World Trade Organisation (WTO)

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It is sometimes necessary to have an intermediary for trade among nations. There may be regulatory and legal disputes among nations regarding trade and business. In such cases, a non-biased third party is necessary to resolve the disputes. The World Trade Organization (WTO) is such an organization.

What is WTO?

The WTO is an institution that oversees the rules for trade among nations. It was created in 1995. The WTO superseded GATT or General Agreement on Tariffs and Trade which was formed in 1947 after World War II.

The WTO has 164 member nations that have signed the agreement initiated by WTO. The foremost concern of WTO is to help the producers of goods and services to protect and manage their trades. The WTO is also a significant institution for importers and exporters because it oversees the Ex-Im operations of its member countries.

Some of the features of WTO are as following:

  • As mentioned above, WTO is an intermediary that upholds international rules for trade among various nations. It provides a platform for member nations to negotiate and resolve disputes regarding trade and business. The main objective of WTO is to clarify communication while resolving disputes among the member nations.

  • The WTO has significantly lowered trade barriers on the one hand and on the other maintained trade barriers where necessary. The idea is to add value to the global economy by upholding global best practices in trade and businesses.

  • When one negotiation has been made or a dispute has been resolved by WTO, an agreement is prepared by WTO for future reference in similar conflicts. All WTO agreements, however, tend to follow a neutral conflict resolution process.

    The foundational legal agreements of WTO are the base of all resolutions without which no dispute or conflict can be ideally solved. These agreements form the legal ground rules for international trade and commerce that the WTO tends to oversee. These rules also tie governments within legal constraints so that fair trade and business policies may be followed by the countries.

  • The WTO is considered to be a major propeller of globalization with both positive and negative outcomes. The institution has done enough to encourage globalization and free trade but skeptics believe that it has also threatened indigenous cultures by harming local communities and human rights.

  • Multinational companies or MNCs are the most adamant supporters of WTO and they believe that WTO has increased trade and businesses among nations by resolving disputes that would otherwise stall trades, including imports and exports. However, there are skeptics too who believe that WTO undermines the true principles of democracy and widens the wealth gap among nations.

Objectives of WTO

Setting Global Trade Rules for Better Trade

WTO is the world’s only organization that works on behalf of the nations in order to set international trade rules for better trade and businesses. Due to the presence of WTO, the importers remain assured that they will get a steady supply of goods and services while the exporters and the producers and exporters know that the doors will always be open for them to trade freely.

  • WTO’s decisions are taken depending on a global consensus and they are ratified by the members’ parliaments. Trade frictions are treated by WTO’s dispute settlement process that ensures everyone’s equality. Such policies reduce the risks that trade disputes may spill over as political and military conflicts at a later stage.

  • WTO lowers the trade barriers by negotiating with member countries so that the barrier between people and economies goes down. This helps global members to accept WTO’s policies with open arms.

  • The multilateral trading system which is at the heart of WTO is a set of agreements accepted and signed by the member committees. It helps to create global foundations for international trade. These are the agreements that talk about the rights of nations in the global trade scenario. They also bind governments in policies that are meant to make the system more transparent and clear.

Trade negotiations

WTO is also a leading institution that has enhanced trade negotiations among its member nations. The multilateral trading system of WTO originated during the GATT days and it is more than 70 years old.

  • In the last 70 years, trade has increased in an unprecedented manner. The trade of global merchandise has grown more than 6% annually. Trade among nations has grown at an average of 1.5 times more than the global economy each year. Total exports in the year 2019 were equal to 250 times that of 1948. Therefore, we can conclude that the WTO and GATT have helped in ushering in a new era of trade negotiations.

  • Although negotiations for free trade were imminent right from the preliminary days of GATT, the Uruguay round of talks held between 1986 to 1994 were responsible for the formation of WTO.

  • After the Uruguay round, many rounds of talks have been held on various themes and aims. The 1997 round for telecommunication services saw members taking wide-ranging liberalization measures. In the same year, 40 nations agreed to free trade in IT products while 70 members accepted a financial services deal covering 95% of financial services.

  • The Doha round of talks initiated in 2011 saw the implementation of various measures in agriculture. This round involved WTO rules on anti-dumping and subsidies, transparency in government procurement, trade facilitation, intellectual property, and some concerns of developing economies while implementing WTO agreements.

  • In the 9th Ministerial conference in Bali in 2013, the exports were aimed to treat with fewer border delays by slashing the red tape. When fully implemented, it will raise exports up to $ 1 trillion per year.

  • The Nairobi conference held in 2015 led to the elimination of tariffs on 200 additional IT products. It also saw the elimination of agricultural subsidies which was a key step toward the UN’s aim of ‘zero hunger’.

Building Trade Capacity in Developing Economies

WTO has special provisions for developing or least developed economies as they are three fourth of the total members of WTO. Many programs are held as initiatives to let these economies have an upper hand in trade and business deals.

  • Programs such as Aid for Trade launched in 2005 aimed to increase the trade capacity of developing nations, to let them participate in it, and to benefit in terms of economic performance through the program. Till now, as much as $ 400 billion has been discussed under this program.

  • The Enhanced Integrated Framework (EIF) is a program that has mobilized the US $ 220 million to support the least developed countries of the world. Its aims include assisting the weak economies to find ways to get a sustainable economic framework, benefit from the poverty eradication goals and get support from developed economies to build the base of their economy.


The WTO has been working to find better economic solutions for the entire world since its inception in 1995. However, some skeptics debate its performance and biased attitude. For example, the US has accused the organization is mute in the case of China’s unfair business practices.

Whatever the point of view of nations and individuals, it is a fact that WTO is a powerful organization that can control international trade holistically and with a much better grip than what the skeptics believe.


Q1. Where is the headquarter of WTO located?

Ans. The headquarters of WTO is located in Geneva, Switzerland.

2. Which was the predecessor of WTO?

Ans. WTO superseded General Agreement on Tariffs and Trade which was formed in 1947 after World War II.

3. How many member countries are there in WTO?

Ans. There are 164 member countries out of a total of 195 countries in the world in WTO.

Updated on 13-Oct-2022 11:19:47