📌 Topic 02 of 6 · Chapter 11 · International Trade

WTO — World Trade Organisation

WTO formation (1995), functions, key agreements (TRIPS, TRIMS, GATS), India’s role, and trade disputes.

📖 What is WTO?

The World Trade Organisation (WTO) is the only global international organisation dealing with the rules of trade between nations. It replaced GATT (General Agreement on Tariffs and Trade) on January 1, 1995.

Headquarters: Geneva, Switzerland
Members: 164 countries (as of 2023)
India joined: January 1, 1995 (founding member)
Director General: Ngozi Okonjo-Iweala (Nigeria) — first woman and first African DG

⭐ GATT vs WTO: GATT (1947) was a provisional agreement covering only goods. WTO (1995) is a permanent organisation covering goods, services, and intellectual property. WTO has a binding dispute settlement mechanism — GATT did not.

🎯 Functions of WTO

Trade negotiations: Forum for negotiating trade agreements to reduce tariffs and barriers
Dispute settlement: Binding mechanism to resolve trade disputes between countries
Monitoring: Reviews members’ trade policies through Trade Policy Review Mechanism
Technical assistance: Helps developing countries build trade capacity
Cooperation: Works with IMF and World Bank on global economic policy

📋 Key WTO Agreements

Agreement	Full Name	What it Covers
GATT	General Agreement on Tariffs and Trade	Trade in goods — reduce tariffs, eliminate quotas
GATS	General Agreement on Trade in Services	Trade in services — banking, IT, education, healthcare
TRIPS	Trade-Related Intellectual Property Rights	Patents, copyrights, trademarks — minimum standards
TRIMS	Trade-Related Investment Measures	Restricts investment measures that distort trade
AoA	Agreement on Agriculture	Reduce agricultural subsidies and trade barriers
SPS	Sanitary and Phytosanitary Measures	Food safety and animal/plant health standards

🌍 Real-World Example — TRIPS and India

TRIPS requires countries to grant 20-year patents on medicines. India initially resisted because it would make medicines expensive. India negotiated a “compulsory licensing” provision — allowing India to produce generic medicines for public health emergencies. This is why India is the “pharmacy of the world” — producing affordable generic medicines for 150+ countries.

🇮🇳 India’s Role in WTO

Founding member: India was a founding member of WTO (1995)
Developing country voice: India leads developing country coalitions (G33, G20 in WTO)
Food security: India fought for the right to maintain food subsidies (Public Stockholding for Food Security)
Agriculture: India opposes reduction of agricultural subsidies that protect small farmers
Services: India pushes for liberalisation of Mode 4 (movement of natural persons) — benefits Indian IT professionals

🇮🇳 India’s WTO Victory: At the Bali Ministerial (2013), India secured a “peace clause” allowing developing countries to maintain food subsidies above WTO limits for food security purposes. This protects India’s PDS and MSP programmes.

⚖️ WTO Dispute Settlement

WTO’s Dispute Settlement Body (DSB) is the world’s most active international trade court. Key features:

Binding decisions — countries must comply or face trade sanctions
India has been both complainant and respondent in WTO disputes
India vs USA: Solar panels dispute (India lost — had to remove local content requirements)
India vs EU: Pharmaceutical patents dispute

🔑 Key Terms

WTO: World Trade Organisation — replaced GATT in 1995
MFN: Most Favoured Nation — treat all WTO members equally
National Treatment: Treat foreign goods same as domestic goods
Tariff: Tax on imports — WTO aims to reduce tariffs
Non-tariff barriers: Quotas, standards, licensing — harder to eliminate
Doha Round: WTO negotiations launched in 2001 — still incomplete

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