1

PROJECT REPORT
ON
WORLD TRADE ORGANISATION
&
ITS IMPLICATIONS
Submitted in partial fulfillment for the requirements for the award of the master of the
business administration {MBA regular}

SUBMITTED TO – DR.SAHIL RAJ

SUBMITTED BY – LOVISH BANSAL

(19421135 , SEC – C)

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ACKNOWLEDGEMENT

Foremost of all, I express my sincere indebtedness to the almighty for bestowing

me with favorable circumstances and keeping me in high spirits.

I feel highly privileged to express my esteemed guide Dr SAHIL RAJ Professor Of

MBA (REGULAR) department in Punjabi University Patiala for helping me in
preparing this project. His able guidance and ever encouraging attitude throughout
the study proved to be an asset in accomplishing this task. Without her profound
knowledge, deep insight and valuable critical comments this study would not have
reached its present form.

I am also delighted to acknowledge the library staff for providing me requisite

books and journals in time.

I am also grateful to all the respondents for sparing their valuable time out of their
busy schedule to answer my queries.

Last but not the least, I pay my gratitude to my family and friends for their
continuous encouragement, support and providing me valuable advices when
needed.

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INDEX

S.no Particulars Page no.

1. Introduction 1
2. History 2-7
3. Functions of WTO 8
4. Principles of WTO 9-10
5. Organisational structure of WTO 11-12
6. Administration 13
7. Decision Making 14-18
8. Dispute Settlements 19
9. Accession & membership 20-24
10. Implications of WTO 25-29
11. Criticism 30-31
12. Conclusion 32-34

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An Introduction to the World Trade Organisation

In a nutshell, the World Trade Organisation (WTO) is an international organisation

aiming to reduce all barriers to trade. All these barriers are reduced by acting as a
forum for countries to constantly re-negotiate to remove conflicts within trading
nations.
Barriers to trade include tariffs (taxes) on products or services coming into a
country, as well as added tariffs/taxes that a foreign product or service might pay
within a country.Barriers also include other blocks on trade like licencing or
packaging requirements or subsidies that a government might give to an industry
like agriculture or the arts.

FOUNDATION –
The WTO officially commenced on 1 January 1995 under the Marrakesh
Agreement, signed by 123 nations on 15 April 1994, replacing the General
Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the
largest international economic organization in the world. The WTO's current
Director-General is Roberto Azevêdo, who leads a staff of over 600 people in
Geneva, Switzerland. A total of 164 nations are the active members of this
association. This organization have multiple official language base i.e English,
French, Spanish.

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HISTORY

The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT),
was established by a multilateral association of 23 countries in 1947 after World
War II . All important institutions dedicated to international economic cooperation
—such as the World Bank and the International Monetary Fund are result of this
approach

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General Agreement on Tariffs and Trade (GATT)

Seven rounds of negotiations were held under GATT.The basic round was
missioned to reduce tariffs.The next round was termed as Kennedy round and it
was bought to action to provide anti dumping agreement and a section on
development.The next round was in mid seventies and was called tokyo round.
The main aim was to tackle trade barriers that do not take the form of tarrifs . All
the terms of this agreement was not accepted by the GATT members due to the
passive nature of this agreement .Later on few aspects remained plurilateral for
example on government procurement , bovine meat, civil aircraft and dairy
products.GATT continued to operate for almost half a century on a provisional
basis.

Uruguay Round: 1986–1994

After completion of 40 years of GATT agreement members of the association

concluded that the system was not adapting to the era of globalizing world
economy. Some basic probleams were structural deficiencies , certain countries
trade polices etc .The eighth round of GATT is known as Uruguay round and was
launched in September 1986, in Punta del este, Uruguay.

The agreements fall into six main parts-

 The agreement establishing the WTO
 The multilateral agreements in trade in goods
 General agreement on trade in services
 Dispute settlements
 The agreement on intellectual property rights
 Reviewer of governments trade policies

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Ministerial Conferences

The supreme decision making body of the WTO, the Ministerial Conference,
usually meets every two years. All the members are brought together, all of which
are countries representives. The Ministerial Conference can take decisions on all
matters related to any of the trade agreements. China's entry to the WTO was
approved in the fourth ministerial conference in doha in 2001 .

The Twelfth Ministerial Conference (MC12) is set to be held in Astana,

Kazakhstan, in 2020. The decision was taken by consensus at the General Council
meeting on 26 July 2018 . First time Ministerial Conference is to be organized in
Central Asia.

Doha Round (Doha Agenda):

The fourth ministerial conference was held in Doha, Qatar in November 2001.
The main effort was to make globalization more inclusive and help the world's
poor,the main aim was to disrupt barriers and subsidies in farming. The another
aim was to provide assistance to the developing countries

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Later on conflicts start arrisiing between developed and developing countries on

issues such as industrial tariffs and non-tariff barriers to trade. Repeated attempts
to revive the talks proved unsuccessful.

Functions

A large number of functions are performed by WTO, some basic functions are
listed below-
1. The WTO shall facilitate the implementation, administration and operation
and further the objectives of this Agreement and of the Multilateral Trade
Agreements, and shall also provide the framework for the implementation,
administration and operation of the multilateral Trade Agreements.

2. The WTO shall provide the forum for negotiations among its members
concerning their multilateral trade relations in matters dealt with under the
Agreement in the Annexes to this Agreement.

3. The WTO shall administer the Understanding on Rules and Procedures

Governing the Settlement of Disputes
.
4. The WTO shall administer Trade Policy Review Mechanism.

5. With a view to achieving greater coherence in global economic policy

making, the WTO shall cooperate, as appropriate, with the international
Monetary Fund (IMF) and with the International Bank for Reconstruction
and Development (IBRD) and its affiliated agencies.

As globalization has hit the economy the need for an international organization to
manage the trading system are preferably important. As large part of trade between
nations take place in large volume the conflicts also tend to increase such as

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subsidies ,trade barriers etc. this association stands as the mediator between the
nations when such problems arise. It not only serves as a dispute resolving agency
on the other hand it acts as a centre of economic research and analysis.

PRINCIPLES
The WTO establishes a framework for trade policies; it does not define or specify
outcomes. That is, it is concerned with setting the rules of the trade policy games.
Five principles are of particular importance in understanding both the pre-1994
GATT and the WTO:

1. Non-discrimination - It has two major components: the most favoured

nation (MFN) rule, and the national treatment policy. Both are embedded
in the main WTO rules on goods, services, and intellectual property, but
their precise scope and nature differ across these areas. The MFN rule
requires that a WTO member must apply the same conditions on all trade
with other WTO members, i.e. a WTO member has to grant the most
favourable conditions under which it allows trade in a certain product type
to all other WTO members. "Grant someone a special favour and you have
to do the same for all other WTO members." National treatment means
that imported goods should be treated no less favourably than domestically
produced goods (at least after the foreign goods have entered the market)
and was introduced to tackle non-tariff barriers to trade (e.g. technical
standards, security standards et al. discriminating against imported goods).

2. Reciprocity - It reflects both a desire to limit the scope of free-riding that

may arise because of the MFN rule, and a desire to obtain better access to
foreign markets. A related point is that for a nation to negotiate, it is
necessary that the gain from doing so be greater than the gain available
from unilateral liberalization; reciprocal concessions intend to ensure that
such gains will materialise.

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3. True Commitments - The tariff commitments made by WTO members in

a multilateral trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules establish "ceiling bindings":
a country can change its bindings, but only after negotiating with its trading
partners, which could mean compensating them for loss of trade. If
satisfaction is not obtained, the complaining country may invoke the WTO
dispute settlement procedures.

4. Transparency- The WTO members are required to publish their trade

regulations, to maintain institutions allowing for the review of
administrative decisions affecting trade, to respond to requests for
information by other members, and to notify changes in trade policies to
the WTO. These internal transparency requirements are supplemented and
facilitated by periodic country-specific reports (trade policy reviews)
through the Trade Policy Review Mechanism (TPRM). The WTO system tries
also to improve predictability and stability, discouraging the use of quotas
and other measures used to set limits on quantities of imports.

5. Safeguarding values- In specific circumstances, governments are able to

restrict trade. The WTO's agreements permit members to take measures to
protect not only the environment but also public health, animal health and
plant health.

There are three types of provision in this direction:

 articles allowing for the use of trade measures to attain non-

economic objectives;
 articles aimed at ensuring "fair competition"; members must not use
environmental protection measures as a means of disguising
protectionist policies.
 provisions permitting intervention in trade for economic reasons.

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Structure of WTO

The WTO’S Organisational structure is outlined below-

The Ministerial Conference (MC) is at the top of the structural organisation of

the WTO. It is the supreme governing body which takes ultimate decisions on all
matters. It is constituted by representatives of (usually, Ministers of Trade) all the
member countries.

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The General Council (GC) is composed of the representatives of all the members.
It is the real engine of the WTO which acts on behalf of the MC. It also acts as the
Dispute Settlement Body as well as the Trade Policy Review Body.
There are three councils, viz.: the Council for Trade in Services and the Council
for Trade-Related Aspects of Intellectual Property Rights (TRIPS) operating under
the GC. These councils with their subsidiary bodies carry out their specific
responsibilities.

1. Council for Trade in Goods

There are 11 committees under the jurisdiction of the Goods Council each with a
specific task. All members of the WTO participate in the committees. The Textiles
Monitoring Body is separate from the other committees but still under the
jurisdiction of Goods Council. The body has its own chairman and only 10
members. The body also has several groups relating to textiles.

2. Council for Trade-Related Aspects of Intellectual Property Rights

Information on intellectual property in the WTO, news and official records of the
activities of the TRIPS Council, and details of the WTO's work with other
international organizations in the field.

3. Council for Trade in Services

The Council for Trade in Services operates under the guidance of the General
Council and is responsible for overseeing the functioning of the General
Agreement on Trade in Services (GATS). It is open to all WTO members, and can
create subsidiary bodies as required.

Further, there are three committees, viz., the Committee on Trade and
Development (CTD), the Committee on Balance of Payments Restrictions
(CBOPR), and the Committee on Budget, Finance and Administration (CF A)
which execute the functions assigned to them by e WTO Agreement and the GC.

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Adminstration of the WTO

The administration of the WTO is performed by the Secretariat which is lead by

the Director General (DG) appointed by the MC for the tenure of four years. He is
assisted by the four Deputy Directors from different member countries. The annual
budget estimates and financial statement of the WTO are presented by the DG to
the CBFA for review and recommendations for the final approval by the General
council.

The procedures for the appointment of the WTO director-general were published in
January 2003. Additionally, there are four deputy directors-general. As of 13 June
2018, under director-general Roberto Azevêdo, the four deputy directors-general
are-
 Yi Xiaozhun of China (since 1 October 2017),
 Karl Brauner of Germany (since 1 October 2013),
 Yonov Frederick Agah of Nigeria (since 1 October 2013) and
 Alan W. Wolff of the United States (since 1 October 2017).

List of directors-general

 Roberto Azevêdo, 2013–present

 Pascal Lamy, 2005–2013
 Supachai Panitchpakdi, 2002–2005
 Mike Moore, 1999–2002
 Renato Ruggiero, 1995–1999
 Peter Sutherland, 1995

 Peter Sutherland, 1993–1995

 Arthur Dunkel, 1980–1993

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 Olivier Long, 1968–1980

 Eric Wyndham White, 1948–1968

One needs to distinguish between rule-making and

RULE decision-making, as these exercises are different in
nature from a constitutional point of view. The formal

& rules of the WTO reflect this distinction, even though it

largely disappears in the organisation’s practice.

DECISI --As is well known, the process of decision-making in

ON the WTO is dominated by the practice of consensus. As
is also well known, consensus means that ‘no Member,

MAKIN present at the meeting when the decision is taken,

formally objects to the proposed decision’. Often, at

G least one Member objects to a proposal, and in those

circumstances, the next step is typically a protracted
effort to reach consensus by overcoming the existing
resistance, e.g. by finding a compromise. If this does
not work, no decision is taken.
This contrasts with Article IX:1 of the WTO Agreement, which does not require
consensus for all cases. While the first sentence states that ‘[t]he WTO shall
continue the practice of decision-making by consensus followed under GATT
1947’, the second sentence allows votes: ‘except as otherwise provided, where a
decision cannot be arrived at by consensus, the matter at issue shall be decided by
voting’. Those decisions are reached with a (simple) majority of the votes cast. An
exception is Article 2.4 of the DSU, according to which the DSB decides by
consensus, with the notable exception of the reverse consensus mechanism for the
key steps of a dispute settlement procedure. Hence, except for the DSB, the bodies
of the WTO would normally decide according to a two-step approach: consensus if
possible, otherwise vote.

The Rules of Procedure contain quite detailed rules on how votes would take place.
Rule 16 of the Rules of Procedure for Sessions of the Ministerial Conference and

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of the Rules of Procedure for Meetings of the General Council provides that a
majority of Members must be present for votes to take place (quorum). Rules
29/34 specify that when decisions are required to be taken by vote, such votes be
taken by ballot but that the representative of any Member may request, or the
Chairperson suggest, that a vote be taken by raising cards or roll call. Where the
WTO Agreement requires a vote by a qualified majority of all Members, the
Ministerial Conference/General Council may decide that the vote be taken by
airmail ballots or ballots transmitted by telegraph or telefacsimile. The respective
Annex 1 of these Rules of Procedure contains further details for such
airmail/telex/telefax ballots, inter alia a notice to be sent to each Member and a
time-limit of a maximum of 30 days.The Councils, Committees and other
subordinate bodies of the WTO, however, are required by Rule 33 of their
respective Rules of Procedure to refer a matter to the General Council whenever
they are unable to reach a decision by consensus.

Figure 1 WTO Headquarters, Geneva

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--When rules are made from scratch, i.e. new international agreements adopted, it
is no wonder that consensus generally governs the procedure. After all, the
signatories of the agreement are to ratify the text (‘express their consent to be
bound’), which is even more than consensus because a subject of international law
becomes party to the agreement only by express (and typically written) consent.
Nevertheless, it is worth pointing out that Article 9(2) of the Vienna Convention on
the Law of Treaties foresees that the ‘adoption of the text of a treaty at an
international conference takes place by the vote of two-thirds of the States present
and voting, unless by the same majority they shall decide to apply a different rule.’
Yet, this only goes for the adoption of the text which does not yet result in the
States being bound. A majority vote in which up to a third of the negotiation
participants are outvoted, therefore risks reducing the number of States that will
later sign up (and ratify). Even if there are in many cases other reasons for non-
signing or non-ratification, it is interesting to point out that the number of
signatories of many UN-sponsored conventions is far below the number of
conference participants, in fact this is the fate of the Vienna Convention itself.

In international trade, it is desirable that the number of countries that sign up to the
agreements be as large as possible for economic and legal reasons. It is therefore
productive if trade agreements are shaped in such a manner that, if possible, all
become a party. This involves a search for compromises, persuasion and
sometimes a certain degree of pressure on other States. Sometimes, an agreement
with partial reach is better than no agreement, and in those cases plurilateral
agreements are the best choice. However, Article X:9 of the WTO Agreement
requires consensus of the Ministerial Conference for adding a plurilateral
agreement to Annex 4.

The required consent of every single State for that State to be bound by an
international agreement constitutes an in-built preference for the status quo in
international law (by default, this status quo amounts to a lack of legal disciplines,
otherwise the status quo comprises those legal disciplines that have emerged so
far). This contrasts with domestic democracies (representative or direct) where
simple majority votes are formally neutral on making or not making, unmaking or

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changing rules. Obviously, in comparison, international rule-making is highly

cumbersome and less effective, possibly more cumbersome and less efficient than
it should be in the light of today’s demand for international governance in a world
of increased international interdependence and eroding independence of single
States as regulators.

-Amendment

The default rule on amendments in public international law is Article 40 of the

Vienna Convention, according to which an amendment does not require the
consent of all parties, but obviously no party is bound by the amendment unless it
gives its consent. With one exception, Article X of the WTO Agreement is stricter.
It first provides that the Ministerial Conference must approve an amendment
proposal with a two-thirds majority of the Members, if it cannot reach consensus
within 90 days. Then, two thirds of the Members must accept (i.e. ratify) the
amendment for it to become effective: for all Members, where the amendment does
not alter substantive rights and obligations; for those who accept the amendment,
where it does alter substantive rights and obligations.The former procedure,
however, requires a three-quarters majority decision by the Ministerial Conference.
Amendments to the DSU require consensus, which is less burdensome than the
normal amendment procedure in that no ratification is needed. Modifications of
Articles IX and X of the WTO Agreement, of the most-favoured-nation treatment
rules and of Article II of GATT 1994 (on bindings) require every Member’s
consent.

-Renegotiation of Commitments
In the WTO Agreement, rights and obligations are also set out in each Member’s
schedule of commitments. As is known, this part of the Agreement accounts for the
majority of the famous 25,000 pages. If a Member intends to modify or withdraw a
GATT concession (typically a tariff concession), Article XXVIII of the GATT
1994 provides for the possibility to do so according to a procedure that is
considerably lighter than the amendment procedure under Article X of the WTO
Agreement. Preferably, that Member should reach agreement with the other

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Members primarily concerned (principal supplier(s) and Members holding an

initial negotiation right) and with those having a substantial interest, i.e. only a
subset of WTO Members. If no agreement is reached, the Member in question can
nevertheless proceed (unilaterally) with the modification or withdrawal of its
concession and the other Members with rights under Article XXVIII may then
withdraw substantially equivalent concessions initially negotiated with that
Member.
Article XXI of the GATS provides for a similar, but slightly stricter procedure for
a Member that wishes to modify a commitment it has made in its services
schedule.

-Waiver
In exceptional circumstances, the Ministerial Conference and the General Council
may waive particular WTO obligations of any given WTO Member by a three-
quarters vote. Waivers are exemptions for certain Members from specific WTO
obligations. They must be temporary (although they can be extended) and
reviewed annually.

-Authoritative Interpretation
A special instrument foreseen in the WTO Agreement that can be used to refine or
revise multilateral trade rules is the interpretation provided for in Article IX:2. This
instrument is an invention of the Uruguay Round, it did not exist under the GATT
1947. In Article 3.9 of the DSU, it is referred to as the ‘authoritative
interpretation’, which allows it to be distinguished from the kind of interpretation
performed by panels and the Appellate Body in clarifying the provisions of the
WTO Agreement. Article IX:2 attributes the responsibility for adopting such
interpretations to the Ministerial Conference and the General Council and
stipulates a decision by three-quarters majority of the Members and – for
interpretations of the GATT, multilateral agreements on trade in goods, the GATS
and the TRIPS Agreement – that there has been a recommendation by the
respective Council (for Trade in Goods/Services/Intellectual Property). Article
IX:2 also states that it must not be used in a manner that would undermine the
amendment provisions in Article X.

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Dispute Settlements

There are two main ways to settle a dispute once a complaint has been filed in the
WTO:
(i) The parties find a mutually agreed solution, particularly during the phase of
bilateral consultations.
(ii) Through adjudication, including the subsequent implementation of the panel
and Appellate Body reports, which are binding upon the parties once
adopted by the DSB. There are three main stages to the WTO dispute
settlement process: (i) consultations between the parties; (ii) adjudication by
panels and, if applicable, by the Appellate Body; and (iii) the
implementation of the ruling, which includes the possibility of
countermeasures in the event of failure by the losing party to implement the
ruling.

The best international agreement is not worth very much if its obligations cannot
be enforced when one of the signatories fails to comply with such obligations. An
effective mechanism to settle disputes thus increases the practical value of the
commitments the signatories undertake in an international agreement. The fact that
the Members of the (WTO) established the current dispute settlement system
during the Uruguay Round of Multilateral Trade Negotiations underscores the high
importance they attach to compliance by all Members with their obligations under
the WTO Agreement.

Settling disputes in a timely and structured manner is important. It helps to prevent

the detrimental effects of unresolved international trade conflicts and to mitigate
the imbalances between stronger and weaker players by having their disputes
settled on the basis of rules rather than having power determine the outcome. Most
people consider the WTO dispute settlement system to be one of the major results
of the Uruguay Round. After the entry into force of the WTO Agreement in 1995,
the dispute settlement system soon gained practical importance as Members
frequently resorted to using this system.

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Accession iand imembership

The iprocess iof ibecoming ia iWTO imember iis ivery idifferent ito ieach ione iof
iapplicant icountry, iand ithe iterms iof iaccession iare idependent iupon ieach icountry's

istage iof ieconomic idevelopment iand icurrent itrade istrategy. iThe iprocess itakes

iabout ifive iyears, ion iaverage, ibut iit ican ilast ilonger iif ithe icountry iis iless ithan ifully

icommitted ito ithe iprocess iand iif ipolitical iissues iinterfere. iThe ishortest iaccession

inegotiation iwas ithat iof ithe iKyrgyz iRepublic, iwhile ithe ilongest iwas ithat iof

iRussia, iwhich, ihaving ifirst iapplied ito ijoin iGATT iin i1993 iapproved ifor

imembership iin iDecember i2011 iand ibecame iWTO imember ion i22 iAugust i2012.

iKazakhstan ialso ihad ia ilong iaccession inegotiation iprocess. iThe iWorking iParty ion

ithe iaquisition iof iKazakhstan iwas iestablished iin i1996 iand iwas ivalid iand

iapproved ifor imembership iin i2015. iThe isecond ilongest iwas ithat iof iVanuatu,

iwhose iWorking iParty ion ithe iAcquisition iand iAccession iof iVanuatu iwas

iestablished ion i11 iJuly i1995. iAfter ia ifinal imeeting iof ithe iWorking iParty iin

iOctober i2001, iVanuatu irequested imore itime ito iconsider iits iaccession iterms

ivalid. iIn i2008, iit iindicated iits iinterest ito iresume iand iconclude iits iWTO

iaccession. iThe iWorking iParty ion ithe iAccession iof iVanuatu iwas ireconvened

iinformally ion i4 iApril i2011 ito idiscuss iVanuatu's ifuture iWTO imembership. iThe

ire-convened iWorking iParty icompleted iits imandate ion i2 iMay i2011. iThe iGeneral

iCouncil iformally iapproved ithe iAccession iPackage iof iVanuatu ion i26 iOctober

i2011. iOn i24 iAugust i2012, ithe iWTO iwelcomed iVanuatu ias iits i157th imember.

iAn ioffer iof iaccession iis ionly igiven iin ione iconsensus iis ireached iamong iinterested

iparties.

A i2017 istudy iargues ithat i"political ities irather ithan iissue-area ifunctional igains
itells iwho ijoins" iand ishows i"how igeopolitical ialignment ishape ithe idemand iand

isupply isides iof imembership". iThe i"findings ichallenge ithe iview ithat istates ifirst

iliberalize itrade ito ijoin ithe iGATT/WTO. iInstead, idemocracy iand iforeign ipolicy

isimilarly iencourage istates ito ijoin.

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Accession iProcess

A icountry iwishing ito iaccede ito ithe iWTO isubmits ia iapplication ito ithe iGeneral
iCouncil, iwhich ihas ito idescribe iall iaspects iof ithe itrade iand ieconomic ipolicies ithat

ihas ia ibearing ion iWTO iagreements. iThe iapplication iis isubmitted ito ithe iWTO iin

ia imemorandum iwhich itells iabout ithe iexamined iby ia iworking iparty iopen ito iall

iWTO iinterested imembers.

After iall inecessary ibackground iinformation ihas ibeen iacquired, iThe iworking iparty
ifocuses ion ithe iissues iof idiscrepancy ibetween ithe iWTO irules iand itheb iapplicant's

iinternational iand ithe idomestic itrade ipolicies iand ilaws. iThe iworking iparty

idetermines ithe iterms iand iconditions iof ithe ientry iinto ithe iWTO ifor ithe iapplying

ination, iand imay iconsider itransitional iperiods ito iallow icountries isome ileeway iin

icomplying iwith ithe iWTO irules.

The ifinal iphase iof iaccession iinvolves ithe ibilateral inegotiations ibetween ithe
iapplicant ination iand ithe iother iworking iparty imembers iregarding ithe iconcession

iand icommitment ion itariff ilevels iand ithe imarket iaccess ifor igoods iand iservices.

iThe inew imember's icommitments i ito iapply iequally ito iall iWTO imembers iunder

inormal inon-discrimination irules, ieven ithough ithey iare inegotiated ibilaterally. iFor

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iinstance, ias ia iresult iof ijoining ithe iWTO, iArmenia iofferd ia i15 iper icent iceiling
ibound itarif irate.

WTO iAccession iprogress-

ii

Together iwith ithe itariff ibindings ibeing iad ivalorem ithere iare ino ispecific ior
i
compound irates i iMoreover ibthere iare ino itariff-rate iquotas ion iboth iindustrial iand
i
agricultural iproducts. iArmenia's ieconomic iand itrade iperformance igrowth iwas
i
noted isince iits ifirst ireview iin i2010, iespecially iits irevival ifrom ithe i2008 iglobal
i
financial icrisis, iwith ian iaverage iof iannual i4% iGDP igrowth irate, idespite iof isome
i
other ifluctuations. iArmenia's ieconomy iwas imarked iby ilow iinflation iand
i
diminishing ipoverty iand iessential iprogress iin ienhancing iits imacroeconomic
i
steadiness iin iwhich itrade iand icommerce iin igoods iand iservices, iwhich iis ithe
i
equivalent iof i87% iof iGDP, iplayed ia igrowing irole. i i

When ithe ibilateral italks iconclude, ithe iworking iparty isends ito ithe igeneral icouncil
i
or ithe iministerial iconference ian iaccession ipackage, iwhich iincludes ia isummary iof
i
all ithe iworking iparty imeetings iand ithe iProtocol iof iAccession i(a idraft
i
membership itreaty), iand ilists i("schedules") iof ithe imember-to-be icommitments.
i
Once ithe igeneral icouncil ior iministerial iconference iapproves iof ithe iterms iof
i
accession iand ithe iapplicant's iparliament imust iratify ithe iProtocol iof iAccession
i
before iit ican ibecome ia imember. iSome icountries imay ihave ifaced itougher iand ia
i
much ilonger iaccessiaon iprocess idue ito ichallenges iduring ithe inegotiations iwith
i
other iWTO imembers, isuch ias iVietnam, iwhose inegotiations itook imore ithan i11
i
years ibefore iit ibecame iofficial imember iin iJanuary i2007.

Members iand iObservers-

The iWTO ihas i164 imembers iand i23 iobserver igovernments. iLiberia ibecame ithe
i
163rd imember iof ithe iWTO ion i14 iJuly i2016, iand iAfghanistan ibecame ithe i164th
i
member ion i29 iJuly i2016 iof iThe iWTO. iIn iaddition ito ithe istates, ithe iEuropean

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 23

i
Union, iand ieach iEuropean icountry iin iits iown iright iand ipower, iis ia imember iof
i
the iWTO. iWTO imembers ido inot ihave ito ibe ifully iindependent istates; ithey ineed
i
only ito ibe ia icustoms iterritory iwith ifull iautonomy iin ithe iconduct iof itheir iexternal
i
commercial irelations. iThus iHong iKong ihas ibeen ia imember iof iThe iWTO isince
i
1995 i(as i"Hong iKong, iChina" isince i1997) ipredating ithe iPeople's iRepublic iof
i
China, iwhich ijoined iThe iWTO iin i2001 iafter i15 iyears iof inegotiations iwith ithe
i
WTO. iThe iRepublic iof iChina i(Taiwan) iacceded ito ithe iWTO iin i2002 ias
i
"Separate iCustoms iTerritory iof iTaiwan, iPenghu, iKinmen iand iMatsu" i(Chinese
i
Taipei) idespite iof iits idisputed istatus. iThe iWTO iSecretariat iomits ithe iofficial
i
titles i(such ias iCounselor, iFirst iSecretary, iSecond iSecretary iand iThird iSecretary)
i
of ithe imembers iof iChinese iTaipei's iPermanent iMission ito ithe iWTO, iexcept ifor
i
the ititles iof ithe iPermanent iRepresentative iand ithe iDeputy iPermanent
i
Representative iof iThe iWTO. i

As iof i2007, iWTO imembers istates irepresented iabout i96.4% iof iglobal itrade iand
i
about i96.7% iof iglobal iGDP. iIran, ifollowed iby iAlgeria, iAre ithe ieconomies iwith
i
the ihighest iand ilargest iGDP iand itrade ioutside ithe iWTO, iusing i2005 idata. iWith
i
the iexception iof ithe iHoly iSea, iobservers ihave ito istart iaccession inegotiations
i
within ifive iyears iof ibecoming iobservers. iA inumber iof iinternational iand iinter-
governmental iorganizations ihave ialso ibeen iprovided iobserver istatus ito iWTO
i
bodies. i12 iUN imember istates ihave ino iofficial iaffiliation iand iratification iwith ithe
i
WTO.

institutional structure. Nevertheless, the DSU, as part of the WTO Charter, is based on
decades of experiment and practice in the GATT and has integrated various dispute
settlement procedures of GATT 1947 as well as the Tokyo Round codes into a unified
and coherent mechanism.. Anybody making an objective analysis of the judicial systems
of GATT and WTO could conclude that the WTO dispute settlement mechanism is
qualitatively superior to that of GATT by virtue of its constitutional machinery,
institutionalized approach, detailed articles for adjudication of disputes, well-written
panel and appellate body reports, absence of the possibility of' 'blockage', and more than
that ensuring greater 'predictability' in intemational trade relations. The performance of
WTO' s dispute settlement mechanism indicates that the Member states have aff

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 24

irmed their faith in WTO judiciary. But no other agreement received as much resistance
as the Agreement on Trade-Related Aspects of intellectual Property Rights (TRIPS) did.
The trading world was polarised into two hostile camps during Uruguay Round
negotiations - the first world led by the United States aggressively pursuing the
incorporation of TRIPS into the WTO agenda for they were so much womed about the
"free-riding" issue in the developing countries; and the third world led by India and
Brazil opposing incorporation of TRIPS in WTO Agreement apparently because of two
reasons(a)the developing countries were net importers of intellectual property, relying
heavily on the technology transfer from the first world for technological development and
prefer a relatively low level of protection of intellectual property(b)since most of the
developing countries did not have a strong intellectual property regime in their domestic
legal systems, bringing TRIPS into the WTO Agreement would drag them into frequent
litigation by the first world before the WTO dispute settlement system not only for
deficiencies in domestic legislation but also for absence of strong enforcement
measures.But finally developing countries succumbed to pressure of first world and
acquiesced to incorporate the TRIPS Agreement under GATT purvleu The powers, which
the WTO's dispute settlement mechanism wields are so sweeping, because there is no
legislative checks or balances in WTO's dispute resolution process. As Allan W.M.
Wolff, former Deputy US Trade Representative stated: We have really significant risks,
because this WTO system has no checks and balances. Yes, there is an appellate review
panel; but if the panel goes off the tracks and it is not corrected by the appellate body, it
is going to be nearly impossible to get the members of the WTO to co
rrect it because everyone has to agree. Still over the past few years, the WTO has
succeeded not only in establishing itself as a de facto world govern

-Agreements
The iWTO ioverlooks iabout i60 idifferent itype iof iagreements iwhich ihave ithe istatus
i
of iinternational ilegal itexts. iMember icountries imust ihave ito isign iand iratify iall
i
WTO iagreements ion iaccession iand iacquisition. i iA idiscussion iof isome iof ithe
i
most iimportant iagreements ifollows. i
The iAgreement ion iAgriculture icame iinto ieffect iwith ithe iestablishment iand
i
development iof ithe iWTO iat ithe ibeginning iof ithe iera iof i1995. iThe iAOA ihas
i
three icentral ibranches, ior i"pillars": idomestic isupport, imarket iaccess iand iexport
i
subsidies. i

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The iGeneral iAgreement ion iTrade iand icommerce iin iServices iwas icreated ito
i
extend ithe imultilateral itrading isystem ito iservice isector, iin ithe isimilar iway ias ithe
i
General iAgreement ion iTariffs iand iTrade i(GATT) iprovided isuch ia isystem ifor
i
merchandise itrade. iThe iagreement ientered iinto iforce iin iJanuary i1995. i
The iAgreement ion iTrade-Related iAspects iof ithe iIntellectual iProperty iRights isets
i
down iminimum inumber iof istandards ifor imany iforms iof iintellectual iproperty
i
regulation. iIt iwas inegotiated iat ithe iend iof ithe iUruguay iRound iof ithe iGeneral
i
Agreement ion iTarif iand iTrade i(GATT) iin i1994. i
The iAgreement ion i iApplication iof iSanitary iand iPhytosanitary iMeasures—also
i
known ias ithe iSPS iAgreement—was inegotiated iduring ithe iUruguay iRound iof
i
GATT, iand ientered iintto ithe iforce iwith ithe iestablishment iof ithe iWTO i ithe
i
beginning iof i1995. iUnder ithe iSPS iagreement, ithe iWTO isets ithe iconstraints ion
i
members' iand ipolicies irelating ito ifood isafety i(bacterial icontaminants, ipesticides,
i
insecticides, iinspection iand ilabeling) ias iwell ias ianimal iand iplant ihealth
i
(imported ipests iand idiseases). i

The iAgreement ion iTechnical iBarriers ito iTrade iis ian iinternational itreaty iof iThe
i
World iTrade iOrganization. iIt iwas inegotiated iduring ithe iUruguay iRound iof ithe
i
General iAgreement ion iTariff iand iTrade, iand ientered iinto iforce iwith ithe
i
establishment iand idevelopment iof ithe iWTO iat ithe iend iof ithe iera iof i1994. iThe
i
object iensures ithat itechnical inegotiations iand istandards, ias iwell ias itesting iand
i
certification iprocedures, ido inot icreate iunnecessary iobstacles ito itrade".
i

The iAgreement ion iCustom iValuation, iformally iknown ias ithe iAgreement ion
i
Implementation iof ithe iArticle iVII iof iGATT, iprescribes imethods iof ithe icustoms
i
valuation ithat iMembers iare ito icarefully ifollow. iSpecifically, iit iadopts ithe
i
"transaction ivalue" iapproach. i
In iDecember i2013, ithe ibiggest iagreement iwas isigned iwithin ithe iWTO iand
i
known ias ithe iBali iPackage.

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IMPLICATIONS OF WTO FOR INDIA

India is a founder member of World Trade Organization, and also treated as the
part of developing countries group for accessing the concessions granted by the
organization. As a result, there are several implications for India for the various
agreements that are signed under WTO. Let us understand each agreement in
general, what it means and its implications for India in specific.

1. India was a signatory of the General Agreement on Tariffs & Trade

(GATT), and as a part of the commitment had to change several laws and policies;
the major changes that were incorporated were as a follows

The result of this agreement as mentioned earlier was limited as, GATT was only
an agreement and there was no enforcing agency to strictly implement the clauses
and punish the country which breaks the clauses. Thus the impact was partial.
However, with WTO coming into effect, the competition from imports for the
domestic firms has increased. WTO had the deadline till 2005, for the domestic
policy was supposed to phase out the QR's; for those countries which face severe
balance of payments problems special concession period was given. Thus it is very
clear that only those firms that have competitive advantage would be able to
survive in the long run, and those firms which are weak would fade into history in
the process.

2. Trade Related Investment Measures (TRIMS)

The agreement relates to investments originating from one country to another. The
agreement prohibits the host country to discriminate the investment from abroad
with domestic investment, which implies that it favours national treatment of
foreign investment. Besides this, there are several other clauses of the agreement
totaling to 5 in this segment, one agreement requires investment to be freely
allowed within domestic borders without any maximum cap on it. Another restricts
to impose any kind of export obligation or import cap on the investment. Another
requires that there should not be any domestic content requirement on foreign
firms operating and manufacturing in other countries.

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These agreements have a direct impact on our Trade, Investment and foreign
exchange policy, domestic annual budgetary proposals and also on the industrial
policy.

Implementation process for the above requires proper preparation by the industries
and policy makers, as sudden change may result in loss of revenue and decline of
foreign exchange for the government and economy, and it may result in decline of
market share and profitability of businesses, decline in employment opportunities
and over all decline in growth.

3. Trade Related Intellectual Property Rights (TRIPS)

An intellectual property right refers to any creation of human mind which gets
legal recognition and protection such that the creator of the intangible is protected
from illegal use of his creation. This agreement includes several categories of
property such as Patents, Copyrights, Trademarks, Geographical indications,
Designs, Industrial circuits and Trade secrets.

Since the law for these intangibles vastly varied between countries, goods and
services traded between countries which incorporated these intangibles faced
severe risk of infringement. Therefore the agreement stipulated some basic
uniformity of law among all trading partners. This required suitable amendment in
the domestic IPR laws of each country. Since this process is not a simple one, a
time period of 10 years was given to the developing countries.

As a result, in India there was a requirement to change the patents act, Trade and
merchandise mark act and the copyright right act. Besides these main laws, other
related laws also required changes.

The main impact of this is on industries such as pharma and bio-technology,

because now with the law in place, it is not possible to reverse engineer the
existing drugs and formulas, change the process and produce the same product.
Now new investment in fresh research is required. This is quite a burden for small
industries and there is a possibility that they are thrown out of business due to
competition.

Besides these, the technology transfer from abroad is expected to become costly
and difficult.

Strict implementation of law is very important in India, otherwise there could be

disastrous affect on the revenue of industries which invest millions of rupees in
Research and development if their products get infringed.

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4. Agreement on Agriculture (AOA): The Agriculture happens to be one of the

most protected sectors in all the countries without any exceptions, and therefore an
agreement on the agricultural issues have always been evading and debated
strongly by all the countries involved in trade in agriculture.

The agreement on agreement deals with market access, Export subsidies and
government subsidies. Broadly, as of now the requirement is to open up the
markets in specific products in market access and incase of subsidies, it is to go for
tarrification and phase it out eventually or reduce it to bound limits. The immediate
impact of the agreement would be on the policy makers to scrutinize all the items
under subsidy, QRs and tariffs. However, the calculation of AMS reveals that the
subsidy given to Indian farmers are much below the acceptable levels and therefore
need not be changed. Looking from other perspective, the reduction of tariffs and
subsidy in export and import items would open up competition and give a better
access to Indian products abroad. However, the concern is on the competitiveness
and sustainability that the Indian farmer would be able to prove in the long run
once the markets open up. Thus there is a requirement to change policy support to
meet the changing needs of Indian agriculture to gear it up for future.

5. Agreement on Sanitary and psyto-sanitary measures (SPM): this agreement

refers to restricting exports of a country if they do not comply with the
international standards of germs/bacteria etc… if the country suspects that
allowing of such products inside the country would result in spread of disease and
pest, then there is every right given to the authorities to block the imports.

Indian standards in this area are already mentioned and therefore there is no need
to change the law, but the problem is that of strictly implementing the laws. There
is an urgent need to educate the exporters regarding the changing scenario and
standards at the international arena, and look at the possible consequence and
losses to be incurred if the stipulations are not followed. Therefore, to meet the
standards certain operational changes are required in the industries such as food
processing, marine food and other packed food that is being currently exported
from India.

6. Multi-Fiber Agreement (MFA): This agreement is dismantled with effect from

1 January 2005. The result was removal of QR on the textile imports in several
European countries. As a consequence a huge textile market is opened up for
developing countries textile industry as well as for other countries that have
competitive advantage in this area. The immediate impact is on the garment and
textile manufacturers and exporters. However, it still needs to be seen whether the
industry is able and ready to take advantage of the large markets. This requires

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quite an amount of modernization, standardization, cost efficiency, and

customization and frequent up gradation of designs to meet the changing need of
global customers. The dismantling of QR also mean more competition to Indian
textile exporters and therefore, it becomes imperative to enhance the
competitiveness in niche areas.

Besides these major agreements there are several other agreements such as
agreement on Market Access , which propagates free market access to products
and reduction of tariff and non-tariff barriers; agreement to have Safeguard
Measures if there is an import surge and it is liable to affect the domestic
industries in the transition economies. These measures can include imposing QR
for a certain period and also imposing tariffs on the concerned products. There are
other agreements that call for direct reduction of S ubsidies on Exports, which are
not permissible, and phasing it out over a period of time. Besides these there are
other Counter-Veiling Duties (CVD) that are permitted to be used in certain
conditions. These are supposed to have an impact positive if they help the
industries and negative if they reduce the cost competitiveness.

The trading countries are allowed to impose an Anti-Dumping Duty

(ADD)against imported products if the charge of Dumping is claimed against
them. The requirement is to prove that the product is being sold at a price, which
results in material injury to the domestic industries. There are several cases in
which the duty is imposed but it still remains to be proven by the Dispute
settlement tribunal in case the other trading party opposes the duty imposed as
"unfair". However, the proposal always should come from the representatives of
the industries affected; this may result in a problem, as small industries voice may
remain unheard in the process.

Certain Other Unresolved Issues:

There are several clauses in each of the above agreements; where there has been no
consensus arrived. Besides that there are several other cases where there is no
consensus on the entire agreement itself, which means that these are still in their
conceptual and drafting stages.

Some of such agreements are on Labour Standards and core social clauses, which
intend to impose a labour standard and certain norm against exploitation of labour
by the organization where they work. Such standards are likely to result in banning
of certain items exports to developed world causing severe damage to industries
such as Carpet manufacturing, crackers, leather, handicrafts and sports goods.

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 30

There is another agreement, which is still under discussion by member countries;

this is on Trade and Environment. Some countries wish to impose restrictions on
trade on environmental grounds. The agreement revolves around protecting global
environment by enforcing standards on production and consumption. The ranges of
clauses are from production, packaging to transportation of the goods as specified
by norms. The main impact of this clause would be on industries such as seafood,
food processing and drugs and chemical manufacturing. There would also be a
overall impact on the export business as the rules related to packaging would be
very stringent.

Another agreement where the consensus is yet to be reached is on Trade and

Investment. The main objective of this agreement is to enable a free operating
environment for foreign investment in host countries such that there is minimum
interference and equal rights. There would be a direct impact on the foreign
investment policy and trade policy of the government with a long-term impact on
balance of payment and foreign exchange position of the country. This agreement
would affect almost all industries and services without an exception. However the
specific impact is expected on auto components and small retailers.

Trade and Competition is another agreement on which the discussions are going
on to reach a consensus. The main aim of this is to stop the business practices that
distort competition in any way and to curb monopolistic growth in trade. The
agreement would have an impact on the MRTP act, which needs to be replaced by
the new competition law, the process for which has already started. These changes
would result in a more competitive environment and it would also be a deterrent
for big business houses if they wish to expand further in the same area. Thus, the
formation of cartels and mergers and acquisitions would be restricted to a great
extent.

Transparency in Procurements made by the Government is one such clause

where it is being debated to a large extent. This is particularly of concern to
developing countries as the role played by the government in a countries
development is much higher than what it is in other developed countries. This
would have a serious impact on the way the government and other public sector
units approach the domestic procurement. This would imply that no special
preference would be given to the domestic suppliers and they also need to compete
on a price basis for getting orders from domestic government. This clearly can
mean that many government suppliers may lose out in competition with efficient
and low cost foreign suppliers.

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 31

IMPACT

About two thirds of the WTO's around 150 members are developing countries.
They play an increasingly important and active role in the WTO because of their
numbers, because they are becoming more important in the global economy, and
because they increasingly look to trade as a vital tool in their development efforts.
An attempt is made in this paper to examine whether the WTO policies have
positive or negative effect on the trade of developing countries. The paper further
discusses that the Doha Round of Talk is a myth, a fiction, or is it a reality.Peace
among nations is promoted with the help of WTO.All the disputes are handled
constructively by the council when disputes arised. The whole association is based
on rules not on power,rules has made it easier for all.cost of living is reduced as a
result of free trade practices. Consumers are provided with tons of choices of
products and quality.globalised trade stimulised economic growth of the
nations.this trade raises income of country and its people.the principlised approach
make lifes of people more efficient and good governance is practiced.

The Indian economy has experienced a major transformation during the decade of
the 1990s. Apart from the impact of various unilateral economic reforms
undertaken since 1991, the economy also had to reorient itself to the changing
multilateral trade discipline within the newly written GATT/WTO framework. The
unilateral trade policy measures have encompassed exchange-rate policy, foreign
investment, external borrowing, import licensing, custom tariffs, and export
subsidies. The multilateral aspect of India's WTO commitments is regarding trade
in goods and services, trade-related investment measures, and intellectual property
rights.

After analyzes of the economic effects on India and other major trading
countries/regions of the Uruguay Round (UR) trade liberalization and the
liberalization that might be undertaken in a new WTO negotiating round. India's
welfare gain is expected to be 1.1% ($4.7 billion over its 2005 GDP) when the UR
scenarios get fully implemented. The additional welfare gain is an estimated 2.7%

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 32

($11.4 billion) when the assumed future WTO round of multilateral trade
liberalization is achieved.

It is expected that Resources would be allocated in India to the labor-intensive

sectors such as textiles, clothing, leather and leather products, and food, beverages,
and tobacco. These sectors would also experience growth in output and exports.
Real returns to both labor and capital would increase in the economy. However as
mentioned above in the analysis of each agreement there is a serious and urgent
need to re-look the strategies followed by individual firms in the changing context
of increasing competition and opened markets. As said time and again there is no
reversal of agreements, so what is required is to make internal policy changes at
macro, meso and micro level to suit the changed external environment.

Criticis
m Politics and Trade
In theory, members of the WTO gain access to each
other's markets on even terms. This means that no two nations can have sweetheart
trade pacts without granting the same terms to every other nation, or at least every
other nation in the WTO. However, some critics argue that in practice, the WTO
has become a way to force politics into trade causing long-term problems.

One problem that many WTO critics point to is apparent concessions the
organization has made to its charters. The most striking example is the system of
tariff brokering that takes place through an organization designed to reduce barriers
to trade. The WTO rules allow a nation to protect certain industries if the removal
of tariffs would have undesirable side effects, which include the loss of vital
domestic industries. Food production is one of the most common, but steel
production, auto production and many others can be added at the discretion of the

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 33

nation. More worrisome is a push by developed nations to have labor effects – job
loss, reduced hours or wages – added to the list of reasons for justified tariffs.

The War on Tariffs

A tariffs is a general tax levied upon all purchasers of a particular product and it
can have negative side effects. The proceeds from the tariff end up in government
coffers. This raises revenue and may protect domestic industries from foreign
competition. However, the resulting high price of foreign goods allows domestic
makers to raise their prices as well. As a result, a tariff may also work as a wealth
transfer tax that uses public money to support a domestic industry that is producing
an uncompetitive product.
So, while unwinding the tariff might hurt the workers in that industry, it could
lessen the burden on everyone else. The WTO has gotten into the business of
brokering tariff agreements, which has opened it up to criticism.

CONCLUSION

World Trade Organisation(WTO) is the replacement of General agreement on tarrifs and

trade (GATT) .All the rules regarding trade within nations are laid by WTO. WTO has a
long branched organizational structure, performing various functions as per their
authority. The administration of WTO is lead by the Director General. He is assisted by
four deputy director general from different member countries.

To sum up, the objective of WTO becomes clear: to reform the GATT system, weed out
the consensus-based political aspects of its predecessor and 'legalise' dispute resolution
by 'judicialisation' of the dispute settlement process. A transparent regime of conflict
adjudication exposes national legislation to a procedure, which ensures security and
predictability. An improved examination process by an impartial body of legal experts is
assumed through the operation of paneVAB. This degree of close and careful
examination of national legislation and national measures is unparalled in the vast history
of intemational relations. In this study we explained this new supranational phenomenon

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 34

- the WTO' s dispute settlement mechanism, a by-product of GATT' s institutional

infirmities The metamorphosis from power-oriented conflict resolution to law-oriented
dispute- settlement is reflected in the Understanding of Rules and Procedures Governing
the Settlement of Disputes (DSU) of WTO Charter. The innumerable procedures, the ent
in trade and commerce but also in giving a legal justification to the process of
liberalisation through its dispute settlement mechanism.
_______________________

School of Management Studies Punjabi University , Patiala