IMF, World Bank & WTO is an essential topics for all defence exams. We are covering this topic in multiple parts to provide you with detailed notes. Today we will know the World Trade Organisation.
The World Trade Organisation
The World Trade Organisation or the WTO, as it is called, is an inter-governmental organisation, headquartered in Geneva, Switzerland. The WTO was officially created by the Marrakesh agreement in the year 1994, replacing the General Agreement on Tariffs and Trades (GATT) of 1947. It is the single largest international economic organisation in the world. It deals with the regulation of trade of goods, services and intellectual property by means of several ancillary agreements annexed to the GATT. Any trade-related disputes are resolved by the independent judges at the WTO through the set dispute resolution process.
GATT 1947
The General Agreement on the Trade and Tariffs was established by way of a multilateral treaty of twenty-three countries in the year 1947, in the wake of the Second World War. This was in the line of creation of organisations such as the International Monetary Fund and the International Bank for reconstruction and development. The WTO did not form back in 1947 because several of the member states, including the United States of America, did not ratify the establishment treaty. This is the reason why it was only until the creation of WTO in 1995, we had our first international economic organisation. GATT 1947, thus became a de facto international organisation for Trade. This is also why we say that WTO replaced GATT as an organisation.
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Why WTO became necessary?
The main reason behind the GATT 1947 negotiations was the need for international cooperation, which in turn meant that there had to be better trade relations between the countries. The driving force behind the agreement is that that must be a reduction of the Tariff rates among the countries.
The GATT exists as the WTO’s umbrella treaty for the trade in goods. However, GATT 1994 is not the only agreement in the WTO. The agreements fall into six main parts- The agreement establishing the WTO, the multilateral agreement on Trade in Goods, The General Agreement on Trade in Services and the Agreement of the Trade-related aspects of intellectual property rights.
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URUGUAY ROUNDS
- The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting of GATT members in Geneva. Although the ministers intended to launch a major new negotiation, the conference stalled on the issue of agriculture and was widely regarded as a failure.
- Nevertheless, it took four more years of exploring, clarifying issues and painstaking consensus-building, before ministers agreed to launch the new round. They did so in September 1986, in Punta del Este, Uruguay. They eventually accepted a negotiating agenda which covered virtually every outstanding trade policy issue.
- Over the following two years, the negotiations lurched between impending failure, to predictions of imminent success. Several deadlines came and went. New points of major conflict emerged to join agriculture: services, market access, anti-dumping rules, and the proposed creation of a new institution. Differences between the United States and the European Union became central to hopes for a final, successful conclusion.
- Took until 15 December 1993 for every issue to be finally resolved and for negotiations on market access for goods and services to be concluded (although some final touches were completed in talks on market access a few weeks later). On 15 April 1994, the deal was signed by ministers from most of the 123 participating governments at a meeting in Marrakesh, Morocco.
- The WTO replaced GATT as an international organization, but the General Agreement still exists as the WTO’s umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations. Trade lawyers distinguish between GATT 1994, the updated parts of GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994.
- The GATT, and its successor the WTO, have successfully reduced tariffs. The average tariff levels for the major GATT participants were about 22% in 1947 but were 5% after the Uruguay Round in 1999. Experts attribute part of these tariff changes to GATT and the WTO
DOHA ROUNDS
- The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work programme covers about 20 areas of trade
- Commenced in November 2001 under then director-general Mike Moore. Its objective was to lower trade barriers around the world and thus facilitate increased global trade.
- The most contentious topic in the Doha Round has been agriculture trade, where developed‐country protections have long caused trade conflict, but now developing country market interventions have made the situation even worse.
World Bank, WTO, and the International Monetary Fund
In 2016, the leaders of these three international institutions came together to discuss Global Trade Concerns. The event was called the “making trade an engine of growth for all”. It was reiterated that global growth and ending of poverty cannot be done without more robust trade. In fact, the IMF and the WTO already work together for many goals, for the common aim of ensuring global economic policing.
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