World Trade Organisation (WTO)


WTO is one of the most important pillars of global financial order abstracted by the United States of America. During the period of 1986 to 1994 Uruguay negotiations took place. On 15th April 1994, the agreement is known as the Marrakesh Agreement was accepted by 123 nations. WTO was officiated on 1st January 1995 after Cold War period.


The WTO emerged as a replacement for GATT. The GATT came into an existence as a set of pacts made after World War II. GATT was enforced by nations who won World War II but WTO is a mutual association of all the countries.

Members and Observers

India has been one of the founder members of WTO since 1 January 1995 and was also a member of GATT from 8th July 1948. The WTO has 23 observer countries and 164 members. All these numbers are mentioned as per the available information on December 2017.

Principle of the WTO:

  1. Non Discrimination
  • Most Powerful Nation-Treating other nations equally

No country is allowed to discriminate in trading except under a few exceptional circumstances.

  • National Treatment: Treating foreigners and locals equally

This principle is applied to item or commodity only after it is introduced in the market.

  1. Free Trade:

This aspect focuses more on to reduce customs duties to lift import bans, to increase import quota, and to remove trading restrictions.

  1. Predictability:

Creation of new employment opportunities, encouraged investments, healthy competitions, and stable trading environment are three prime aspects of this system.

  1. Promoting fair competition

The WTO is known for encouraging fair competition. In some cases, WTO allows collections of tariffs even though trade is supposed to be free.

  1. Encouraging Development and Economic Reforms

The WTO has mainly benefitted the developing nations. The WTO provides economic assistance, which can be returned in flexible instalments.

Safety values

The WTO policies are designed in such a way that, countries are bound to protect environment, public health, plant health, and animal health.

Functions of WTO

  • Administration of trade agreements and monitoring development of member countries.
  • Common forum for all trade transactions.
  • Ultimate authority in case of any dispute.
  • Controls national trade policies.
  • Arranges training and camps for developing nations.

The Organisational structure of WTO








Major Agreements of WTO

Agreement on subsidies and countervailing measures (SCM): It defined subsidy, their types, extent or limitations and countervailing measures.

General Agreement on Trade in Services (GATS): It is the updated version of the GATT and aims for the creation of the reliable and credible system for global trade rules for unbiased treatment.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS): It came into existence in 1994, which sets down basic rules for intellectual property regulations.

Agreement on Trade-Related Investment Measures (TRIMS): It understands that certain policies can distort, so WTO does not allow members to engage any policies which make trade biased.

Agreement on Agriculture (AOA): In 1994 WTO concluded an agreement on agriculture to remove trade barriers and to promote transparent market access.

Multifibre Arrangement and Agreement on Textiles: In 1974, a short-term solution allowed developed nations to manage their imports from developing nations. The best example is of the textile industry, which was brought under WTO in January 2005.

Sanitary and Phyto- Sanitary Measures: The agreement is about ‘animal and plant health standards’ and ‘basic rules for food safety’.

Importance of WTO for India

Free and Fair Trade: India has benefitted a lot from the open global market and WTO is important to protect industry from cheaper yet superior goods manufactured in developed nations

Globalization:  Several agreements formulated at WTO have allowed India to grow economically, in terms of employment, standard of living etc.

Leadership role: Developing nations look forward to India as their leader in many aspects, which was proven right when India successfully defended developing nations side against developed nations in Buenos Aires.

 Global inequality: The GDP of developing has seen a great amount of growth which is evident by growth of G20group. WTO has played a crucial role in reducing the GDP gap between G7 and G20 countries.

 Bulwark against protectionism: There has been a recent development of protectionism in Europe and mainly the USA. These tendencies can put a break on globalization and India which has benefitted a lot from globalization may lose a lot.

Fair mechanism for dispute settlement: The US-Brazil dispute over cotton trade made developing countries believe that they can win against developed nations with the help of WTO. WTO provides such help free of cost.

TFA for Services: India has its maximum revenue from service sector and if WTO passes the TFA agreement then India is going to be a major beneficiary.

Indo –WTO problems

Domestic Content Requirement in Solar Panel

Recently, India lost this case to US in dispute resolution body. India has prescribed ‘domestic content requirement’ for procurement of Solar cells/panels for its target of installing 100 GW of solar power by 2022. Under this some (about 5%) procurement was reserved to be bought from Indian vendors, to promote indigenous industry. US alleged that this is against principles of Non-Discrimination and National Treatment.

Visa problem

Indian people are the largest group who apply for H1B and L1 visas. About 60% of the revenue earned by the Indian IT industry is from North America. India has filed a complaint against USA at WTO.  Both countries have been advised to solve issue mutually by bilateral discussions.


WTO is one of the few platforms where developing nations come together and unite against pressurising developed nations.

India has its own place in WTO. Many developing and underdeveloped nations look at India as their leader. India has maintained a very good relationship with most of the developed and other nations in WTO hence; it is very unlikely to happen that India has imposed with unfavourable policies. India has always been benefitted and successfully safeguarded their developmental concerns. India has been the part of most of constructional policies developed at WTO.