World Trade Organization (WTO)

World Trade Organization (WTO)

WTO came into existence as a successor of GATT (General Agreement on Tariffs and Trades), in the year 1995. GATT was an agreement that was signed in 1947, and it became effective in 1948.

It was not an organization but a mere agreement signed by a number of countries to ensure restriction-free trade in goods. However, in the developed countries as the labor cost started increasing, the production of goods started becoming costlier. Hence, manufacturing industries started shifting toward developing economies. The economy of developed countries started shifting towards the service sector therefore the existence of GATT would have helped only the developing economies which had become manufacturing hubs by the early 1990s.

Hence, in the 8th and last round of GATT, which was held in Uruguay, the idea of WTO was conceived. The then Director General of GATT Arthur Dunkel was given the responsibility to prepare a blueprint for WTO. Hence under the Marrakesh (Morocco) treaty, WTO came into existence. The last Director-General of GATT and the first Director-General of WTO was Peter

Sutherland.

WTO is a multilateral organization that aims at facilitating restriction-free trade not only in goods but also in services among the member countries. The headquarters of WTO is located in Geneva. At present, it has 164 members. The latest member to join WTO is Afghanistan and the 163rd member was Liberia. India has been the founding member of both GATT and WTO.

WTO is headed by a Director-General. The present Director-General of WTO is Ngozi Okonjo- Iweala. She took the office in March 2021 as the 7th Director-General. She is the 1st woman and 1st African to hold this office. The highest decision-making body in WTO is the Ministerial Conference which is held after every two years. Till date, 12 ministerial conferences of WTO have been held.

1. 1996: Singapore

2. 1998: Geneva

3. 1999: Seattle (USA)

4. 2001: Doha (Qatar)

5. 2003: Cancun (Mexico)

6. 2005: Hongkong

7. 2009: Geneva

8. 2011: Geneva

9. 2013: Bali

10.2015: Nairobi

11.2017: Buenos Aires

12.2022: Geneva (cohosted by Kazakistan)

The 12th ministerial conference of WTO was organized from 12th to 17th June 2022 at WTO headquarters in Geneva, Switzerland. Earlier it was to be organized in Nur-Sultan the capital of Kazakistan in June 2020 but was postponed due to Covid-19 Pandemic. It was postponed again in 2021 due to the outbreak of the Omicron variant of COVID-19. Kazakhstan presided over the 12th conference.

WTO Director-General, Ngozi Okonjo-Iweala said “Not in a long while has the WTO seen such a significant number of multilateral outcomes”, as it was the only conference in nearly 5 years that too in this Post Covid world. The conference agreed to a series of deals relating to setting limits on harmful fishing subsidies, temporary waivers on Covid-19 vaccines, a moratorium on e-commerce trade, food security, etc.

A multilateral agreement was passed to curb ‘harmful’ subsidies on illegal, unreported, and unregulated fishing for the next four years. It will protect global fish stocks. Members agreed to temporarily waive intellectual property patents rights on Covid-19 vaccines for 5 years. Countries can manufacture them domestically without the consent of the patent holder. 

Considering the global food shortages and rising prices due to war, members agreed to a binding

decision to exempt food purchased by the UN’s World Food Programme (WFP) for humanitarian purposes from any export restrictions. However, countries would be allowed to restrict food supplies to ensure domestic food security needs. India wanted the WTO should renegotiate subsidy rules for food purchasing programs backed by the government specifically aimed at feeding poor citizens in developing and poor countries.

India has asked the WTO to review the extension of the moratorium on customs duties on e-commerce transactions, involving digital trade in goods and services. However, all members agreed to continue the long-standing moratorium on customs duties on e-commerce transmissions until the subsequent Ministerial Conference or until March 31, 2024, depending on whichever comes first.

India has been vocal about WTO Reforms. Members reaffirmed the foundational principles of the WTO. Which is the commitment towards an open and inclusive process to reform all its functions, from deliberation to negotiation to monitoring. Notably, they committed to working towards having a well-functioning dispute settlement system accessible to all members by 2024.

Piyush Goyal, Minister of Commerce and Industry and Minister of Consumer Affairs of India, who participated in the conference said “India is 100% satisfied with the outcome.” And “I am not returning to India with any worries.” 

Here it is worth mentioning that, due to the constant disputes arising in the WTO conferences and due to the absence of consensus among the members, its importance as a multinational organization for promoting trade has steadily decreased. The organization has been divided into three different opposing factions - underdeveloped countries, developing countries and developed countries. The importance of this multinational organization has also decreased due to free trade agreements and regional agreements between different countries. WTO aims at eliminating both Tariff & Non Tariff barriers to promote trade. But due to different economic needs and problems of different countries, WTO cannot formulate uniform rules for all member countries.