8 World Trade Organisation

8.1 From GATT to the WTO

The Bretton Woods Conference (1944) envisaged a third institution alongside the IMF and the World Bank — the International Trade Organization (ITO). The Havana Charter establishing the ITO was negotiated in 1948, but the United States Senate refused to ratify it. Instead, a General Agreement on Tariffs and Trade (GATT), signed by 23 countries on 30 October 1947 and provisionally applied from 1 January 1948, became the de-facto framework for multilateral trade for the next 47 years (hoekman2009?).

The GATT was not an organisation but an agreement; it administered itself through eight successive rounds of multilateral tariff negotiations.

Eight Rounds of GATT Negotiations

Round	Year(s)	Venue	Principal achievement
1. Geneva	1947	Geneva	First tariff cuts; GATT signed
2. Annecy	1949	Annecy	Tariff reductions
3. Torquay	1950–51	Torquay	Tariff reductions
4. Geneva II	1956	Geneva	Tariff reductions
5. Dillon	1960–61	Geneva	Tariff reductions
6. Kennedy	1964–67	Geneva	Tariffs and anti-dumping
7. Tokyo	1973–79	Geneva	Non-tariff measures, codes
8. Uruguay	1986–94	Punta del Este → Marrakesh	Created the WTO; covered services, IPR, agriculture, textiles

The Uruguay Round closed with the Marrakesh Agreement of 15 April 1994. The World Trade Organization (WTO) came into being on 1 January 1995, replacing the GATT secretariat with a full-fledged international organisation. The GATT 1947 was incorporated into the WTO as GATT 1994, one of several agreements administered by the new organisation.

The WTO is headquartered in Geneva, Switzerland, with 166 members (as of 2024) accounting for over 98 per cent of world trade (wto2024?). India is a founding member.

8.2 Objectives and Functions

The Marrakesh Agreement gives the WTO five working functions (wto2024?).

Five Functions of the WTO

Function	Content
Administer WTO trade agreements	Implement, administer and operate the multilateral and plurilateral agreements
Forum for negotiations	Provide the framework for further trade liberalisation among members
Dispute settlement	Operate the Understanding on Rules and Procedures Governing the Settlement of Disputes
Trade policy review	Operate the Trade Policy Review Mechanism
Cooperation with other bodies	Coordinate with the IMF, World Bank and other international organisations

8.3 Principles of the Multilateral Trading System

The WTO rests on five working principles, several inherited and strengthened from GATT (hoekman2009?; cherunilam2020?).

Five Pillar Principles of the WTO

Principle	Content	Article basis
Most-Favoured-Nation (MFN)	Any concession given to one member must be extended to all members	GATT Art. I; GATS Art. II; TRIPS Art. 4
National Treatment (NT)	Imported goods must be treated no less favourably than like domestic goods, once they cross the border	GATT Art. III; GATS Art. XVII; TRIPS Art. 3
Free trade through negotiation	Successive rounds of binding tariff cuts	Whole framework
Predictability through binding	Bound tariffs and transparent rules	GATT schedules
Special and Differential Treatment (S&DT)	Developing and least-developed members get longer transition, lower commitments, technical assistance	Multiple agreements

The MFN and National Treatment principles together constitute the non-discrimination core of the system. MFN is non-discrimination between trading partners; National Treatment is non-discrimination between foreign and domestic goods inside the country.

8.4 Structure of the WTO

The WTO is a member-driven, consensus-based organisation. Decision-making layers are:

Decision-Making Bodies of the WTO

Body	Role	Frequency
Ministerial Conference (MC)	Highest decision-making body	At least once every two years
General Council	Day-to-day governance; meets as DSB and TPRB	Several times a year
Councils for Goods, Services, TRIPS	Oversee respective agreements	Regular
Dispute Settlement Body (DSB)	Adjudicates disputes through panels and the Appellate Body	As needed
Trade Policy Review Body (TPRB)	Reviews each member’s trade policies periodically	As scheduled
Committees under each Council	Specialised subjects (SPS, TBT, Agriculture, etc.)	Regular
Secretariat under Director-General	Administrative support, headed by DG	Permanent

flowchart TB
  MC[Ministerial<br/>Conference] --> GC[General Council<br/>also sits as DSB and TPRB]
  GC --> CG[Council for Trade<br/>in Goods]
  GC --> CS[Council for Trade<br/>in Services]
  GC --> CT[Council for TRIPS]
  GC --> SEC[Secretariat<br/>under Director-General]
  CG --> CMT1[Committees:<br/>SPS, TBT, Agriculture, ...]
  CS --> CMT2[Committees:<br/>Financial Services, ...]
  CT --> CMT3[Committees:<br/>TRIPS Council subsidiaries]
  style MC fill:#E8F0FE,stroke:#1A73E8
  style GC fill:#FFF3E0,stroke:#EF6C00
  style SEC fill:#E6F4EA,stroke:#137333

8.5 The Major WTO Agreements

The Marrakesh package bundled GATT 1947 with a sheaf of new agreements covering services, intellectual property, agriculture and textiles. The candidate is expected to recognise the principal ones.

Principal WTO Agreements

Agreement	Coverage	Note
GATT 1994	Trade in goods	Successor to GATT 1947
GATS — General Agreement on Trade in Services	Trade in services	Four modes of supply
TRIPS — Trade-Related Aspects of Intellectual Property Rights	Patents, copyrights, trademarks, designs, GIs, trade secrets	Minimum standards across members
TRIMS — Trade-Related Investment Measures	Investment measures affecting trade in goods	Bans local content, trade balancing
AoA — Agreement on Agriculture	Market access, domestic support, export subsidies	Three “boxes”: green, blue, amber
SPS — Sanitary and Phytosanitary Measures	Food safety, animal and plant health	Science-based
TBT — Technical Barriers to Trade	Standards, regulations, conformity assessment	Avoid disguised protectionism
SCM — Subsidies and Countervailing Measures	Subsidies and remedies	Prohibited / actionable subsidies
ADP — Anti-Dumping Agreement (Art. VI of GATT)	Dumping and remedies	Margin of dumping, injury, causation
DSU — Dispute Settlement Understanding	Rules and procedures for disputes	Compulsory and binding
ATC — Agreement on Textiles and Clothing	Phased out the MFA	Ended 1 January 2005
TFA — Trade Facilitation Agreement	Customs simplification	Concluded Bali 2013, in force 2017

The four “modes of supply” under GATS are cross-border supply (Mode 1 — software exports), consumption abroad (Mode 2 — tourism), commercial presence (Mode 3 — bank branches abroad), presence of natural persons (Mode 4 — IT consultants on assignment).

The three boxes under the Agreement on Agriculture are Green Box (non-distorting subsidies, exempt), Blue Box (subsidies tied to production-limiting programmes, exempt) and Amber Box (trade-distorting subsidies, subject to reduction).

8.6 Dispute Settlement Mechanism

The WTO’s Dispute Settlement Understanding (DSU) is widely regarded as the system’s “crown jewel” (hoekman2009?). The procedure is:

Consultations — bilateral attempt to resolve the dispute (60 days).
Panel — three experts established by the DSB; report within roughly six months.
Appellate Body — standing body of seven members; reviews questions of law on appeal.
Adoption — DSB adopts panel/AB reports unless there is negative consensus against adoption.
Implementation — the losing member implements the ruling; if it fails, the complainant may impose retaliatory measures with DSB authorisation.

The Appellate Body has been non-functional since December 2019 because the United States has blocked appointments of new members; the system is operating with workarounds, including the Multi-Party Interim Appeal Arbitration Arrangement (MPIA).

8.7 Ministerial Conferences

The Ministerial Conference is the WTO’s highest decision-making body and meets at least every two years.

Notable WTO Ministerial Conferences

Conference	Year	Location	Notable outcome
MC1	1996	Singapore	Set the “Singapore issues” — investment, competition, transparency, trade facilitation
MC3	1999	Seattle	Failed; civil-society protests; collapse of new round talks
MC4	2001	Doha	Launched the Doha Development Agenda (DDA)
MC5	2003	Cancún	Failed over agriculture and Singapore issues
MC6	2005	Hong Kong	End-date for export subsidies in agriculture
MC9	2013	Bali	Trade Facilitation Agreement; food-security peace clause
MC10	2015	Nairobi	Decision to eliminate agricultural export subsidies
MC11	2017	Buenos Aires	Limited outcomes; e-commerce work programme
MC12	2022	Geneva	TRIPS waiver on COVID-19 vaccines; fisheries-subsidies agreement
MC13	2024	Abu Dhabi	Extended e-commerce moratorium; admission of Comoros and Timor-Leste

8.8 The Doha Development Agenda

Launched at MC4 in November 2001, the Doha Development Agenda (DDA) was meant to be the first multilateral round under the WTO and the first to put development at the centre. Negotiations covered agriculture, NAMA (non-agricultural market access), services, TRIPS, rules, trade facilitation, environment and the Singapore issues. The negotiations have been suspended and revived repeatedly; substantive consensus on the full package has not been reached. Single undertaking — the Doha rule that “nothing is agreed until everything is agreed” — has been the principal political obstacle. Some Doha results — Trade Facilitation (2013), agricultural export subsidies (2015) — have been harvested separately.

8.9 WTO and India

India is a founding member of the WTO and a leading voice for developing-country interests (cherunilam2020?). India’s positions in repeated negotiations have included:

Public stockholding for food security — peace-clause arrangement at Bali (2013) shielding MSP-based public-stockholding programmes from challenge until a permanent solution is found.
Agricultural domestic support — defending Amber-Box flexibilities under the de minimis rule.
Special and differential treatment — opposing erosion of S&DT for self-declared developing countries.
TRIPS and access to medicines — championing the use of compulsory licences and the Doha Declaration on TRIPS and Public Health (2001).
Services (Mode 4) — pushing for greater commitments on movement of natural persons.
India has been an active user of the dispute settlement mechanism, both as complainant and as respondent.

8.10 Criticisms of the WTO

Recurring criticisms in the textbook discussion include:

Asymmetry between developed and developing members in negotiating capacity.
Erosion of policy space for industrial policy and subsidies in developing countries.
Decision paralysis under the consensus rule.
Appellate Body crisis (since 2019) leaving disputes without a final appeal forum.
Weak coverage of new-economy issues — digital trade, climate, labour standards — with overlapping plurilateral talks creating fragmentation.

Despite these challenges, the WTO remains the single multilateral framework for trade rules and dispute settlement.

8.11 Exam-Pattern MCQs

Q 01

Which of the following is not one of the five core principles of the WTO?

AMost-Favoured-Nation treatment
BNational Treatment
CReciprocity through bilateral exemption
DSpecial and differential treatment for developing members

View solution

Correct Option: C

The WTO operates on non-discriminatory MFN, not bilateral exemptions; the others are core principles.

Q 02

Match the GATT round with its principal achievement:

	Round		Principal achievement
(i)	Kennedy Round (1964–67)	(a)	Created the WTO; covered services, IPR, agriculture
(ii)	Tokyo Round (1973–79)	(b)	First multilateral negotiations in non-tariff measures
(iii)	Uruguay Round (1986–94)	(c)	Tariffs and the first anti-dumping code
(iv)	Doha Round (since 2001)	(d)	"Development Agenda"; not concluded

A(i)-(c), (ii)-(b), (iii)-(a), (iv)-(d)
B(i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
C(i)-(a), (ii)-(d), (iii)-(b), (iv)-(c)
D(i)-(d), (ii)-(a), (iii)-(c), (iv)-(b)

View solution

Correct Option: A

Q 03

"An Indian software engineer is deputed to a client site in Germany to deliver a six-month assignment." Under GATS, this transaction is supplied through:

AMode 1 — Cross-border supply
BMode 2 — Consumption abroad
CMode 3 — Commercial presence
DMode 4 — Presence of natural persons

View solution

Correct Option: D

Mode 4 covers the temporary movement of natural persons of one member to deliver a service in another member's territory.

Q 04

Match the WTO agreement with its coverage:

	Agreement		Coverage
(i)	TRIPS	(a)	Sanitary and phytosanitary measures
(ii)	TRIMS	(b)	Trade in services
(iii)	GATS	(c)	Investment measures linked to trade in goods
(iv)	SPS	(d)	Intellectual property rights

A(i)-(d), (ii)-(c), (iii)-(b), (iv)-(a)
B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
C(i)-(b), (ii)-(d), (iii)-(a), (iv)-(c)
D(i)-(c), (ii)-(a), (iii)-(d), (iv)-(b)

View solution

Correct Option: A

Q 05

The three "boxes" of the Agreement on Agriculture refer to:

ARed, Yellow, Green
BGreen, Blue, Amber
CBlack, White, Grey
DGold, Silver, Bronze

View solution

Correct Option: B

The AoA boxes are Green (non-distorting), Blue (production-limiting), Amber (trade-distorting).

Q 06

Match the Ministerial Conference with its location:

	Ministerial Conference		Location
(i)	MC4 (2001)	(a)	Bali
(ii)	MC9 (2013)	(b)	Doha
(iii)	MC12 (2022)	(c)	Geneva
(iv)	MC13 (2024)	(d)	Abu Dhabi

A(i)-(b), (ii)-(a), (iii)-(c), (iv)-(d)
B(i)-(a), (ii)-(b), (iii)-(d), (iv)-(c)
C(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
D(i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)

View solution

Correct Option: A

Q 07

Arrange the following events in chronological order: (i) Establishment of the WTO (ii) Signing of the GATT (iii) Launch of the Doha Development Agenda (iv) End of the Uruguay Round (Marrakesh Agreement)

A(ii), (iv), (i), (iii)
B(i), (ii), (iv), (iii)
C(iv), (iii), (ii), (i)
D(ii), (i), (iii), (iv)

View solution

Correct Option: A

GATT signed (1947) → Marrakesh signed (April 1994) → WTO established (1 January 1995) → Doha Round launched (November 2001).

Q 08

Match the WTO body with its primary role:

	Body		Primary role
(i)	Ministerial Conference	(a)	Adjudicates trade disputes through panels and the Appellate Body
(ii)	General Council	(b)	Reviews trade policies of each member periodically
(iii)	Dispute Settlement Body	(c)	Day-to-day governance; meets between Ministerials
(iv)	Trade Policy Review Body	(d)	Highest decision-making body; meets every two years

A(i)-(d), (ii)-(c), (iii)-(a), (iv)-(b)
B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
C(i)-(c), (ii)-(d), (iii)-(b), (iv)-(a)
D(i)-(b), (ii)-(a), (iii)-(d), (iv)-(c)

View solution

Correct Option: A

Quick recall

GATT signed 1947, applied 1948; not an organisation. WTO established 1 January 1995 by Marrakesh Agreement (1994). HQ Geneva; 166 members; led by Director-General.
Eight GATT rounds: Geneva → Annecy → Torquay → Geneva II → Dillon → Kennedy (anti-dumping) → Tokyo (NTBs, codes) → Uruguay (created WTO).
Five core principles: MFN, National Treatment, Free Trade through Negotiation, Predictability via Binding, Special & Differential Treatment.
Structure: Ministerial Conference → General Council → Councils (Goods/Services/TRIPS) → DSB and TPRB → Secretariat.
Major agreements: GATT 1994, GATS, TRIPS, TRIMS, AoA, SPS, TBT, SCM, ADP, DSU, TFA.
GATS four modes: Cross-border (1), Consumption abroad (2), Commercial presence (3), Movement of persons (4).
AoA three boxes: Green (non-distorting), Blue (production-limiting), Amber (trade-distorting).
DSU procedure: Consultations → Panel → Appellate Body → Adoption (negative consensus) → Implementation. Appellate Body dysfunctional since 2019.
Doha Round (2001) still open; harvested results: TFA Bali 2013, agricultural export subsidies Nairobi 2015, fisheries subsidies and TRIPS-COVID waiver Geneva MC12 2022.
India’s WTO priorities: public stockholding peace clause, agricultural de minimis, S&DT, compulsory licences, GATS Mode 4.