World Trade Organisation (WTO) have always been one of the prominent international organisations contributing to development of its member nation. WTO is successor Of General Agreement on Tariffs and Trade (GATT).it was formed on January 1 ,1995 by Uruguay round negotiation (1986-1994). WTO deals with areas such as agriculture, textiles and clothing, banking, telecommunications, industrial standards and product safety, food sanitation regulations, intellectual property, and many more. GATT was a forum where member countries used to meet and discuss about solution of world trade problem. One striking difference between them is that GATT dispute settlement system was dilatory which was not binding to the dispute parties whereas WTO dispute settlement system is faster and binding on the parties. Primary purpose of WTO is to promote open and free trade and adding to the development of world trade. It has over 160 members representing 98 per cent of world trade. To become member of the same a country’s government have to bring its economic and trade policy in line with the organisation (WTO). Headquarter of WTO is in Geneva, Switzerland.
WTO help producers of goods and services, exporters, and importers conduct their business is at the core of organisation. Overriding objective is to make flow of trade smooth and fair. With above discussed broad objective organisation have following functions to perform.
To provide technical training and assistance to the member countries
Toto settle disputes between the parties who are member nation.
To co-operate and work with another international organisation such as IMF, WB etc.
To act as forum of trade negotiation.
To facilitate implementation, administration and operation of objectives of Multilateral trade agreement.
To review national policies pertaining to trade.
Principles of WTO:
Following are the major principles on which WTO works-
Trade without discrimination:
WTO treats all the member nation on the same grounds ensuring no discrimination and bias among member nations. Under this principle we have two sub headings:
a: Most Favoured Nation (treating trade partner equally)- it simply means that countries cannot practice discrimination to member nation. MFN says that every time a country lowers a trade barrier or opens up a market or impose high tariff, it has to do so for the same goods or services from all its trading partners irrespective of the economic status (rich or poor, weak or strong).
b: National Treatment (equal treatment to foreign and local goods)- this principle ensure that member nations are giving same treatment to others as one’s own national.it prohibits discrimination between imported goods and goods which are domestically produced with respect to internal taxation or other regulation of government.
Predictable: WTO works to reduce uncertainty and promote world trade. commitment of a particular country not to raise import duty or tax make trade environment less uncertain as well as it gives confidence to investor. Boosting investment will create job and ensure speedy growth. Multilateral trading system provides business environment which is stable and predictable. Percentage or level of tariffs imposed by countries have considerably reduced down under WTO guidelines and various policy.
Development: organisation consist of various countries majority of which are under the process of transition of market economics or developing countries. To gives them flexibility for implementation of systems agreement, special assistance and various trade concessions are provided which creates conducive environment and helps them grow at faster pace. recently developed countries have also started allowing duty-free and quota-free imports for most of the products from least-developed countries and developing countries.
Fair competition: from objectives and function of WTO one can say that promotion of free and fair trade is the core of organisation. The principle of non-discrimination-MFN and National treatment have ensured reduction in unfair and distorted trade practices. Presence of fair-trade policies and practices boot the confidence of traders and increase the level of investment and growth of countries.