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Structure And Functions Of World Trade Organization

The World Trade Organization (WTO) provides the institutional and legal foundation for the new multilateral trading system that came into being on 1 January 1995. The comparatively short agreement that sets out its role, structure and powers is also the first text in the package of Uruguay Round agreements signed in Marrakesh on 15 April 1994 that is of permanent importance.

World Trade Organization (WTO)

The World Trade Organization (WTO) is a multilateral organization headquartered in Geneva, Switzerland. It came into existence on January 1, 1995, as a successor to the General Agreement on Tariffs and Trade (GATT). The organization functions as a central body that facilitates global trade.

The WTO provides a common platform to negotiate trade agreements among member countries and to resolve any trade disputes. It manages 60 global and about 300 regional trade agreements. The 60 trade agreements are accorded the status of international law. The WTO comprises 164 member states. There are also observer states that are not signatories to the WTO agreements, and they do not participate in free trade.

Objectives Of The WTO:

  1. To limit the trading barriers by negotiating. This results in a reduction in the prices of goods and services, which in turn results in a reduction in the cost of living.
  2. Stimulating economic growth and employment opportunities
  3. Limit the cost of international business activities.
  4. To promote the concept of good governance.
  5. To reduce the trade disputes among the countries.
  6. Collaborating with leading financial institutions to boost economic management.

Functions Of The WTO

The stated objectives are clearly those of the Marrakesh package of agreements as a whole. The role of the World Trade Organization itself is defined by Article III of the WTO Agreement, which defines five functions for it.
  1. Implementing agreements
    The first, and broadest, function is to "facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements", and also to "provide the framework for the implementation, administration and operation of the Plurilateral Trade Agreements" (Article III:1). The wording reflects the difference between the multilateral agreements, to which all member governments are committed, and the plurilateral agreements which are under the WTO umbrella but cannot expect the same degree of support.
  2. Negotiations
    The WTO's second function is to be a negotiating forum. Again, a distinction is made between negotiations for which the WTO shall provide the forum, and those for which it may provide a forum (Article III:2). The first category, specifically reserved to the WTO, consists of multilateral negotiations on matters dealt with in the annexes to the agreement  that is, on the subjects already covered by the GATT and the Uruguay Round.

    The second category is defined only as "further" negotiations concerning multilateral trade relations, as may be decided by the WTO's Ministerial Conference: should such negotiations take place, the WTO can also provide the framework for putting their results into effect.
  3. Disputes and policy reviews
    The third and fourth functions of the WTO are to administer the arrangements in Annexes 2 and 3 for the settlement of disputes that may arise between members and for the review of trade policies. Finally, the WTO is to cooperate, as appropriate, with the International Monetary Fund and the World Bank "with a view to achieving greater coherence in global economic policymaking"
  4. Differential treatment to Developing countries
    The WTO Agreement's Preamble and Article III are buttressed by two separate texts that were adopted by Ministers on the same day that they signed the Marrakesh agreements.

    One text, of particular importance because it has a bearing on virtually every other agreement in the Uruguay Round package, is a decision on measures in favour of least-developed countries. Its central point is that these countries, as long as they remain in the least-developed category, will only be required to undertake commitments and concessions under the Uruguay Round agreements "to the extent consistent with their individual development, financial and trade needs, or their administrative and institutional capabilities". The decision gave least-developed countries an additional year to submit their schedules of commitments on goods and services.

    Developed countries are called on to be careful of the effects any import relief measures they take may have on exports of the least-developed countries. Finally, the decision promises the least-developed countries substantially increased technical assistance in the development, strengthening and diversification of their production and exports, as well as continuing review of their specific needs. Special and differential treatment for developing countries is instead included in most of the separate agreements and arrangements reached in the Uruguay Round, where it usually takes the form of less stringent obligations (e.g. longer transition periods) than are imposed on developed countries.
  5. Coherence in global economic policymaking
    The second ministerial text bearing on the functions of the WTO is a declaration on its role in achieving "greater coherence in global economic policymaking". As the title of the declaration suggests, it is directly linked with the fifth function of the WTO, already referred to.

Structure Of The WTO

The WTO Agreement provides the new organization with a clear structure, political guidance, a proper staff, and appropriate financial arrangements.

The Ministerial Conference
The Ministerial Conference of the WTO meets every two years to make important decisions about existing trade agreements. The Ministerial Conference holds the authority to make decisions on any aspects of all multilateral agreements made under the WTO. The Conference includes representatives from all members of the WTO. It gives equal representation to all its members regardless of the size of their economy or share in international trade. It can be thought of as the legislative branch of the WTO. The 12th Ministerial Conference is now scheduled to take place in June 2021 in Kazakhstan.

The WTO is headed by the Ministerial Conference, while the daily operations are carried out by three administrative bodies:

General Council
The General Council comprises the representatives of all member countries and acts as the representative of the Ministerial Conference when it comes to daily operations. Its job is to carry out the implementation and monitoring function of the WTO. The General Council is further divided into multiple councils and committees that focus on specific topics. Examples of such bodies include the Council on Goods, the Councils on Services, the Committee on Textiles under the Council on Goods, etc.
  • The Council for Trade in Goods
    The Council for Trade in Goods oversees about 11 committees, and each one of them has separate responsibilities. All the committees consist of the existing WTO members only. This is also led by the chairman.
  • The Council on Trade-Related Aspects of Intellectual Property Rights
    The Council on Trade-Related Aspects of Intellectual Property Rights promotes trade aspects of the same. The news and official records regarding the TRIPS Council and WTO collaboration with other international organizations on intellectual property at the World Trade Organisation are provided by him.
  • The Council for Trade Services
    The Council for Trade Services is directed by the General Council which Oversees the operations of general agreements on trade in services means GATS.

Dispute Settlement Body
The Dispute Settlement Body is a part of the General Council and is responsible for settling trade disputes between member states. There is also an Appellate Body, where member states can appeal any decisions made against them during a dispute settlement.

Trade Policy Review Body
The Trade Policy Review Body is also a part of the General Council and is responsible for ensuring the trade policies of member states are in line with the goals of the WTO. Member countries are required to inform the WTO about changes in their laws and trade policies. The body undertakes regular reviews of the policies to ensure they conform to the rules of the WTO. This is part of the monitoring function of the WTO, and it helps the WTO to adapt to the changing economic landscape.

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. The WTO has many roles: it operates a global system of trade rules, it acts as a forum for negotiating trade agreements, it settles trade disputes between its members and it supports the needs of developing countries. These functions are carried out by the governance structure of WTO.

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