The World Trade Organization (WTO) is a global intergovernmental organization that regulates international trade. It was established on January 1, 1995, replacing the General Agreement on Tariffs and Trade (GATT), which had been in place since 1948.
Objectives of WTO
The WTO aims to:
- Promote Free Trade: By reducing trade barriers like tariffs and quotas.
- Ensure Fair Competition: By establishing transparent trade practices.
- Resolve Trade Disputes: Through an impartial dispute settlement mechanism.
- Increase Economic Growth: By facilitating trade to boost global economic development.
- Protect Developing Nations: By allowing them greater flexibility in implementing agreements.
Functions of WTO
Here’s a quick breakdown of what the WTO does:
| Function | Explanation |
|---|---|
| Trade Negotiations | Facilitates trade talks and agreements among member nations. |
| Dispute Resolution | Provides a legal framework to resolve trade disputes between countries. |
| Monitoring Trade Policies | Reviews trade practices of member nations to ensure compliance with WTO rules. |
| Capacity Building | Assists developing nations with trade policies and global integration. |
| Global Trade Forum | Serves as a platform for discussion on trade-related issues. |
Key Agreements Under WTO
Let’s now explore the major agreements under the WTO, each playing a significant role in regulating global trade.
Agreement on Agriculture (AoA)
The Agreement on Agriculture focuses on three key pillars:
- Market Access: Reducing tariffs and quotas on agricultural imports.
- Domestic Support: Limiting government subsidies that distort trade.
- Export Subsidies: Phasing out subsidies that artificially make exports cheaper.
Why it’s important: The AoA aims to create a level playing field in agricultural trade, benefiting both producers and consumers globally.
General Agreement on Trade in Services (GATS)
The GATS extends trade rules to the services sector, covering industries like finance, healthcare, IT and tourism.
- Four Modes of Supply:
- Cross-border trade (e.g., online services).
- Consumption abroad (e.g., tourism).
- Commercial presence (e.g., foreign bank branches).
- Presence of natural persons (e.g., consultants working abroad).
Why it’s important: GATS ensures fair competition and transparency in the global services market.
Trade-Related Aspects of Intellectual Property Rights (TRIPS)
The TRIPS Agreement sets global standards for intellectual property (IP) rights, including:
- Patents: Protecting innovations for a minimum of 20 years.
- Copyrights: Safeguarding creative works like books and films.
- Trademarks: Ensuring brand recognition through exclusive rights.
Why it’s important: TRIPS encourages innovation and protects creators' rights, balancing economic growth with public interest.
Trade-Related Investment Measures (TRIMS)
The TRIMS Agreement governs policies affecting foreign direct investment (FDI) and trade. Key provisions include:
- Prohibition of measures that favor domestic goods over imports.
- Elimination of local content requirements.
Why it’s important: TRIMS ensures that FDI policies do not distort international trade.
How India Engages with WTO
India is a founding member of the WTO and actively participates in negotiations and trade policy reviews. Some of its significant stances include:
- Advocating for greater flexibility for developing countries.
- Opposing stringent IP rules under TRIPS that limit access to medicines.
- Supporting subsidies for agriculture to protect farmers' livelihoods.
Summary
| Agreement | Key Focus | India’s Position |
|---|---|---|
| Agreement on Agriculture (AoA) | Reducing trade barriers in agriculture. | Advocates for food security and subsidy flexibility. |
| GATS | Liberalizing trade in services. | Strong in IT services but protective in others. |
| TRIPS | Standardizing IP laws globally. | Balances innovation with access to medicines. |
| TRIMS | Ensuring fair FDI practices. | Opposes stringent investment restrictions. |