WTO to protect the trading interests of developing countries. It supports such member countries to leverage the capacity for carrying out the mandates of the organization, managing disputes, and implementing relevant technical standards. 

Features of WTO 

The major features of the World Trade Organization are –

• The scope of WTO is far more expensive than the erstwhile General Agreement on Trade and Tariff. For instance, GATT solely focused on goods while excluding textiles and agriculture. On the other hand, WTO covers all goods, services, and investment policies along with intellectual property. 

• WTO Secretariat has formalized and bolstered the mechanisms for the review of policies as well as the settlement of disputes. This aspect has become crucial due to the proliferation of member countries and more goods and services being covered by the WTO. Another important consideration in this regard is the substantial increase in open access to different international markets. 

• There are rules implemented for the protection of small and weak countries against the discriminatory trade practices of developed countries. 

• National Treatment articles and Most Favored Nation (MFN) clause permits equal access to markets for just treatment of both domestic and foreign suppliers. 

• Each member country of the WTO carries a single voting right and all members enjoy privilege on the global scale. 

• The WTO agreements encompass all the member states and act as a common forum of deliberation for the members. 

Roles and Functions of WTO 

The broad reach of WTO and its functions have been mentioned below. 

• Implementation of Rules for Review of Trade Policy 

The international rules of trade provide stability and assurance and lead to a general consensus among member countries. The policies are reviewed to ensure that even with the ever-changing trading scenarios, the multilateral trading system thrives. It also helps in the facilitation of a transparent and stable framework for conducting business. 

• Forum for Member Countries Discuss Future Strategies 

The WTO, as a forum, allows for trade negotiations in the multilateral trading system. In the absence of trade negotiations, growth may stunt, and issues related to tariff and dumping may go unaddressed. Further liberalization of trade is also subject to consistent trade negotiations. 

• Implementing and Administering Bilateral and Multilateral Trade Agreements 

The bilateral or multilateral trade agreements have to be necessarily ratified by the parliaments of respective member countries. Unless such ratification comes through, the non-discriminatory trading system cannot be put into practice. The executed agreements will ensure that every member is guaranteed to be treated fairly in other members’ markets. 

• Trade Dispute Settlement 

The dispute settlement by the WTO is concerned with the resolution of trade disputes. Independent experts of the tribunal interpret the agreements and give out judgment mentioning the due commitments of the concerned member states. It is encouraged to settle the disputes by way of consultation among the members as well. 

• Optimal Utilization of the World's Resources 

Resources across the world can be further optimally utilized by harnessing the trade capacities of the developing economies. It requires special provisions in the WTO agreements for the least-developed economies. Such measures may include providing greater trading opportunities, longer duration to implement commitments, and also support to build the sue infrastructure. 

Test Your Knowledge – 

1. Where is the headquarter of the World Trade Organisation located?

(a) Melbourne 

(b) New York 

(c) Doha 

(d) Geneva 

2. How many countries are members of the World Trade Organisation? 

(a) 164 member countries 

(b) 160 member countries 

(c) 144 member countries 

(d) 194 member countries      

3. Which of the following is the official language of the World Trade Organisation?

(a) Spanish 

(b) French 

(c) English

(d) All of the above   

4. Who among the following is the current director-general of the World Trade Organisation?

(a) Roberto Azevedo 

(b) Antonio Guterres 

c) Peter Sutherland 

(d) Kristalina Georgieva 

The World Trade Organization is introduced in schools when the topic of globalization is discussed. The world trade organization is a part of globalization as this organization is concerned with the facilitation of international trade between nations. It is an intergovernmental organization. There are a certain set of rules of the trade that are set between nations, the World Trade Organization is in charge of dealing with the rules of trade between nations. It is based on the set of world trade organization agreements that are negotiated and signed by the bulk of the world trading nations. The goal of this organization is to facilitate and help the businessmen and the producers of goods and services, exporters and importers to conduct their business according to the rules laid by The world trade organization.

The world trade organization is headquartered in Geneva, Switzerland it was established on 1 January 1995, it was created by Uruguay Round negotiations. The world trade organization‘s membership includes 164 members representing 98% of world trade, the budget is one 97 million Swiss Francs for 2020, the secretariat staff includes 623 members, the head of the organization is Ngozi Okonjo Iweala Who is known as the director-general.

The World trade organization has various aspects as it is an organization known for trade opening. It is also considered a forum where governments can negotiate trade agreements. It is also known as a place for governments to settle trade disputes. It is known as a system of trade rules. Most importantly the world trade organization is a forum where governments of various countries sit and try to sort out the many trade problems that they might face with each other.

While studying commerce it is extremely important to learn about this important organization. Vedantu’s team has curated the study material based on the World Trade Organisation this study material is a product of extensive research done by Vedantu’s expert team and The study material contains important facts and definitions which a student must know in order to get a good hold over the many functions and aspects of the world trade organization. The sari material on Vedantu‘s website is available for free download. The link is easily accessible and the material is available in a PDF format which will help students to download it and study it anywhere they want. It helps in glancing over the concepts before the examination so that students can learn about the main aspects.

This article mainly deals with the definition of World Trade Organisation the year in which it was established some important facts and objectives of portrait organization,  The features of World Trade Organisation and roles and functions of World Trade Organisation along with this Vedantu’s team has also curated practice questions so that students can keep in check their progress and check how much knowledge they have about the concerned topic.

The World Trade Organization is introduced in schools when the topic of globalization is discussed. The world trade organization is a part of globalization as this organization is concerned with the facilitation of international trade between nations. It is an intergovernmental organization. There are a certain set of rules of trade that are set between nations, the World Trade Organization is in charge of dealing with the rules of trade between nations. It is based on the set of world trade organization agreements that are negotiated and signed by the bulk of the world trading nations. The goal of this organization is to facilitate and help the businessmen and the producers of goods and services, exporters and importers to conduct their business according to the rules laid by The world trade organization.

The world trade organization is headquartered in Geneva, Switzerland it was established on 1 January 1995, it was created by Uruguay Round negotiations. The world trade organization‘s membership includes 164 members representing 98% of world trade, the budget is one 97 million Swiss Francs for 2020, the secretariat staff includes 623 members, the head of the organization is Ngozi Okonjo Iweala Who is known as the director-general.

The World trade organization has various aspects as it is an organization known for trade opening. It is also considered a forum where governments can negotiate trade agreements. It is also known as a place for governments to settle trade disputes. It is known as a system of trade rules. Most importantly the world trade organization is a forum where governments of various countries sit and try to sort out the many trade problems that they might face with each other.

While studying commerce it is extremely important to learn about this important organization. Vedantu’s team has curated the study material based on the World Trade Organisation this study material is a product of extensive research done by Vedantu’s expert team and The study material contains important facts and definitions which a student must know in order to get a good hold over the many functions and aspects of the world trade organization. The sari material on Vedantu‘s website is available for free download. The link is easily accessible and the material is available in a PDF format which will help students to download it and study it anywhere they want. It helps in glancing over the concepts before the examination so that students can learn about the main aspects.

This article mainly deals with the definition of World Trade Organisation the year in which it was established some important facts and objectives of portrait organization,  The features of World Trade Organisation and roles and functions of World Trade Organisation along with this Vedantu’s team has also curated practice questions so that students can keep in check their progress and check how much knowledge they have about the concerned topic.