A PROJECT REPORT ON WORLD TRADE ORGANIZATION (WTO)

SUBMITTED BY SURAJKUMAR V. PANDEY ROLL NO. 509 MASTER OF COMMERCE (M.COM) (BUSINESS MANAGEMENT) SEMESTER- I

UNDER THE GUIDANCE OF Prof. KALPANA K. S

SUBMITTED TO UNIVERSITY OF MUMBAI 2012-2013

Smt. Parmeshwaridevi Durgadutt Tibrewala Lions Juhu College of Arts, Science & Commerce J. B. Nagar, Andheri (E), Mumbai 400 059

Smt. Parmeshwaridevi Durgadutt Tibrewala Lions Juhu College of Arts, Science & Commerce J. B. Nagar, Andheri (E), Mumbai 400 059

CERTIFICATE
We hereby certify that Mr. Vishal Gupta of Smt. Parmeshwaridevi Durgadutt Tibrewala Lions Juhu College College of Arts, Science & Commerce studying in M.COM (Business Management) (Semester I) has completed project on WORLD TRADE ORGANIZATION (WTO) the academic year 2012-2013. The information submitted in the project is true and original to the best of our knowledge.

____________________

_____________________

INTERNAL EXAMINER

EXTERNAL EXAMINER

________________________ CO-ORDINATOR

_____________________

PRINCIPAL

DECLARATION
I Vishal Gupta the student of M.COM (Business Management) (Semester I ) (2012-2013) hereby declare that I have completed the project on WORLD TRADE ORGANIZATION (WTO) The information submitted is true and original to the best of my knowledge.

Signature of Student: ______________

Name of student: SURAJKUMAR V.PANDEY

Roll No. 508

ACKNOWLEDGEMENT

The first and foremost words of gratitude go to my faculty guide, Prof: KALPANA K.S for her invaluable support. .I thank cordially for her guidance provided for the completion of project successfully.

The project WORLD TRADE ORGANIZATION (WTO) is creative work. Any undertaking as ambitious as project requires the assistance and aid of several individual for successful completion I would like to take this opportunity to express my sincere gratitude to everyone who has helped me to make project.

I specially thank to the Nanda indulkar for guiding me with the proper guidance, which assisted me in the completion of the project.

INDEX

1.Introduction .... 9 2. A brief history of the WTO ..10 3.WTO GENESIS ..12 4. Different Phases of WTO .14 5. The multilateral trading systempast, present and future ...22 6. Principles of the trading system ............25 7.Organizational structure ..26 8.Agreements 27

INTRODUCTION:

WORLD TRADE ORGANISATION

The principle of non-discrimination was meant to be the cornerstone of the World Trade Organisation and the multilateral trading regime. But ten years down the line, it is clear that the trade rules favour developed countries, and the promise of greater market access for developing countries has not been sufficiently realised The formation of the World Trade Organisation (WTO) in 1995 was a watershed development in the sphere of international trade. It was a major advancement in the multilateral trade regime, with the previous regime embodied in the form of a treaty known as the General Agreement on Tariffs and Trade (GATT).

GATT was signed in 1948 and had close to 30 member countries. Its primary objective was to see that impediments to international trade -- mainly in the form of tariffs were reduced or removed in order to facilitate the movement of goods across borders. In the course of six to seven rounds of negotiation, it succeeded in getting countries to lower their tariff rates, thus enabling greater movement of goods.

However, over time, the nature and character of global trade started to get very complex. Countries began to realise that GATT did not have all the answers to the questions posed by the increasingly complicated nature of global trade.

This led member countries to launch a new round of negotiations, from 1986-1994, known as the Uruguay Round (UR). This series of negotiations was much more elaborate and detailed. It not only covered trade in goods but also brought trade in services and intellectual property rights within the ambit of the multilateral trading regime.

Even within trade in goods, a far more thorough set of rules was discussed and negotiated. Further, trade in agricultural goods was brought into the fold of the multilateral trading regime in a major way. In GATT, trade in agricultural goods was, at best, minimal and at the fringes of the discussions. The end of the UR resulted in the formation of the WTO, which established a substantial set of rules regarding trade in goods -- including agricultural goods, included agreements on trade in services and on trade-related aspects of intellectual property rights, as well as a strong and comprehensive mechanism to settle trade disputes between member countries.

A brief history of the WTO :

The principle of non-discrimination was meant to be the cornerstone of the World Trade Organisation and the multilateral trading regime. But ten years down the line, it is clear that the trade rules favour developed countries, and the promise of greater market access for developing countries has not been sufficiently realised The formation of the World Trade Organisation (WTO) in 1995 was a watershed development in the sphere of international trade. It was a major advancement in the multilateral trade regime, with the previous regime embodied in the form of a treaty known as the General Agreement on Tariffs and Trade (GATT). GATT was signed in 1948 and had close to 30 member countries. Its primary objective was to see that impediments to international trade -- mainly in the form of tariffs -- were reduced or removed in order to facilitate the movement of goods across borders. In the course of six to seven rounds of negotiation, it succeeded in getting countries to lower their tariff rates, thus enabling greater movement of goods. However, over time, the nature and character of global trade started to get very complex. Countries began to realise that GATT did not have all the answers to the questions posed by the increasingly complicated nature of global trade. This led member countries to launch a new round of negotiations, from 1986-1994, known as the Uruguay Round (UR). This series of negotiations was much more elaborate and detailed. It not only covered trade in goods but also brought trade in

services and intellectual property rights within the ambit of the multilateral trading regime. Even within trade in goods, a far more thorough set of rules was discussed and negotiated. Further, trade in agricultural goods was brought into the fold of the multilateral trading regime in a major way. In GATT, trade in agricultural goods was, at best, minimal and at the fringes of the discussions. The end of the UR resulted in the formation of the WTO, which established a substantial set of rules regarding trade in goods -- including agricultural goods, included agreements on trade in services and on trade-related aspects of intellectual property rights, as well as a strong and comprehensive mechanism to settle trade disputes between member countries. Notwithstanding these additions, the WTO retained some of the basic characteristics of GATT, such as the principles of nondiscrimination embodied in the Most Favoured Nation (MFN) and National Treatment (NT) rules. Today the WTO, the youngest of the world's multilateral organisations, is over 10 years old.It may be instructive to follow the journey of the WTO from 1995 onwards, even though it is difficult to assess the overall impact of the organisation on the global economy or on individual developing countries. It has been good for some, bad for others and a mixed bag for the remaining. It is also difficult to capture all the developments that have taken place from 1995 to 2006. However, one can certainly attempt to outline some of the key developments of the past decade.

Non-discrimination :

As mentioned above, the WTO recognized and institutionalized the principle of nondiscrimination embodied in the MFN clause, which was present in GATT as well. According to the MFN principle, no WTO member country can discriminate against other member countries. For example, if country X imposes a tariff rate of 5% on steel coming from country Y, it has to impose the same tariff rate on all imported steel, irrespective of the country of origin. This non-discrimination principle of the WTO is said to be the cornerstone of the multilateral trading regime.

However, both GATT and the WTO also recognised certain exceptions to the MFN principle. Preferential Trading Agreements (PTAs) constitute one such exception, which permits two or more countries to sign an agreement to form a free trade area where they can provide preferential access to each other's products. By signing a PTA, countries would be able to violate the MFN obligation that they have with other WTO member countries and provide preferences to countries that are members of the free trade area.

Ten years into the WTO regime this exception appears to have become the rule, while the primary principle of MFN is becoming an exception. By the end of 2004, about 300

PTAs had been notified with GATT and the WTO. Of these, close on 180 came into existence after 1995 -- that is, after the formation of the WTO. In other words, about 60% of all PTAs in existence today came into effect after the most remarkable advancement in the multilateral trading regime happened, in 1995. Estimates suggest that by the end of 2007 the total number of PTAs will be well above the 300 mark. Today, more than 50% of global trade takes place through PTAs, on a non-MFN basis. Hence, what was considered an exception has now become the rule.

There could be many reasons for this development. Industrially developed countries get into PTAs in order to extract benefits that they would be unable to secure through the multilateral trading regime, such as a more stringent intellectual property rights regime, as well as rules relating to competition, investment, labour and the environment. Less economically developed countries are lured into PTAs by the prospect of getting greater market access. However, the growing number of PTAs has created a substantial degree of confusion in the global trade regime, bringing in complicated rules and procedures and creating difficulties for member countries in their administration.

WTO GENESIS

The General Agreement on Trade and Tariff (GATT) came into existence in 1947 It sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce.

India signatory to GATT 1947 along with twenty two other countries Eight rounds of negotiations had taken place during five decades of its existence WTO Came into existence on 1-1-1995 with the conclusion of Uruguay Round Multilateral Trade Negotiations at Marrakesh on 15th April 1994, to :

Transparent, free and rule-based trading system Provide common institutional framework for conduct of trade relations among members

Facilitate the implementation, administration and operation of Multilateral Trade Agreements

Rules and Procedures Governing Dispute Settlement Trade Policy Review Mechanism Concern for LDCs and NFIDCs Concern on Non-trade issues such as Food Security, environment, health, etc.

BASIC PRINCIPLES :

1. NON-DISCRIMINATION
MFN (exceptions RTAs, SPS) National Treatment (exceptions Government Procurement, GATS) 2. MARKET ACCESS Reduction and binding of tariffs General elimination of quantitative restrictions on imports and exports (exceptions Article XX, XXI of GATT

WTO Aims at :

Fair and market oriented trading system Commitments on support and protection Operationally effective GATT Rules & Disciplines Equitable Trade Reform process Greater opportunities and Terms of Access to developing Concern for LDCs and NFIDCs Concern on Non-trade issues such as Food Security, environment, health, etc. countries

Domestic Support :

Green Box

- Research, Extension, PDS, Decoupled Payments etc;

Blue Box - Production Limiting Subsidies ;

Amber Box - AMS-subject to reduction commitments viz

Product specific (MSP) Non product specific (input subsidies-fert. Power, irrigation)

THE MANDATE OF ARTICLE 20

ARTICLE 20 OF THE AoA MANDATES FRESH NEGOTIATIONS :

-STARTED IN 2000, TAKING INTO ACCOUNT

A)

THE EXPERIENCE OF IMPLEMENTATION TO DATE

B)

THE EFFECTS ON WORLD TRADE IN AGRICULTURE

C)

NON TRADE CONCERNS

D) WHAT FUTURE COMMITMENTS ARE NECESSARY TO ACHIEVE THE LONG

TERM OBJECTIVES

Phase I: March 2000 to March 2001

a) the experience of implementation to date b) the effects on world trade in agriculture c) non trade concerns d) what future commitments are necessary to achieve the long term objectives

Around 45 Negotiation proposals submitted by 126 Members in Phase-I to cover:

Market Access

Domestic Support

Export Subsidies

Non Trade Concerns

Phase II: March 2001 to February 2002 Modalities and timeframe for of the negotiating process decided in the March 2001 Special Session. Six Special Sessions of Committee on Agriculture held during 2001-02 and discussed various negotiating proposals. Modalities and timeframe for of the negotiating process decided in the March 2001 Special Session. Six Special Sessions of Committee on Agriculture held during 2001-02 and discussed various negotiating proposals.

Phase III: March 2002 to March 2003

Commenced from March 2002 During 2002-03 , the meetings of Committee on Agriculture to discuss the issues on export competition, market access and domestic support.

Indias Approach to the Negotiations

1. Comprehensive negotiating proposal submitted to WTO on 15.1.2001 covering Food Security, Market Access, Domestic Support, and Export Competition 2. Non paper on Special and Differential Treatment to Developing Countries

India Seeks :

Protecting our food and livelihood security by having sufficient flexibility for domestic policy measures. Protecting domestic producers from the surge in imports or significant decline in import prices. Substantial reduction in export subsidies and domestic support to agriculture in the developed countries for greater market access to products of developing countries. Finally, a more equitable & fair trading framework for agricultural commodities.

Market Access :

The negotiations on market access should include the following issues:

Comprehensive binding of tariffs Reduction of peak tariffs and removal of tariff escalations Reduction in the number of tariff rate quotas (TRQs) in a progressive manner

Volume of imports allowed under quotas to be substantially expanded till TRQs are eventually eliminated Transparent administration of TRQs

Export Subsidies :

The negotiations on export subsidies should include the following issues:

Countries using export subsides should phase out this form of farm support within two years of implementation of the revised disciplines to be followed by countries in the agricultural sector. Export subsidies discipline should include all forms of spending that enhances the capacities of exporters to increase trade, e.g. export credit, guarantees and insurance programmes. The Peace Clause Article 13 (c) shall not be extended beyond implementation period.

Non-Trade Concerns

The issue of non-trade concerns should be articulated as under: Non-trade concerns should be adequately reflected in the decisions, particularly those related to market access and domestic support. The AoA needs to provide an enabling environment for the countries to address the concerns relating to food security and livelihoods. The relevant decisions of the World Food Summit on food security and livelihoods need to be integral part of the negotiations.

S&D in Doha Ministerial Declaration

We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development.

S&D to Developing Countries

Increase the levels of MFN tariffs on sensitive products Special Safeguards (SSGs) No requirement to provide minimum access requirements Administration of tariff rate quotas for improved market access Right to use export subsidies Exemption for resource poor farmers in Product Specific Support

Issues of Regional Importance

1. Crops that are significant from the point of view of sustaining livelihoods and regional development

2. Crops in which the individual states can be considered to be efficient producers considering the global trends

3. Crops in which the states have been accumulated surpluses 4. Crops that face the threat from cheap imports 5. Crops that have been facing fluctuating prices, resulting in uncertainties for the farmers

Ministerial conferences

The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.

The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues". The second ministerial conference was held in Geneva in Switzerland. The third conference in Seattle, Washington ended in failure, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention.

The fourth ministerial conference was held in Doha In Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved the joining of China, which became the 143rd member to join. The fifth ministerial conference was held in Cancn, Mexico, aiming at forging agreement on the Doha round. An alliance of 22 southern states, the G20 developing nations (led by India, China[22], Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.

The sixth WTO ministerial conference was held in Hong Kong from 13-18 December 2005. It

was considered vital if the four-year-old Doha Development Agenda negotiations were to move forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything but Arms initiative of the European Union but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010.

The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November-3 December 2009. A statement by chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol requiring two-yearly "regular" meetings, which had lapsed with the Doha Round failure in 2005, and that the "scaled-down" meeting would not be a negotiating session, but "emphasis will be on transparency and open discussion rather than on small group processes and informal negotiating structures". The general theme for discussion is "The WTO, the Multilateral Trading System and the Current Global Economic Environment".

Non-tariff barriers :

The WTO came into existence at a time when tariffs -- the customs duties that countries levy on goods entering their country -- were very low. The intent of

successive rounds of negotiations under GATT, which led to the formation of the WTO, was to reduce barriers to international trade. Reduction of tariff barriers was one of the consequences of this process.

Although barriers to international trade in the form of tariffs have come down, other non-tariff barriers have increased manifold after the formation of the WTO.

These non-tariff barriers exist mainly in the form of food standards, technical requirements, antidumping duties, etc. Industrially developed countries often impose stricter food standards on imports from developing countries.

These standards are sometimes even stricter than what is warranted under existing international standards. An interesting trend in the imposition of non-tariff barriers after the formation of the WTO has been the growing tendency of developing countries to use these measures.

It is important to recall that antidumping rules represent a remedial tool whereby countries impose additional duties on imports that are sold in their markets at prices lower than the domestic price of the imported goods in their country of origin.

For instance, India has emerged as the biggest imposer of antidumping duties after the formation of the WTO.

Ex p o r t vs im p o r t o f a g r ic u ltu r a l p r o d u c ts
3 5 0 0 0 .0 0

R s. in crores

3 0 0 0 0 .0 0 2 5 0 0 0 .0 0 2 0 0 0 0 .0 0 1 5 0 0 0 .0 0 1 0 0 0 0 .0 0 5 0 0 0 .0 0 0 .0 0 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 200091 92 93 94 95 96 97 98 99 2000 01 T o ta l A g r ic u lt u r a l Im p o r t s T o ta l A g r ic u lt u r a l e x p o r ts

E x p o r t v s i m p o r t o f to ta l p r o d u c ts
2 5 0 0 0 0 .0 0 2 0 0 0 0 0 .0 0

Rs. in crores

T o ta l N a ti o n a l e xp o r ts

1 5 0 0 0 0 .0 0

1 0 0 0 0 0 .0 0

T o ta l
5 0 0 0 0 .0 0 0 .0 0

N a ti o n a l Im p o r ts

0 00 99 20 00 -2

-9

-9

-9

-9

-9

-9

-9

-9

-9

90

91

92

93

94

95

96

97

19

19

19

19

19

19

19

19

19

98

E x p o r t v s im p o r t o f o t h e r p r o d u c t s
2 5 0 0 0 0 .0 0

2 0 0 0 0 0 .0 0

19

-0

Rs. in crores

Ex p o r t o f 1 5 0 0 0 0 .0 0 o th e r p r o d u c ts Im p o r t o f o th e r p r o d u c ts 5 0 0 0 0 .0 0

1 0 0 0 0 0 .0 0

0 .0 0 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 200091 92 93 94 95 96 97 98 99 2000 01

Export of important agricultural products

5000.00 4500.00 4000.00 3500.00 3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 200091 92 93 94 95 96 97 98 99 2000 01

Rs. in crores

exports Rice exports spices exports Tea exports Coffee

Issues of Export Competitiveness of Select Agro-products

Rice:

The rice export is projected to increase to 2.7 million tonnes in 2005 from current level of 1.8 million tonnes.

In spite of much favourable domestic resource cost, the nominal protection co-efficient is marginal which is due to volatile international prices.

The domestic supply gap, quality, processing, marketing, transportation etc., are going to be key factors for sustaining Indias rice export potential.

Spices:

Owing to expanding global demand of spices, there is potential for accelerating Indian spice export but the rising competition would require concerted efforts.

The problem of aflotoxin, pesticide residue and low yields are to be tackled.

Tea:

The Indian tea export is projected to increase marginally from 159 thousand tonnes during 1993-95 to 165 thousand tonnes in 2005.

Indias export competitiveness as well as share in export of tea is declining.

The strategies include promotional measures, joint ventures for tea blending and marketing and support for importing machinery and packaging materials.

Coffee:

The coffee export is projected to reach to 180 thousand tonnes in 2005 from the level of 160 thousand tonnes in 90s.

There is emergence of new markets in Asia and Eastern Europe and hence India has to focus on this aspect as well.

The quality, R&D and post-harvest methods are important to sustain the growth.

Cashew : Indias export is projected to increase to 95,000 tonne by 2005 from current exports of 80,000 tonne.

The emergence of Vietnam and Brazil as exporters, decline in domestic production of raw cashew and quality stipulations by importing countries, may make these projections un-achievable.

The improvement in the processing facility, land development for additional plantation crop area and removal of legal barriers for such area expansion are suggested for sustaining the export potential.

Marine Products :

Indian marine products are expected to increase by about 10.2%, per annum, in the next five years.

The marine processing industry is well developed but to sustain the growth, availability of raw materials for effective production planning and development of scientifically managed aqua-culture and brackish water resources are envisaged.

The transport and other infrastructure to support export are also envisaged.

Schedule of Regional Consultations :

Dates

Location

Region

11th May, 2002

Delhi

Northern

31st May, 2002

Hyderabad

Southern

7th June, 2002

Guwahati

North-East

14th June, 2002

Pune

Western

28th June, 2002

Jaipur

Central

5th July, 2002

Bhubaneshwar

Eastern

29-11-2011

Madurai

Southern

07.12.2011

Tirunelveli

Southern

Get tariff data The WTO website now offers sophisticated options for researching members customs duty rates and in many cases imports. One, the new Tariff Analysis Online, draws on two databases to offer tariff rates on products defined at the highest level of detail, import statistics and the ability to analyse these interactively. Another, the Tariff Download Facility, provides standardized tariff statistics, in slightly less detail but with the ability to compare between countries immediately.

In the ten years of its existence, WTO panels composed of corporate attorneys have ruled that: the US law protecting sea turtles was a barrier to "free trade"; that US clean air standards and laws protecting dolphins are too; that the European Union law banning hormone-treated beef is illegal. According to the WTO, our democratically elected public officials no longer have the rights to protect the environment and public health.

Unlike United Nations treaties, the International Labor Organization conventions, or multilateral environmental agreements, WTO rules can be enforced through sanctions. This gives the WTO more power than any other international body. The WTO's authority even eclipses national governments.

In November 1999, 50,000 people went to Seattle to challenge this corporate agenda and to demand a more democratic, socially just and environmentally sustainable global economy. The protests succeeded in shutting down the trade talks and derailing the expansion of the WTO.

The fourth ministerial took place in 2001 in Qatar, a country where free-speech rights are

effectively nonexistent. Behind closed doors and out of the civil-society and media spotlight, hard pressure was applied. Empty promises were made that this round of negotiations would focus on development and the needs of the poorest countriesan implicit acknowledgment of the unfairness of the current system. The US and the EU thus succeeded in launching the socalled Doha Development Round, a misnomer of epic proportions.

In 2003 the process moved to Cancn, Mexico, where the rich countries sought to expand the scope of the WTO. But a remarkable new alliance of developing countries argued that the unfair global agricultural system had to be cleaned up first, before new issues could come onto the table. The tragic suicide of Korean farmer Lee Kyung Hae brought the collective rage of the outside civil-society mobilization inside the closed gates of the negotiating halls. Most important, an alliance of the poorest countries stood their ground. The talks fell apart on the last day.

Then, in the summer of 2004, the most powerful countries cobbled together a minimal consensus to get the negotiations back on track by giving false assurances that agriculture would be fairly reformed. The WTO held its next ministerial in 2005, in Hong Kong, China. Though mired in controversy, negotiations continued on key issues including agriculture, services, and market access for industrial goods and natural resources.

The multilateral trading systempast, present and future

The World Trade Organization came into being in 1995. One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War.

So while the WTO is still young, the multilateral trading system that was originally set up under GATT is well over 50 years old.

The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on average by 6% annually. Total trade in 2000 was 22-times the level of 1950. GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth.

The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as antidumping and non-tariff measures. The last round the 1986-94 Uruguay Round led to the WTOs creation.

The negotiations did not end there. Some continued after the end of the Uruguay Round. In February 1997 agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round.

In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information.

In 2000, new talks started on agriculture and services. These have now been incorporated into a broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001.

The work programme, the Doha Development Agenda (DDA), adds negotiations and other work on non-agricultural tariffs, trade and environment, WTO rules such as anti-dumping and subsidies, investment, competition policy, trade facilitation, transparency in government procurement, intellectual property, and a range of issues raised by developing countries as difficulties they face in implementing.

The organization The WTOs overriding objective is to help trade flow smoothly, freely, fairly and predictably.

It does this by:

Administering trade agreements Acting as a forum for trade negotiations Settling trade disputes Reviewing national trade policies Assisting developing countries in trade policy issues, through technical assistance and training programmes

Cooperating with other international organizations

Structure

The WTO has nearly 150 members, accounting for over 97% of world trade. Around 30 others are negotiating membership.

Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTOs

predecessor, GATT. The WTOs agreements have been ratified in all members parliaments. The WTOs top level decision-making body is the Ministerial Conference which meets at least once every two years.

Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council.

Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements.

Secretariat

The WTO Secretariat, based in Geneva, has around 600 staff and is headed by a director-general. Its annual budget is roughly 160

million Swiss francs. It does not have branch offices outside Geneva. Since decisions are taken by the members themselves, the Secretariat does not have the decision-making role that other international bureaucracies are given. The Secretariats main duties are to supply technical support for the various councils and committees and the ministerial conferences, to provide technical assistance for developing countries, to analyze world trade, and to explain WTO affairs to the public and media.

The Secretariat also provides some forms of legal assistance in the dispute settlement process and advises governments wishing to become members of the WTO.

Principles of the trading system : 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 favorable conditions under which it allows trade in a certain product type to all other WTO members.[35] "Grant someone a special favour and you have to do the same for all other WTO members."[36] National treatment means that imported goods should be treated no less favorably 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.

3. Binding and enforceable 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. Safety valves : In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction: articles allowing for the use of trade measures to attain noneconomic objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons.Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.

Organizational structure :

The General Council has multiple bodies which oversee committees in different areas, and they are the following: 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.

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 WTOs work with other international organizations in the field.

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.

Trade Negotiations Committee The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTOs director-general. The committee is currently tasked with the Doha Development Round. The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The General council has several different committees, working groups, and working parties.

There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession.

There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.

Voting system :

The WTO operates on a one country, one vote system, but actual votes have never been taken. Decision making is generally by consensus, and relative market size is the primary source of bargaining power. The advantage of consensus decision-making is that it encourages efforts to find the most widely acceptable decision.

Main disadvantages include large time requirements and many rounds of negotiation to develop a consensus decision, and the tendency for final agreements to use ambiguous language on contentious points that makes future interpretation of treaties difficult.

In reality, WTO negotiations proceed not by consensus of all members, but by a process of informal negotiations between small groups of countries. Such negotiations are often called "Green Room" negotiations (after the colour of the WTO Director-General's Office in Geneva), or "Mini-Ministerials", when they occur in other countries.

These processes have been regularly criticised by many of the WTO's developing country members which are often totally excluded from the negotiations.. Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favouring Europe and the U.S., and may not lead to Pareto improvement.

Members and observers : The WTO has 153 members (almost all of the 123 nations participating in the Uruguay Round signed on at its foundation, and the rest had to get membership).[54] The 27 states of the European Union are represented also as the European Communities. WTO members do not have to be full sovereign nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations.

Thus Hong Kong (as "Hong Kong, China" since 1997) became a GATT contracting party, and the Republic of China (ROC) (commonly known as Taiwan, whose sovereignty has been disputed by the People's Republic of China or PRC) acceded to the WTO in 2002 under the name of "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei).

A number of non-members (30) are observers at WTO proceedings and are currently negotiating their membership. As observers, Iran, Iraq and Russia are not yet members. Russia is the biggest economy outside WTO and after the completion of Russia's accession, Iran would be the biggest economy outside the WTO.

With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. Some international intergovernmental organizations are also granted observer status to WTO bodies.14 states and 2 territories so far have no official interaction with the WTO.

Agreements :

The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession.A discussion of some of the most important agreements follows. The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support, market access and export subsidies. The General

Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade. The Agreement entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. The Agreement on the Application of Sanitary and Phytosanitary Measures also known as the SPS Agreement was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (imported pests and diseases). The Agreement on Technical Barriers to Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade".The Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes methods of customs valuation that Members are to follow.

Bibliography Internet Social Media WTO Website http://www.wto.org/ http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm Internet Journal Economics of global Trade and finance