WTO (World Trade Organization): Meaning, Objectives and Functions

The World Trade Organization (WTO) was established on January 1, 1995, following the Marrakesh Agreement, which replaced the General Agreement on Tariffs and Trade (GATT). The World Trade Organization is the only global organization that governs the rules of trade between nations. Its primary purpose is to ensure that international trade flows as smoothly, predictably, and freely as possible.

Objectives Of WTO (World Trade Organization)

1. Facilitating Global Trade Negotiations

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2. Ensuring Transparent Decision-Making

3. Collaborating with International Economic Bodies

4. Resolving Trade Disputes Fairly

5. Setting and Enforcing International Trade Rules

World Trade Organization Features

• Broader Scope of Coverage: The WTO has a much wider scope compared to GATT, which primarily focuses on goods. Unlike GATT, the WTO includes trade in services, investment policies, and intellectual property rights. This expansion ensures that more areas of international trade are covered and regulated.
• One Member, One Vote: Each member country of the WTO has an equal voting right. This means that every member, regardless of size or economic power, has the same influence in decision-making processes, ensuring fairness and equal representation.
• International Privileges for Members: WTO members enjoy significant international privileges. These include access to global markets and protections against discriminatory trade practices by more developed countries. The organization works to ensure that all members, including smaller and weaker nations, have fair access to international trade opportunities.
• Unified Agreements: The WTO administers a comprehensive set of agreements to which all members are committed. This unified package covers a broad range of trade-related issues and ensures that member countries adhere to the same rules and standards.
• Forum for Discussions: The WTO serves as a key platform for dialogue among its member countries. It provides a forum where nations can discuss trade issues, negotiate agreements, and address disputes, helping to foster cooperation and understanding in global trade.

Also Read: International Trade Institutions and Trade Agreements

Functions Of WTO (World Trade Organization)

1. Facilitating International Trade: The WTO helps facilitate international trade by working to remove barriers like tariffs and non-tariff obstacles. Doing so provides greater market access for all member countries, allowing them to trade more freely and efficiently with one another.
2. Establishing Trade Rules: One of the key functions of the WTO is establishing a rule-based trading system. This means that countries cannot impose arbitrary restrictions on trade. Instead, trade policies must adhere to the agreed-upon rules, ensuring that all member nations operate on a level playing field.
3. Protecting Developing Countries: The WTO is committed to protecting the interests of developing countries. It does this by framing fair global trade rules and regulations that safeguard their needs and concerns. This helps ensure that developing countries can benefit from global trade on equal terms with more developed nations.
4. Promoting Optimal Resource Utilization: The WTO also focuses on the optimal utilization of global resources. By encouraging the increase in production and trade of goods and services, the WTO helps ensure that world resources are used efficiently and sustainably.
5. Providing a Platform for Trade Negotiations: The WTO serves as a forum where member countries can come together to discuss and negotiate future trade strategies. This platform is essential for addressing ongoing trade issues, further liberalizing trade, and ensuring that the multilateral trading system continues to evolve and thrive.

Also Read: International Monetary Fund (IMF)