PROJECT ON WORLD TRADE ORGANISATION

NAME- Khushi Dudy

COURSE- B.Com Hons.

SEMESTER- 4th

ROLL NO.- BCH/22/28

SUBJECT- International Business

SUBMITTED TO- Dr. Anchal Gupta

 DECLARATION

I, Khushi Dudy, hereby declare that the work presented in this project on the topic- World Trade
Organization (WTO) is my original work. I affirm that all sources used in this project have been
properly cited and acknowledged. Any contributions or ideas obtained from external sources
have been duly credited. I take full responsibility for the content and findings presented herein. I
acknowledge that the information presented in this project is based on research conducted from
credible and reliable sources up to the best of my knowledge. I declare that this project
represents my own understanding and interpretation of the subject matter related to the WTO.
Any opinions or viewpoints expressed are solely mine and do not necessarily reflect those of my
institution or any other organization. Furthermore, I affirm that this work has not been submitted,
in whole or in part, for any other academic or professional purpose. By signing this declaration, I
attest to the authenticity and originality of this project to the best of my knowledge.
 ACKNOWLEDGEMENT

I would like to express my sincere gratitude to all those who have contributed to the completion
of this project on the World Trade Organization (WTO).

First and foremost, I am deeply thankful to my professor, Dr. Anchal Gupta, for her invaluable
guidance, encouragement, and support throughout the duration of this project. Their expertise
and constructive feedback have been instrumental in shaping the content and structure of this
work. Additionally, I am grateful to the authors of the numerous books, scholarly articles,
reports, and online resources that I consulted during the course of my research. Their
contributions have enriched my understanding of the subject matter and provided valuable
insights into the complex issues surrounding the WTO.

Furthermore, I wish to acknowledge my family and friends for their unwavering support,
understanding, and encouragement throughout this endeavour. Their patience, encouragement,
and belief in my abilities have been a constant source of motivation and inspiration. Thank you
to everyone who has played a part, however big or small, in making this project a reality.
 INDEX

1. Introduction

2. History and Evolution of WTO

3. Core objectives and Principles of WTO

4. Structure and Functioning

5. WTO Agreements

6. Dispute settlements

7. Impact of WTO on Global Economy

8. Case Studies

9. Conclusion

10. Bibliography
 INTRODUCTION

The World Trade Organization (WTO) stands as a cornerstone of the global economic
system, playing a pivotal role in fostering international trade and promoting economic
prosperity. Established in 1995, it succeeded the General Agreement on Tariffs and Trade
(GATT), building upon decades of efforts to liberalize trade and create a more predictable
and stable trading environment.

At its core, the WTO acts as the guardian of global trade, striving to ensure a level playing
field for its member countries, currently encompassing over 98% of global trade. It achieves
this through a set of multilateral trade agreements negotiated and ratified by member
governments. These agreements establish rules governing international trade practices,
including:

Tariff Reduction: One of the primary objectives is to encourage the reduction or elimination
of tariffs, which are taxes imposed on imported goods. This helps to lower prices for
consumers and encourage trade flows.

Non-Tariff Barriers: The WTO also addresses non-tariff barriers, such as quotas,
regulations, and technical standards that can hinder trade.

Fair Competition: The organization works to promote fair competition by addressing unfair
trade practices like dumping (selling goods below cost) and subsidies.

By upholding these principles, the WTO aims to create a transparent and predictable trading
environment that fosters economic growth, job creation, and improved living standards for
people around the world. However, the WTO's role extends beyond simply setting rules. It
also serves as a forum for trade negotiations, providing a platform for member countries to
discuss and address trade concerns. Additionally, the WTO maintains a dispute settlement
system, offering a mechanism for countries to resolve trade disagreements peacefully and
according to established rules.

In the following sections, we'll delve deeper into the structure, functioning, and on-going
challenges faced by the WTO. We'll also explore its impact on the global economy and its
critical role in shaping the future of international trade.
 HISTORY & EVOLUTION OF WTO

The World Trade Organization (WTO) might seem brand new, starting in 1995. But its story
actually goes way back! Imagine a world after a big fight (World War II), where countries
were worried about trade turning into a fight again. So, they made a deal called GATT in
1948. GATT was like a club where countries promised to gradually lower taxes (tariffs) on
things they bought from each other. This made trade cheaper and easier.

The Legacy of GATT (1948-1994):

In 1948, nations mindful of the perils associated with protectionist trade policies, a
contributing factor to the Great Depression, established the General Agreement on Tariffs
and Trade (GATT). GATT functioned through a series of multilateral trade rounds, where
member countries negotiated progressive tariff reductions on specific goods. Over eight
rounds, GATT achieved considerable success in facilitating international trade and economic
growth through:

 Gradual Trade Liberalization: GATT's framework fostered an environment

conducive to trade expansion by lowering tariffs on a wide range of goods.
 Focus on Goods: GATT's primary area of concern was trade in physical goods, such
as machinery and textiles.

The Birth of the WTO (1995) and Its Expanded Scope:

On January 1, 1995, the WTO formally commenced operations, marking a substantial
evolution in the global trading system. While inheriting the core principles of GATT, the
WTO significantly broadened its scope:

 Trade in Services: Recognizing the growing importance of the service sector in the
global economy, the WTO established agreements governing trade in services such as
finance, telecommunications, and transportation.
 Intellectual Property Rights: The WTO introduced a framework for protecting
intellectual property (IP) rights, including patents, copyrights, and trademarks,
fostering innovation and economic development.
 Strengthened Dispute Settlement System: The WTO bolstered the existing GATT
dispute settlement system, offering a more robust legal framework for resolving trade
conflicts between member countries peacefully.
 CORE OBJECTIVES AND PRINCIPLES

The World Trade Organization (WTO) plays a critical role in shaping the global trading
system. Its foundation rests on a set of core objectives and principles that guide its
activities and member countries' interactions.

Core Objectives:
 Promoting Free Trade: The WTO's primary objective is to foster a global
trading environment that encourages the free flow of goods and services between
member countries. This is achieved by reducing or eliminating trade barriers like
tariffs, quotas, and subsidies.
 Ensuring Fair Competition: The WTO strives to create a level playing field for
all member countries by addressing unfair trade practices. This involves measures
against dumping (selling goods below cost) and unfair subsidies.
 Promoting Sustainable Development: While promoting trade, the WTO
recognizes the importance of environmental protection and social development. It
aims to ensure trade liberalization happens in a way that is sustainable for the
future.
 Increasing Living Standards: Ultimately, the WTO seeks to contribute to global
economic growth and development. By facilitating trade, it aims to improve living
standards for people around the world.

Guiding Principles:
 Non-Discrimination: The WTO upholds the principle of non-discrimination, also
known as Most-Favoured-Nation (MFN) treatment. This principle ensures that all
member countries are treated equally, and any trade benefits granted to one
country must be extended to all.
 Reciprocity: This principle emphasizes the importance of mutually beneficial
trade agreements. Countries offer concessions (like tariff reductions) in exchange
for similar concessions from their trading partners.
 Transparency: The WTO emphasizes transparency in trade policies and
regulations. Member countries are obligated to notify the WTO of any changes to
their trade laws and practices, ensuring a predictable and stable trading
environment.
 Progressive Liberalization: The WTO strives for continued liberalization of
trade through negotiations and agreements. This principle encourages member
countries to progressively reduce trade barriers over time.
 STRUCTURE AND FUNCTIONING

STRUCTURE

MAIN ORGANS:
Ministerial Conference: The highest decision-making body, meeting at least every
two years. It consists of trade ministers from all member countries and sets the overall
direction for the WTO, discusses trade issues, and launches new trade negotiations.

General Council: Acts as the executive body, overseeing day-to-day operations. It

meets regularly and carries out decisions made by the Ministerial Conference.

SUPPORTING BODIES:
Councils: These handle specific areas of trade. Key ones include:

 Council for Trade in Goods (CTG)

 Council for Trade in Services (CTS)
 General Council acting as the Trade Policy Review Body (TPRB)

Committees: Numerous committees deal with specific trade-related issues, such as:

 Committee on Agriculture (CoA)

 Committee on Intellectual Property Rights (TRIPS Council)
 Committee on Trade and Development (CTD)

Dispute Settlement System: A separate structure that provides a mechanism for

resolving trade conflicts peacefully. It involves:

 Consultation: Countries involved in a dispute first attempt to resolve it

directly.
 Panel Process: If consultations fail, a panel of experts is established to
examine the case and make recommendations.
 Appellate Body: Countries can appeal the panel's decision to the Appellate
Body, the highest court of the WTO dispute settlement system. (Note: The
Appellate Body is currently not functioning due to a lack of appointments)
 Implementation: The losing party must bring its trade policies into compliance
with WTO rules.
 Secretariat: Located in Geneva, Switzerland, it provides administrative and technical
support for the WTO's activities. It employs trade experts and lawyers who assist with
negotiations, analyze trade issues, and manage the dispute settlement system.

Decision-Making: Decisions are typically made by consensus, meaning all member

countries must agree. This can be slow but ensures all voices are heard, and
agreements reflect the interests of all members.

FUNCTIONS

1. Promoting Free Trade: The WTO's core mission is to encourage the free flow of
goods and services between member countries. It achieves this by:

 Negotiating and Administering Trade Agreements: These agreements set rules for
reducing or eliminating tariffs (taxes on imports), quotas (limits on imports), and
other trade barriers.
 Monitoring Trade Policies: The WTO keeps an eye on member countries' trade
policies to ensure they comply with WTO agreements.

2. Ensuring Fair Competition: A level playing field is crucial for healthy trade. The
WTO addresses unfair practices like:

 Dumping: Selling goods in a foreign market at a price below their cost of

production.
 Subsidies: Financial assistance given by a government to a domestic industry that
can distort competition.

3. Settling Trade Disputes: Trade disagreements are inevitable. The WTO provides
a mechanism for peaceful resolution through its dispute settlement system, involving:

 Consultation: Countries attempt to resolve the issue directly.

 Panel Process: If consultations fail, a panel of experts examines the case and
makes recommendations.
 Appellate Body (Currently on hold): Countries could appeal the panel's decision,
but the Appellate Body is currently not functioning.
 Implementation: The losing party must bring its policies into compliance with
WTO rules.
4. Building Trade Capacity: Developing countries often face challenges in
integrating into the global trading system. The WTO offers technical assistance and
training programs to help them build their trade capacity.

5. Promoting Transparency: Predictability is key for businesses engaged in

international trade. The WTO encourages transparency by:

 Requiring members to notify the WTO of any changes to their trade laws and
regulations.
 Providing a platform for sharing information and best practices related to trade.

6. Cooperation with Other Organizations: The WTO recognizes that trade is

interconnected with other global issues. It cooperates with other international
organizations like the World Bank and International Monetary Fund to address these
interlinkages.
 WTO AGREEMENTS

The World Trade Organization (WTO) oversees a complex web of agreements that govern
international trade. These agreements establish a set of rules and principles that member
countries must follow when trading goods and services with each other. Key categories of WTO
agreements are as follows-

1. Agreements on Trade in Goods (GATT and beyond): This category forms the foundation
of the WTO's work. It builds upon the General Agreement on Tariffs and Trade (GATT), which
focused on reducing tariffs (taxes on imports) on goods.

Additional Agreements: The WTO has expanded this focus with agreements covering areas
like:

 Sanitary and Phytosanitary Measures (SPS): Ensures food safety and animal/plant health
regulations don't become unnecessary trade barriers.
 Technical Barriers to Trade (TBT): Promotes standards that facilitate trade without
compromising safety or quality.
 Trade-Related Investment Measures (TRIMS): Sets rules on how governments can
regulate foreign investment in their economies.

2. Agreements on Trade in Services (GATS): Recognizing the growing importance of

services in the global economy, the WTO established the General Agreement on Trade in
Services (GATS). This agreement outlines rules for liberalizing trade in a wide range of services,
including:

 Financial services (banking, insurance)

 Telecommunications
 Transportation
 Professional services (accounting, engineering)

3. Agreements on Intellectual Property Rights (TRIPS): The Agreement on Trade-Related

Aspects of Intellectual Property Rights (TRIPS) sets minimum standards for protecting
intellectual property (IP) like patents, copyrights, and trademarks. This ensures innovation and
creativity are encouraged by providing inventors and artists with exclusive rights to their
creations.

4. Plurilateral Agreements: These are optional agreements that only a select group of WTO
members have chosen to participate in. They cover specific areas like:

 Government Procurement Agreement (GPA): Promotes open and fair competition in

government purchasing.
  Information Technology Agreement (ITA): Eliminates tariffs on a wide range of
information technology products.

DISPUTE SETTLEMENTS

The World Trade Organization (WTO) plays a critical role in dispute settlement by providing a
peaceful and rules-based mechanism for member countries to resolve trade disagreements. It is
an important task because of the following reasons-

 Alternatives to Trade Wars: Before the WTO, trade disputes often escalated
into trade wars, where countries imposed tariffs and other barriers on each other's
goods. This could be damaging to the global economy. The WTO dispute
settlement system offers a more civilized way to address conflicts.
 Fairness and Transparency: The WTO establishes clear rules for international
trade through its agreements. The dispute settlement system ensures these rules
are interpreted and applied fairly. This creates a level playing field for all member
countries and discourages unfair trade practices.
 Peaceful Resolution: Through consultations, panels, and (previously) appeals,
the WTO promotes a structured dialogue between countries in conflict. This
allows them to present their cases and potentially reach a mutually agreeable
solution, avoiding escalation into a trade war.
 Predictability and Stability: When countries know there's a reliable system for
resolving disputes, it fosters greater predictability and stability in the global
trading environment. Businesses can operate with more confidence, knowing their
trade activities are less likely to be disrupted by unilateral actions.
 Enforcement of Trade Rules: The WTO dispute settlement system has teeth.
Countries that are found to be violating trade rules are obligated to bring their
policies into compliance. This incentivizes countries to adhere to the agreed-upon
rules, promoting a more just and predictable trading system.

A 5 step procedure is followed when a dispute takes place-

 Talk it Out (60 Days): Countries try to solve the trade issue themselves through direct
discussions. Finding common ground is key!
 Expert Panel (If Talks Fail): No deal? A panel of trade experts investigates the case.
They listen to both sides and gather evidence.
  Ruling & Appeals (Hold On!): The panel issues a decision based on WTO rules.
Appeals to a higher court (Appellate Body) were possible, but currently on hold.
 Follow the Rules (Implementation): The losing country must adjust its trade policies to
comply with the WTO ruling.
 Pressure to Comply (If Needed): If the loser doesn't change its ways, the winner can get
permission to take actions like imposing tariffs to force compliance.

IMPACT OF WTO ON GLOBAL ECONOMY

The World Trade Organization's (WTO) impact on the global economy is multifaceted, with
both positive and negative aspects to consider.

Positive Impacts:
 Increased Trade and Economic Growth: The WTO's core function of promoting free
trade has arguably contributed to significant growth in global trade. This, in turn, has
stimulated economic growth for many member countries by:
a. Expanding markets for goods and services
b. Encouraging competition and innovation
c. Attracting foreign investment.
 Reduced Trade Barriers: The WTO has facilitated significant reductions in tariffs
(taxes on imports) and other trade barriers. This has lowered the cost of imported goods
and services for consumers and businesses worldwide.
 Fairer Trading Environment: The WTO establishes a framework of rules and
principles for international trade. This helps to create a more level playing field for all
member countries by addressing unfair trade practices like dumping and subsidies.
 Dispute Settlement: The WTO's dispute settlement system offers a peaceful and rules-
based mechanism for resolving trade conflicts between member countries. This helps to
avoid trade wars and promotes greater predictability in the global trading environment.

Negative Impacts:
 Job Losses in Developed Countries: Increased competition from developing countries
can lead to job losses in certain sectors of developed economies, particularly in
manufacturing.
 Income Inequality: While trade liberalization can benefit consumers through lower
prices, it can also contribute to income inequality within countries. Workers in sectors
facing intense competition from imports may see their wages stagnate or decline.
 Environmental Concerns: Increased global trade can lead to higher levels of
transportation and production, potentially contributing to environmental problems like
pollution and climate change.
 Challenges for Developing Countries: Developing countries may face challenges in
integrating into the global trading system due to factors like infrastructure limitations and
lack of technological advancement.
 CURRENT CHALLENGES AND FUTURE OF WTO

CURRENT CHALLENGES
The World Trade Organization (WTO) faces several significant challenges that threaten its
effectiveness in the current global economic landscape. Some issues are as follows-

 Stalled Doha Round Negotiations: Launched in 2001, the Doha Development Round
aimed to further liberalize trade and address the concerns of developing countries.
However, negotiations have been stalled for years due to disagreements on issues like
agriculture and intellectual property. This lack of progress weakens the WTO's ability to
adapt to changing economic realities.

 Non-Functioning Appellate Body: The Appellate Body, which acted as the highest
court in the WTO dispute settlement system, is currently not functioning due to a lack of
appointments by WTO members. This significantly hinders the dispute settlement
process and undermines the WTO's ability to enforce trade rules.

 Rise of Protectionism: The global economic climate has seen a shift towards
protectionist policies, with countries increasingly resorting to measures like tariffs and
import quotas to shield domestic industries. This trend contradicts the WTO's core
principle of free trade.

 E-Commerce and Digital Trade: The rapid growth of e-commerce and the digital
economy poses challenges for the existing WTO framework. The WTO needs to adapt its
rules to address issues like digital taxation and intellectual property rights in the digital
sphere.

 Geopolitical Tensions: Rising geopolitical tensions between major economies like the
US and China create a challenging environment for international cooperation on trade
issues. This can hinder the WTO's ability to function effectively.

 Concerns about Development: Developing countries continue to raise concerns about

their ability to benefit fairly from the global trading system. Issues like access to
developed country markets and intellectual property rights remain significant hurdles.
FUTURE OF WTO
The World Trade Organization (WTO) faces an uncertain future, with both potential for
revitalization and the risk of marginalization. The future of the WTO depends on the willingness
of member countries to work together and address the challenges it faces. Bold reforms and a
renewed commitment to the principles of free trade and fair competition are essential for the
WTO to remain a vital institution in the global trading system.

 Reform and Modernization: The WTO is expected to undergo reforms to become more
effective and responsive, including updating rules to address digital trade and
environmental sustainability.
 Multilateralism vs. Bilateralism/Plurilateralism: The WTO's future may involve a mix
of multilateral negotiations and bilateral or regional agreements, depending on countries'
trade interests.
 Addressing Global Challenges: The WTO will likely play a role in tackling global
challenges like climate change and public health crises, integrating trade with
sustainability goals.
 Digital Economy and Innovation: The WTO may need to develop rules for governing
digital trade and emerging technologies, shaping global trade patterns.
 Inclusive Growth and Development: Efforts to promote inclusive growth and
development, especially in developing countries, are expected to continue through
capacity-building and special treatment provisions.
 Geopolitical Dynamics: Geopolitical tensions could impact the WTO's ability to reach
consensus and advance negotiations, influenced by competition between major powers.
 Public Perception and Legitimacy: Maintaining public support and legitimacy will be
crucial, requiring efforts to enhance transparency, engage civil society, and communicate
trade benefits effectively.
 CASE STUDIES

The EU Banana Dispute: A Fight for Fair Trade in the Fruit Market

The dispute between the United States (US) and the European Union (EU) over bananas
goes back to preferential treatment offered by the EU to former colonies. These countries
enjoyed lower tariffs on their banana imports compared to producers in Latin America,
like Costa Rica, and the US itself. The US argued that this system unfairly discriminated
against American fruit companies, making it difficult for them to compete in the
European market. They challenged the practice as a violation of the World Trade
Organization's (WTO) principles of non-discrimination and fair trade. The WTO sided
with the US, highlighting that the preferential system did indeed create an uneven playing
field. The EU was forced to adjust its import regime to comply with WTO rules, ensuring
a more level competition in the banana trade.

US-Thailand Compulsory Licensing Dispute: Balancing Public Health

and Intellectual Property Rights

A complex situation arose when Thailand faced a severe HIV/AIDS crisis. To make life-
saving medications more affordable for its citizens, Thailand sought to issue compulsory
licenses for patented drugs. These licenses would allow local companies to produce
generic versions of the drugs at a lower cost. However, the pharmaceutical companies
held the patents on these medications, and the US challenged Thailand's move. The US
argued that refusing to grant compulsory licenses restricted access to essential
medications. The WTO's decision acknowledged both sides. While recognizing
Thailand's right to protect public health, the WTO also stressed the importance of
intellectual property rights. This case brought to light the ongoing tension between these
two crucial aspects within the framework of international trade.
US-EU Hormone-Treated Beef Dispute: Science vs. Trade Barriers in
the Food Industry

A clash arose between promoting free trade and ensuring food safety regulations when
the EU banned imports of beef raised with growth hormones, a common practice in the
US. The EU argued that these hormones posed health risks to consumers. However, the
US contested this claim, stating that the EU's ban lacked sufficient scientific evidence.
They believed it was a disguised trade barrier to protect European beef producers. The
WTO ultimately agreed with the US. The EU's ban wasn't supported by enough scientific
data to be considered a legitimate health measure. The WTO decision forced the EU to
either lift the ban or introduce stricter scientific guidelines for such restrictions on food
imports. This case highlighted the importance of science-based trade policies that balance
free trade with legitimate concerns about food safety.

Costa Rica-US Textiles Case: A Developing Country Stands Up for its

Trade Rights

In a landmark case, Costa Rica, a small developing country, challenged import

restrictions imposed by the US on textiles they produced. The US had established quotas,
limiting the amount of textiles Costa Rica could export to their market. Costa Rica argued
that these restrictions violated WTO rules on free trade and unfairly discriminated against
developing nations trying to expand their exports. The WTO sided with Costa Rica,
finding the US import quotas to be unfair restrictions. This case stands as a testament to
the potential of the WTO dispute settlement system. It demonstrates how even smaller
nations can use this platform to defend their trade rights and create a more level playing
field in the global market.
 CONCLUSION

The World Trade Organization (WTO) occupies a unique and critical space in the ever-churning
waters of global trade. Established to usher in an era of open markets and fair competition, the
WTO has undoubtedly played a key role in fostering economic growth and international
collaboration. Its framework of rules has streamlined trade flows, allowing nations to specialize
and benefit from a wider array of goods and services.

However, the WTO operates in a sea of complexities. Striking a delicate balance between
promoting free trade and addressing legitimate concerns like environmental protection and
national security requires constant adjustments. The organization must navigate the sometimes
conflicting needs of developed and developing nations, ensuring that smaller players aren't swept
away by the currents of globalization. Additionally, the rise of new areas like digital trade and
the ever-evolving landscape of intellectual property rights necessitate ongoing adaptation and
rule updates.

The future of the WTO hinges on its ability to weather these challenges. Embracing new
technologies, fostering inclusivity for all participants, and addressing emerging concerns will be
crucial in maintaining its relevance. By acting as a platform for dialogue and dispute resolution,
the WTO can continue to serve as a vital compass, guiding the global economy towards a more
prosperous and interconnected future.
BIBLIOGRAPHY