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WTO (World Trade Organization)

| November 17, 2012


WTO (World Trade Organization) agreements consists of the rules and regulations and having fair trade practices framework with the developing countries of the world. In order to face multilateral negotiations and to cope up with the failure of Doha Round. The multilateral trade system was a great achievement that advanced a framework for the WTO/GATT international trading. However, the conflicts of member’s interests, RTAs have become the only remedy, where nations can seek to apply their views via direct negotiations. Ultimately the success depends on the success of Doha Round, developing countries fails to achieve their objectives under the RTAs framework and bilateral deals. Finally it has been analyzed that the rules set under the RTAs were proper but the regulation was on weaker side. The RTAs and WTO relationship has been controversial and much disputed as a matter of lack of regulation among the fair trade practices. Taking into consideration the proper valuation of the goods the amount of duties paid should also be counted. Lastly in this essay we look towards most beneficial acquisitions to promote unfair and equitable foreign trade practices.


Describing WTO:

A word WTO is known as the World Trade Organization which is very helpful to the trading business around the world. Nowadays most of the countries are being benefited by the trading agreements which are having their own different types of regions[1]. Earlier the regions and the international bodies were treated very softly with a view to have mutual cooperation to the financial business. But the time when RTA has been increased, it has put a competition with the trade structure. WTO came into practice from 1995 due to which agreements has been treated fairly and smoothly. It was formed so as to have track on all joint venture trade and agreements which were being done among the associates, side by side support was being given to the newest trades. As such many precautions have been taken care of so that any disputes should not come among the different nations. All the previous agreements which were formed by different countries were being continued with the new agreements also. World Trade Organization also plays an important role to keep a check on all regions so that there should not be any unfair trade practices being used with the agreements[2].

The agreements helps the other nations to remove  the poverty line by taking different measures which helps the workers to benefit in terms of their health, family and also by providing good training so as to come out from their poverty line.

The WTO agreements consists of the rules and regulations and having fair trade practices framework with the developing countries of the world. Every country has different rules and regulations as such WTO takes care of all nations.

There are approx. 150 countries are the member of WTO and among them around 2/3 members are developing countries. Those developing countries play an important role in the WTO due to their strong economy and consider trade as a one of the key for the economy development. There are several difference as concern to their individual views exist among the developing countries. So followings are the special arrangement for the developing countries:

  • Existence of the special provision for the developing countries under WTO agreements.
  • There are special committees as concern to Trade and development, focus on those special provisions and there are other area like technology transfer, trade and debt, which are dealing with some other committee.
  • Technical assistance related training and development backed by Secretariat of WTO for the developing nations.

The obligation of procedural fairness of WTO has two different aspects. The first explained that the obligation imposed within dispute settlement system, which protects the fairness among the parties in the processing. The other, member of WTO are obliged to ensure the fairness practice in their country’s legal system; it could be referred to GATT Article X: 3(a), which state that all the norms and regulation mentioned under Article X: 1 should be strictly scrutinize in a proper manner. Although, the above mentioned obligations are very important and it could also be subject to WTO dispute settlement proceeding.

In this essay, there are some problems which are been faced when the rules and trade practices are being implemented on different nations. In this we cover all the briefs of WTO; all the problems which are related to the developing nations have been resolved through WTO rules and guidelines[3].

Review of World trade organization

For the development of the economy, international trade barriers are been incorporated to provide promotional support to the developing nations. During the formation of International Monetary Fund, a proposal was been submitted by United Nation[4] and formulation of plan was been done with economics and social council acknowledge so as to regulate the plan in International Trade Organization ,started  just after World Bank and IMF in 1945. US and UK has got a very sophisticated picture towards the fair trade in the beginning, just after sometime United Nation have been settled for mixed and different rules and regulations, o the other hand United kingdom Government followed proper rules and regulations so as to run in an proper manner.

WTO and various trade agreements share the same rules and regulations as such they were regulated by strict policies. Mainly there were some clear exemptions of various trade agreements as compared to WTO. RTA and other agreements from the trading organization created a discriminatory issue for other members.  The regional trade agreements moved very hastily just after article XXIV came through which other trade organizations has grown significantly.

Fifty four bodies signed the treaty that worked for the debate for various rounds held at Havana. As ITO does not come under the Trading agreements as states of UNO, it never participated while voting for ITO bodies, and ignores by few regulatory bodies[5].

The negotiation which took place in 1948 involved various rounds and at UN Conference in Havana(Cuba), 54 countries signed the negotiation. The main objective of ITO’s was to encourage more international economic growth and the flow of trade internationally, which also consider agreements of commodity, provisions for employment, investment opportunities and eliminating risky business practices. The major factors which ITO constitutes and concentrated was to increase the flow of international trade by performing trading of various goods and services and to boost up the global economic growth. Proper procedures were established to measure the performance of provisions made for employment, limiting trade practices, agreement of commodity and various methods of investment. Because of all this ITO was not in the minds of different bilateral participating nation in the trading[6].

The actual predictions on epigrammatic agreement and trade organization kept a regulatory check on it proved by General agreement on Trade and Tariffs. After the disintegration of the ITO, GATT has been emerged as a multilateral instrument for handling the international trade. Since, GATT transformed as an international body, which has been expected by UN system to function as a specialized agency[7].

Handling the issues over trade , trading was increased as well as the tariffs set were comparatively lower than the other trade practices, thus playing an important and pivotal role in forming a powerful and useful approach all over. Some set of rules and regulations was to be followed by the endorsed countries. A deep refurbishing was required by the system in 1980’s which gave rise to a Uruguay Round and further  lead to the introduction of WTO7. InGeneva, The Uruguay round has been taken place with the basic idea of the ministerial meeting of GATT in November 1982.

Agriculture was strongly hindered from the beginning in this meeting, but all the ideas lead to the immense failure of all. The new globalization of the world economy was anxiously followed by the Uruguay Round.

Since the treaty has been signed by many nations, a large expansion in the trade was expected. Trading of agriculture and textiles in different segment also showed a increasing sign. A well planned cross-examination was held in order to give a review to all rules and regulations levied by GATT. Hence, the growth of international trade has been accelerated due lead taken by increased number of nations. In year 1993, some modifications were made in the rules and regulations which had been assigned to the existing signatory bodies. Perhaps same rules were to be followed with the same agreements as it was the high time but some changes lead to the higher side of foreign trade. The important benefit obtained from the act of Uruguay Round lead to the foundation of World Trade Organization. On 1st, January 1995, the term WTO came into existence in continuation with the GATT framework[8]. For all the countries agreement is not necessary, although it is related to the constitutional body of international law and represents the significant picture widely. Around 153 members took part in the foundation of WTO and maximum trade is being measured through this WTO framework. WTO is regarded as the only existing framework which focuses and deals in maintaining the healthy relationship between the co-countries which allow the trade expansion within liberal economy across the world. The co-members of WTO have the full right to arbitrate in the round table as per Article 2, many regulations deal while

posing provisions and restrictions for obligation among the internal environment[9].WTO describes various rules and regulations for promotional trade, but it does not represent the real picture as any appropriate meetings and procedures are not followed or have not been considered regarding the fairness of practices and which remains impartial. Because of all this some new areas has been taken into account and proper measures are drafted to make them as an economical advantage among labour and the environment because of different trading agreements. WTO works on the larger framework whereas the agreements are balanced when it considers the total number of states. Few assumptions are being framed while dealing with the developing countries. WTO’s basic principle is to see the limitation of rules and regulations which are open to the members, although a very limited discussion on trade barriers and proper procedures are followed to resolve the disputes between the trading countries.

WTO Regulatory Framework

The legal framework of WTO is to see the proper execution of fair trade practices and the extent up to which the rules and regulations should be taken into consideration while doing trade with different countries. The problem faced lies with the implementation of various rules and regulations, how to resolve the disputes among different traders and making decisions for the organization[10].

Under the Article 4.1 of the WTO agreement, the Conference among the ministry is the highest authority of WTO. The conference details the voluntary decision making all the members of WTO confined to the legislative body. The meeting of the Ministerial Conference must be done in every two years. These meetings explain the wide range of political interactions of the Conference held for through discussions and decisions.

It is not necessary that the Ministerial conference actually needs to deliver the proper influence over the obligatory feat over the WTO members. In contrary the General council calls for the general meet with all itsMemberState’s ambassadors apparently once in every subsequent month inGeneva, this meeting is done related to the economic condition in order to get investigated and possible amendments could be made on the decisions making. Its main objective is to frame and analyze the policies related to national trade and in order to run other authorities in the WTO such as the secretariat. Every member of the WTO was specified to participate in disputes settlements panels, committees exempting from the Appellate body, councils and Textiles Monitoring Body. The administrative and technical support was provided by the Secretariat among both the WTO and developing countries which were laid on different trade policies, resolutions of trade and advice of the governments.

To keep checks on the rules and regulation, the country’s voting system plays a very crucial role as each country can just vote one time, though it does not matter because they are not taken into account.

Dispute Settlement

The global economy prefers to do trade with the neighboring countries, reason being the low tariffs, and thus helping in creating and maintaining healthy environment and relation as transport costs also lowers down. Proper calculations and approximations are made in order to formulate and regulate proper agreement among the countries. As new trade theory opens the gate for the scale of economies giving rise to larger number of agreements and thus to more trading segments which can become more efficient towards exports and imports. Various agreements of Uruguay Round gave a helping hand in providing a clear picture of WTO framework towards planned rules and regulations.  A proper framework to settle disputes was confined by WTO[11].

The dispute settlement is an integral system in the WTO, Which applies to all multilateral agreements with single set of all disputes but some specific rules in some cases.

The following bodies play an important role in the WTO:

  • Dispute Settlement Body (DSB)
  • Panel and Appellate Body
  • Parties: WTO Members
  • WTO Secretariat 

Dispute Settlement in the WTO: Relationship of players

Source: Dispute Settlement in the WTO,…/intro_wto_disput_settle.ppt

As the disputes arising between the trading countries, the regulations of the trade control the fluctuations affects, now a days the WTO dispute settlement as the most dynamic international adjudicative process in the worlds due to the previous experience of the Considered WTO director-general. Hence it was found that “aggressive unilateralism” of economically powerful nations have been replaced by mechanism of multilateral rules and remedies backed by WTO. Because of the separation of many members from the system, the transparency of WTO guideline fails to fulfill the decisions making process. As an example, certain conferences have not been attended by some of the delegates among the Seattleconference[12].

Thereafter, The Doha conference came into existence whose main objective was to focus on the individual people, thus showing a real picture to the framework. The main drawback is due to improper time management and negotiation done with the different rounds of conference. The difficulties arise due to the unclear language used in the various agreements of analyzing the treaties[13]. The increasing number of nation towards MFN treaty is more important aspect of the decision, from which other nation will get benefited and consequently banned discrimination state would be followed by WTO. The rate remains the same for all the other bodies no matter if any member provides some benefit at lower cost or lower custom duty; hence no discrimination is being followed. MFN also concerns about the GATT (article2) and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (article4) 11. The main thing which is considered while selecting the method is that the method or the article must contain all the important aspects of WTO.

National treatment

The members of the different states could not be fully understood the actual relationship between the foreign products and services. The third article of GATT is being referred for the proper limelight of actual market principles of WTO. Thereafter proper proportion should be maintained between the regional and international products and services as per Article 17 of GATT and the TRIPS provisions. Making differentiation may very easy for the WTO regarding its local and overseas products.

National treatment firmly applies to the foreign goods, services or piece of logical property has already accessed the local market. It fails to achieve its main objective of finding out the proper and exact proportion of conflicts between the developed and developing countries. National treatment policy very easily accepts the changed proper tariffs for the neighboring products but thereafter if the product has been found radically they lose the position of being charged as an correspondent tax notions. For example the situation can be best put up into matter of fact that treatment can be found in Japan-Alcohol which can best explain:  in order to get proper protection the national treatment is generally prohibited while using internal taxes and other internal treatment obligations. Article I of GATT and WTO owns a very significant role and have been described as “a keystone of the GATT and one of the main and important pillar of WTO trading system”. Though it is mainly accepted that WTO has been more successful in comparison to GATT for promoting the fairness and equality in the trading system as organization keeps a regular check on the liabilities possessed by its members.

WTO is referred to as a free trade institution which generally accepts tariffs and occasionally forms or follows different forms of protection[14]. Thus it s a open system of desired rules and regulations where there is truthful and fair competition. The rules governed to the Non-inequity-national treatment and MFN is centralized and can be opposed critically by the environment, human right action and medical. The international trade regime contains the factors that are so designed as to prevent the intervention in support of domestic stability.  Generally basic concept and objective of the national treatment is to increase the fair competition between the members in terms of goods, intellectual property, agriculture, services and this has given a right to the government of breaching the trade agreements. The fairness and equality between the international trade has been threatened in many occasions in many ways but WTO proved successful in solving the matters and bringing out fairness and equality by using utilizing case laws.  Anti-dumping agreements and relevant case laws are explained so that one can think of rules and regulations to be followed in the trade agreement.

WTO and the developing countries

The WTO membership consists of developing countries which formed the main framework and resulted in better trade flow of foreign products and services after the GATT. This was because the involvement of emerging countries increased immensely. The involvement of more developing countries roots WTO’s stem from classified system tailored by the World Bank on the basis of per capita income of the country. Since WTO does not contain any proper definition of developing countries, the term was defined in either economic or other measures[15]. These developing countries in the WTO framework had a disadvantage of lack of human and technical resources. WTO considered these countries to be weaker in keeping up proximity with the rapidity in meetings held in Geneva on the weekly basis. Thus developing countries under the framework rarely entered into the discussions as they were less prepared than the industrialized countries. Due to this, a decision making bloc was selected to make decisions on behalf of all members for US, EU, Canada and Japan. Therefore in spite of single vote structure for the WTO it was helpless to allege the decisions. The WTO is responsible for the promoting fair and equitable trade as an international organization. WTO in Seattle conference was accused to be the supporter of globalization because of favoring interest of developed countries and negative effects on developing countries[16]. There was a disagreement between the developing and developed countries regarding the agricultural subsidies given by the governments of developed countries. One must clarify that , most least developed and developing country’s economy depends on the tariffs on foreign products and services.

Since WTO focuses on reducing the tariffs on foreign goods and services under the principle of MFN the biggest disadvantage which developing countries faces being under WTO will be risk faced in terms of their budget and public payment responsibilities. As the gathering of most powerful countries under the WTO as well increase in the demand of the national treatment by the WTO, developing countries will be affected negatively and its local market and agriculture will be confronted by the tough competition. In year 2003 many developing countries rejected the EU proposal which focused on lowering the commitment of is agricultural subsidies. This gave the developed countries a greater access over the developing countries markets[17].

The WTO lies on the fact that even after the collapse of Doha round, WTO didn’t stopped performing its functions discussed under the past rounds, continued to manage and hold a stable position, even though it lacked some regulations in developing countries. The existing agreement detailed the planned set of rules and regulations for trading among important players includingEU,USA, Japan, China andIndiaas prevailing power. The WTO possessed a challenged against Doha deal as they undertook separate free trade agreements among themselves thus attracting the new acquisitions and working with the new countries like Russia and Vietnam, which worked very hard  and did all possible efforts to be the part of the organization. The new policies were implemented taking into the consideration that the disputes are been settled and criticism is being hold n frequent basis.  Solving the disparity among the member states provided the real benefit of no risk element.

As some important skills will be expected in next couple of year therefore the role of the Director General of WTO has to be re-evaluated for the future concern. In order to make a regulatory body WTO will be looking forward to leadership acknowledgement while addressing philosophical measures related to the impacts of the trade policy towards the employment which WTO’s most members are with. In this modern world today the developing countries which are the members with the WTO faces more problems in terms of employment. They offer very less jobs in agricultural and manufacturing sector. The relationship between economic growth and employment during the short span of time in dynamic economies like inChinahas been denied by the Asian development Bank and UNDP study. Thus the main problem faced by the members of the WTO is due to the trade affecting the jobs basically entitled to it. Providing employment can be placed as an important aspect with the new rising needs formulating a proper procedure to show some efforts in significant manner. Few adjustments are planned to be made to keep stress of job segment liberalized and flexible. The adjustments are posed to be flexible and wide executions are sequential as the present economy and trading system tends to change dramatically over the last few rounds of trade negotiations constituted in year 1994 summit.

The under developed and poor countries are making various efforts to gear up their spirits in order to overcome lost grounds in past few years in trade. So in nutshell it can be seen and framed out that many countries are gearing up the working on employment and other various possible factors for creating a environment beneficial for trade[18].



All the above mentioned information attempted to explain that how fair trade system is embodied in the WTO/GATT is to be taken care of and understood clearly. Both GATT and WTO got the benefited of international trade by framing and following various rules and regulations of trade. Different trade barriers and negotiation on tariffs were very seriously planned keeping in to the mind the rules and regulations of the trade. Since WTO came into existence first, it afforded the opportunity of gathering members and discussing the trade opportunities available, discussed issues and provided protection to their markets from unfair trade practices and anti-competition. Free of cost trading tends to be beneficial and free trade movement will be a helping hand towards the welfare of the organization. In order to save the free trading and free trade movement the GATT/WTO established some agreements (like anti-dumping agreement) which contained the rules to protect the Member’s economies, introduced some principles like MFN and national treatment. These organizations removed the key developmental tool for developing countries. The developing countries which do not joined the WTO was negatively affected. The only solution which was left with the developing countries was to organize their interest to achieve their objectives. The Doha development round clearly showed the way of fairness of focusing particularly on t he central issues of market access and thus ensuring all the members participation in the decision makes process.

The WTO helps in facing the unnecessary competition present in the members of the states. Delays in holding panels and increased management cost gave rise to more disputes among the members and breaches of WTO obligations. To settle these disputed developed and developing countries experienced proper disputer settling process.  It has been initially made for the WTO to overcome the regulations speeded all over the equity between member States to boost world trade. By providing legal assistant to the developing countries, a fair trade can be considered best with the difference between developed and developing countries. The relevant aspect which is supported by the trade agreement is of competitive liberalization with the consent of moving toward free trade on the three levels that is multilateral, bilateral and regional. The reason for the improper regulation of obligations among the members may be due to the lack of decision making power. The conflict between household rules and its necessities was the major criticism faced by WTO. The identical apprehension applies to cut-throat liberalization. The general concept of liberalization is based in the concept of discriminatory view of RTAs. To develop good healthy competition among different levels having full benefit for well-off countries, a good competitive liberalization is must. Competitive liberalization in actual is regarded as political rather than economical.

The increasing operational trade barrier between groups of members has been removed by mutual agreement between the groups of countries. The members of the WTO predicted the need of RTAs after dealing withDoharound to be in harmony with the multilateral process in order to promote trade integration and facilitate the transactions between the nations. Thus ministers decided to launch a negotiation to address this subject of trade integration, in respect of RTAs systematic and legal aspect. The WTO reformed RTAs to be transparent ad fully regulated under its rules. For the regional trade agreement a Draft Decision on a transparency Mechanism was advanced in year 2006 but the conclusions are awaited from the Doha Round. A successful Conclusion by theDoharound will be expected to improve the CRTA and increase the WTO oversight of RTAs. The failure cost in the DDA will be substantial, as the trading system. The main analysis of the papers reveals the proper understanding of the rules and regulations mentioned therein.  In respect of culture, there should be proper regulatory bodies to face multilateral negotiations, uncertain and unpredictable future, and the failure of Doha Round. The set up set by the multilateral trade system was a great achievement that advanced a framework for the WTO/GATT international trading. However, the conflicts of member’s interests, RTAs have become the only remedy, where nations can seek to apply their views via direct negotiations. Ultimately the success depends on the success of Doha Round. The developing countries are not able to achieve their objectives in the framework of RTAs and bilateral deals as in few situations local business is put to set aside from the competition under competitive liberalization. Finally it has been analyzed that the rules set under the RTAs were proper but the regulation was on weaker side. The RTAs and WTO relationship has been controversial and much disputed as a matter of lack of regulation among the fair trade practices. Taking into consideration the proper valuation of the goods the amount of duties paid should also be counted.

So in nutshell it can be pointed out that few goods do not have any problem during calculation of export duties or quota management, nor does it creates problem for the valuation of goods for internal taxation or foreign control. Hence WTO looks out for more beneficial acquisitions to promote unfair and equitable foreign trade practices.



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Alan Matthews (2003), “Agriculture After Cancún”, Trinity Economic Paper No. 17, 2003.

Amrita Narlikar (2006), “Fairness in International Trade Negotiations: Developing Countries in the GATT and WTO”, The World Economy, Volume 29, Issue 8, pages 1005–1029, August 2006.

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Anne McGuir (2002), “The Doha Development Agenda”, Finance & Development (IMF), September 2002, Volume 39, Number 3.

Bhagwati J, Hugh T. Patrick (1990), “Aggressive unilateralism: America’s 301 trade policy and the world trading system”, University of Michigan Press, pp. xii + 268

Bhagwati and Krishna (1999), “Trading Blocs: Alternative Approaches to Analyzing Preferential Trade Agreements”, MIT Press.

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Ross Korves (2005), “Regional Trade Agreements Are Discriminatory, And That’s Good”, available at

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[1]Benefits of WTO Trading System (2008)

[2] Brian Jones Jr. (2010), The role of World Trade Organization,

[3]Tobi Indyk,. Fair Trade Or Free Trade;

[4] Agricultural Issues Centre vol. 17, No. 2 (2003),

[5] Bhagwati & Krishna (1999), Trading Blocs: Alternative Approaches to Analyzing Preferential Trade Agreements, MIT Press

[6] Matsushita M, Schoenbaum T, &Mavroidis P (2006), The World Trade Organization Law, Practice and policy, Oxford University Press, 2nd Edition.

[7] The Uruguay Round, WTO;

[8] Peter Van den Bossche, Denise Prévost & MariëlleMatthee (2005/06), ‘WTO Rules on Technical Barriers to Trade’

[9] Overview of the WTO: DTI’s Website for Europe & World Trade; The National Archives.

[10] Ten Years of WTO Dispute Settlement: Australian Perspectives (2006), Commonwealth ofAustralia

[11] Bhagwati J, Krishna P (1999), Trading Blocs: Alternative Approaches to Analyzing Preferential Trade Agreements, MIT(Press)

[12] Bhagwati J, Hugh T. Patrick (1990), Aggressive unilateralism: America’s 301 trade policy and the world trading system, University of Michigan Press, pp. xii + 268

[13] Brown, Andrew and Stern, Robert M. (2005), Achieving Fairness in the Doha Development Round,, Global Economy Journal: Vol. 5: Issue. 4.

[14] Folsom R. (2008), Bilateral Free Trade Agreements: A Critical Assessment and WTO Regulatory Reform, School of Law , San Diego Research Paper No. 08-070 2008.

[15] Mr. Carlos Carnero González (European Parliament) (2008): LOOKING BEYOND DOHA, ANNUAL 2008 SESSION OF THE PARLIAMENTARY CONFERENCE ON THE WTO, Geneva, 11-12 September 2008

[16]Ross Korves (2005), Regional Trade Agreements Are Discriminatory, And That’s Good,

[17] Alan Matthews (2003), Agriculture After Cancún, Trinity Economic Paper No. 17, 2003

[18] Sandra Polaski, the Future of the WTO, Trade, Equity, and Development Project, Policy outlook 2006.

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Category: Free Essays, International Relations