WTO NOTES
‘’ The world trade organization
(WTO) is the only international organization dealing with the global rules of
trade between nations.''
Formation: 1 January 1995
Type: international trade
organization
Purpose: deduction of tariffs and other barriers to trade
Headquarter: Geneva, Switzerland
Official language: English, French, Spanish
Staff: 640
Website: www.wto.org
Fact about WTO:
Ø 8TH round of Uruguay (1986-1993) gave birth to
world trade organization.
Ø Members of GATT signed on an agreement of Uruguay round on
15th April 1994 in morocco for establishing a new organization
named WTO
Ø Wto was officially constituted on January 1st
1995 which took place of GATT as an effective formal organization.
Ø On 12th Dec 1995 GATT
was abolished and replaced by the World Trade Organization which came into
existence on 1st Jan 1995
Ø Its headquarter is at Geneva.
Ø WTO is a permanent organization which has been established
on the basis of an international treaty approved by participating countries.
Ø WTO is not an agency of UNO.
Ø WTO has a general council
for its administration which includes one permanent representative of each
member nation.
Ø Generally it has one meeting per month which is held at
Geneva.
Ø The highest authority of policy is WTO ministerial
conference which is held after every 2 years.
Ø India is a founder member
of both GATT & WTO.
Ø WTO has recent 160th
member countries .latest Yemen country has joined it in 9th ministerial
conference at Bali 2013.
Ø 161st member country
which will join WTO will be Seychelles on 26th April 2015 at 10th ministerial
conference which will be going to held at Nairobi, Kenya Dec 2015.
Ø WTO is designed to play the role of watchdog in the spheres
of trade in goods, trade in services, foreign investment, intellectual property
rights.
Objectives of WTO are as follows
ü To improve the standard of living of people in the member
countries
ü To ensure full employment and broad increase ineffective
demand
ü To enlarge production and trade of goods
ü To enlarge production and trade in services
ü To ensure optimum utilization of world resources
ü To accept the concept of sustainable development
ü To protect the environment
Structure of WTO
(A). Highest authority: its function is to conduct the ministerial conference. It occurs generally two or three
times in a year.
(B). Second level: its function is to overtook day to day work of the organization. It consists of
three working bodies.
·
The general council
·
The dispute settlement
body
·
Trade policy review body
(C). Third level: its
function to overlook broad areas of the individual matter. They are as –
·
Council for trade-in
goods
·
Council for trade-in
services
·
Council for
trade-related aspects of intellectual property
rights.
(D). Fourth level :
deals in various subjects like agriculture, market access, subsidies,
anti-dumping measures and so on.
Functions of WTO
·
To provide facilities
for implementation administration and operation of multilateral and bilateral agreements
of world trade.
·
To provide a platform to
member countries to decide future strategies related to trade & tariff.
·
To administer the rules
and processes related to dispute settlement.
·
To implement rules and
provisions related to the trade policy review mechanism.
·
To assist IMF & IBRD
for establishing coherence in universal economic policy determination.
·
To ensure optimum use of
world resources,
Agricultural subsidies
The WTO argues that the product
subsidies (non- product) like credit, fertilizers, irrigation and power will
cut the production cost of farming and will give undue advantage to such
countries in their access to the world market such subsidies are called to cause
distortions to the world trade.
Agriculture subsidies in WTO is
identified by Boxes such as green box, amber box, red box, blue box and S&D
Boxes.
· Amber box-
all subsidies which are supposed to distort production
& trade fall into the Amber box i.e all agricultural subsidies except those
which fall into the blue & green boxes. These include government policies
of minimum support prices. Reduction 5% to 10 %.
· Blue box-
this is the amber box with conditions. The conditions are
designed to reduce distortions. Any subsidy that would normally be in the amber
box is placed in the blue box if it requires farmers to go for a certain
production level. These subsidies are nothing but certain direct payments made
to farmers by the government in the form of assistance Programme to encourage
agricultural rural development. At present, there is no limit on spending on the
blue box subsidies.
· Green box-
The agriculture subsidies which cause minimal or no
distortions to trade are put under the green box. This is a very wide box and
includes all government subsidies like public storage for food security, pest
and disease control, research and extension and some direct payments to farmers
that do not stimulate production like the restructuring of agriculture,
environmental protection, regional development, crop, and income insurance. The
green box subsidies are allowed without limits provided they comply with the
policy specific criteria. It means this box is exempt from the calculations
under subsidies under the WTO provisions because the subsidies under it are not
meant to promote production thus do not distort trade. That is why this box is
called production neutral box.
· S & D box-
The social and Development box allows the developing
countries for some subsidies to the agriculture sector under certain
conditions. These conditions revolve around human development issues such as
poverty, minimum social welfare, health 20 support, etc., especially for the
segment of the population living below the poverty line. Developing countries provide
subsidies of less than 5% of their total agriculture output.
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