GATT was an international body having its headquarters at Geneva and was founded in 1947 by 23 member countries including India. The body now comprises of 117 member countries of which around two-thirds are developing nations.
According to the approved GATT accord, a Preparatory Committee would be set up, which in turn would set up the World Trade Organization (WTO), to become operational in early 1995. The WTO will act as a permanent watchdog on the International Trade and will enjoy the status similar to that of UNIDO, wherein each member nation will have single voting right.
GATT was converted from a provisional agreement into a formal international organisation called World Trade Organization (WTO) with effect from January 1, 1995. WTO will serve as a single institutional framework encompassing GATT and all the result of the Uruguay Round. It will be directed by a Ministerial Conference that will meet at least once every two years and its regular business will be overseen by a General Council. The WTO is a more powerful body with enlarged functions than the GATT and is envisaged to play a major role in the world economic affairs.
Structure of WTO
The Ministerial Conference : The Ministerial Conference (MC) is the highest body. It is composed of the representative of the Members. The MC is the executive of WTO and responsible for carrying out the functions of the WTO. It has the authority to take decisions in any matter under the relevant Multilateral Trade Agreement (MTA). It shall meet at least once every two years.
The General Council : The General Council (GC) is an executive forum composed of representatives of all the Members. It discharges the functions of the MC during intervals between the meetings of the MC. The GC shall meet as and when appropriate and necessary. It also arranges effective co-operation with other inter-governmental organisations and non-governmental organisations which have responsibility related to those of the WTO.
The GC established its own rules of procedures and also approves the rules of procedures for the functional Councils. The is also responsible for:
- The discharge of the responsibilities of the Dispute Settlement Body.
- The discharge of the responsibilities of the Trade Policy Review Body.
The Functional Council shall have three Functional Councils working under its guidance and supervision. These are:
(a) Council for Trade in Goods (for overseeing the functioning of the MTA relating to Trade in Goods)
(b) Council for Trade in Services (for overseeing the functioning of the MTA relating to Trade in Services)
(c) Council for Trade Related Aspects of Intellectual Property Rights (for overseeing the functioning of MTA connected with Intellectual Property Rights and obligations)
These Councils establish their own rules of procedure subject to the approval of the GC. Membership of these Councils is open to representative of all Members. These will meet as necessary.
Subsidiary Bodies of the Councils: These Councils can establish subsidiary Bodies which establish their respective rules of procedure subject to the approval of their respective Councils.
Functional Committees under MC: The Ministerial Conference (MC) establishes the functional Committees for discharge of functions assigned to them under MTAs. These committees are:
(a) Committee on Trade and Development.
(b) Committee on Balance of Payments Restrictions.
(c) Committee on Budget, Finance and Administration.
These committees also discharge functions specifically assigned to them by the General Council. These are open to representatives of all members.
Disputes settlement body: Under the WTO, there is a Dispute Settlement Body (DSB) which is the custodian of the Dispute Settlement System. The DSB has been empowered to establish panels, constitute Appellate Body, adopt panel and Appellate Body Reports, exercise surveillance for compliance with rules and recommendations and authorize retaliatory measures in cases of non-implementation of recommenda-tion. The General Council is responsible for the discharge of responsibilities of the Dispute Settlement Body.
Features of WTO
The WTO is the main organ of implementing the Multilateral Trade Agreements.
The WTO is global in its membership. Its prospective membership is already around 150 countries and with many other considering accession.
It is the forum for negotiations among its member. In this forum, the member-nations discuss issues related to the MTAs and associated legal instruments. It is also the forum for negotiations on terms of the Plurilateral Trade Agreements (PTAs). In fact, it is the third economic pillar of world-wide dimensions along with the IMF and the World Bank.
It has a far wider scope than its predecessor GATT, bringing into the multilateral trade system, for the first time, trade in service, intellectual property protection and investment.
It is a full fledged international organisation in its own right.
- It administers a unified package of agreements to which all members are committed.
- The decision-making under the WTO is carried out by consensus where a consensus is not arrived at the issue shall be decided by voting. Each member has one vote.
- The WTO has legal personality. Members shall endow it with such legal capacity, privileges and immunities as are necessary for the exercise of its functions.
- The representatives of the members and all officials of the WTO enjoy International privileges and immunities.
Function of WTO
The WTO has the following specific functions:
- The WTO shall facilitate the implementation, administration and operation and further the objectives of the Multilateral Trade Agreements and shall also provide the framework for the implementation, administration and operation of Plurilateral Trade Agreements.
- The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreements.
- The WTO shall administer the ‘Understanding on Rules and Procedures governing the Settlement Disputes’.
- The WTO shall administer the ‘Trade Review Mechanism’.
- With a view to achieving greater coherence in global economic policy making, the WTO shall co-operate, as appropriate, with the IMF and IBRD and its affiliated agencies.
Area of relevance in the Indian context
India being a member of WTO, the GATT accord has its impact on many areas in the Indian context. The major impact would be on the agricultural sector, textile and pharmaceutical industries.
