flowchart TB
MC[Ministerial Conference<br/>Every two years] --> GC[General Council]
GC --> DSB[Dispute<br/>Settlement Body]
GC --> TPRB[Trade Policy<br/>Review Body]
GC --> GS[Council for Trade<br/>in Services]
GC --> CG[Council for Trade<br/>in Goods]
GC --> CT[Council for<br/>TRIPS]
classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;
9 World Trade Organisation (WTO): Functions and objectives of WTO; Agriculture Agreement; GATS; TRIPS; TRIMS
9.1 From GATT to the WTO
After the failure of the International Trade Organization (ITO) — designed at Bretton Woods but blocked by the US Senate — the General Agreement on Tariffs and Trade (GATT) came into provisional force on 1 January 1948 with 23 signatories. GATT was a contract, not an organisation. Over eight successive rounds of negotiation, the most ambitious of which was the Uruguay Round (1986-94), GATT was progressively expanded. The Uruguay Round culminated in the Marrakesh Agreement of 15 April 1994 which created the World Trade Organisation (WTO), formally established on 1 January 1995. The WTO absorbed GATT-1994 alongside new agreements covering services, intellectual property and dispute settlement.
TipEight GATT Rounds
| # | Round | Years | Main outcome |
|---|---|---|---|
| 1 | Geneva | 1947 | Initial tariff cuts; 45,000 concessions |
| 2 | Annecy | 1949 | Tariffs |
| 3 | Torquay | 1950–51 | Tariffs |
| 4 | Geneva | 1956 | Tariffs |
| 5 | Dillon | 1960–61 | Tariffs |
| 6 | Kennedy | 1964–67 | Tariffs; anti-dumping; across-the-board cuts |
| 7 | Tokyo | 1973–79 | Non-tariff barriers; codes |
| 8 | Uruguay | 1986–94 | WTO, GATS, TRIPS, DSU |
| (Continuing) | Doha Development Agenda | Since 2001 | Stalled; some plurilateral wins |
9.2 Establishment and Membership
The WTO came into being on 1 January 1995, with headquarters at Centre William Rappard, Geneva. It currently has 164 member countries plus a number of observer states. India was a founding member of both GATT (1948) and the WTO (1995). The institutional head is the Director-General.
9.3 Objectives
The preamble to the Marrakesh Agreement lists objectives in the broad spirit of “raising living standards”:
TipSix WTO Objectives
- Raise standards of living and ensure full employment in member countries.
- Promote sustainable use of world resources and protect the environment.
- Ensure developing and least-developed countries secure a share of growth in international trade.
- Expand production and trade in goods and services.
- Reduce tariffs and other trade barriers and eliminate discriminatory treatment.
- Provide a forum for trade negotiations and a mechanism for settling disputes.
9.4 Functions
TipFive WTO Functions
| Function | Working content |
|---|---|
| Administering trade agreements | Implements the WTO covered agreements (Marrakesh) |
| Forum for negotiations | Hosts trade rounds and Ministerials |
| Dispute Settlement | Operates the Dispute Settlement Understanding (DSU) through a single Dispute Settlement Body (DSB) |
| Trade Policy Review Mechanism (TPRM) | Periodic peer review of each member’s trade policy |
| Cooperation with IMF and World Bank | Coherent global economic policy-making |
9.5 Core Principles
TipWTO’s Five Core Principles
| Principle | Content |
|---|---|
| Non-discrimination — MFN | A concession to one member must be extended to all (Article I of GATT) |
| Non-discrimination — National Treatment | Imported goods, once cleared, treated no less favourably than domestic ones (Article III) |
| Predictability through binding | Tariffs and market access are “bound” — cannot be raised unilaterally |
| Promoting fair competition | Curbs on dumping, subsidies, state monopolies that distort trade |
| Special and differential treatment (S&DT) | Longer phase-ins, technical assistance, exemptions for developing/LDC members |
NoteDistractor warning
A frequent PYQ trap: what is the difference between MFN and National Treatment? MFN is non-discrimination between trading partners; National Treatment is non-discrimination between imported and domestic goods once inside the country.
9.6 Organisational Structure
The Ministerial Conference (MC) is the highest decision-making body, meeting at least every two years. The General Council operates between Ministerial sessions. The Council further splits into the Council for Trade in Goods, Council for Trade in Services, and Council for TRIPS, plus the DSB and TPRB.
9.7 Major Ministerial Conferences
TipKey WTO Ministerial Conferences
| # | Year | City | Key outcome |
|---|---|---|---|
| 1 | 1996 | Singapore | “Singapore issues” — investment, competition, transparency, trade facilitation |
| 2 | 1998 | Geneva | E-commerce moratorium |
| 3 | 1999 | Seattle | Failed amid protests |
| 4 | 2001 | Doha | Doha Development Agenda launched |
| 5 | 2003 | Cancún | Collapsed over agriculture |
| 6 | 2005 | Hong Kong | EU export-subsidy phase-out |
| 9 | 2013 | Bali | Bali Package — Trade Facilitation Agreement |
| 10 | 2015 | Nairobi | Agricultural export subsidies abolished |
| 11 | 2017 | Buenos Aires | Limited progress |
| 12 | 2022 | Geneva | Fisheries subsidies, TRIPS waiver for COVID-19 vaccines |
| 13 | 2024 | Abu Dhabi | Limited progress; dispute settlement reform |
9.8 The Four Key WTO Agreements
The WTO covers a wide family of agreements; the four most frequently asked in UGC-NET are AoA, GATS, TRIPS, TRIMS.
9.8.1 Agreement on Agriculture (AoA)
The Agreement on Agriculture brought farm trade under WTO discipline for the first time, organised around three pillars:
TipAoA — Three Pillars
| Pillar | Working content |
|---|---|
| Market access | Conversion of non-tariff barriers into tariffs (“tariffication”); progressive reduction |
| Domestic support (boxes) | Classification of farm subsidies into Amber / Blue / Green boxes |
| Export subsidies | Reduction and (since 2015 Nairobi) elimination of export subsidies |
The “boxes” of domestic support:
TipAoA Boxes
| Box | Colour | Content | Treatment |
|---|---|---|---|
| Amber | Yellow | Trade-distorting support tied to output or price (MSP, input subsidies) | Must be reduced; capped by de minimis |
| Blue | Blue | Production-limiting payments | Permitted |
| Green | Green | Non-distorting support — research, training, public stockholding for food security, environmental programmes | Unlimited |
The de minimis ceilings: developed countries 5 %, developing countries (including India) 10 % of value of production.
The Peace Clause (Bali 2013) prevents legal challenges against developing-country food-stockholding programmes (such as India’s MSP-based procurement) until a permanent solution is found.
9.8.2 GATS — General Agreement on Trade in Services
GATS is the first multilateral, legally enforceable framework for trade in services. It identifies four modes of supply:
TipGATS — Four Modes of Service Supply
| Mode | Name | Description | Example |
|---|---|---|---|
| Mode 1 | Cross-border supply | Service crosses the border | Indian BPO answers a US call from Bangalore |
| Mode 2 | Consumption abroad | Consumer travels abroad | Patient travels to India for medical treatment |
| Mode 3 | Commercial presence | Foreign firm establishes a local branch | Citibank branch in Mumbai |
| Mode 4 | Movement of natural persons | Service-provider travels temporarily | Indian IT engineer on H-1B in the US |
India has a strong offensive interest in Modes 1 and 4 (where it has comparative advantage), and defensive interest in Mode 3 (where foreign banks and retail chains seek access).
9.9 Dispute Settlement Mechanism
The Dispute Settlement Understanding (DSU) is often called the “crown jewel” of the WTO. Stages:
- Consultations (60 days).
- Panel established by the DSB; ruling within ~6 months.
- Appellate Body review (if appealed) — within 90 days.
- DSB adoption by reverse consensus.
- Implementation — reasonable period; otherwise retaliation may be authorised.
The Appellate Body has been non-functional since December 2019 because the US has blocked the appointment of new members. The 2024 Abu Dhabi Ministerial sought to revive a fully functioning dispute-settlement system by 2024.
9.10 India and the WTO
TipIndia’s Major WTO Issues
- Founding member of WTO (1995); active in G-20, G-33, G-90 coalitions of developing countries.
- Patents Act amended 2005 to be TRIPS-compliant; allows compulsory licensing.
- Food security and MSP-based procurement; Peace Clause secured at Bali 2013.
- Agricultural negotiations — opposed Doha’s demand for deep tariff cuts.
- Special Safeguard Mechanism (SSM) for developing-country farmers — long-standing Indian demand.
- Trade Facilitation Agreement (2017) — India ratified.
- E-commerce moratorium — India favours an end to permanent moratorium on customs duties on electronic transmissions.
- Fisheries subsidies (2022) — India sought longer transition.
- Dispute settlement — India has been both complainant (e.g., against EU on generics seizure) and respondent.
9.11 Practice Questions
Q 01
GATT-WTO
Easy
The WTO formally came into existence on:
View solution
Correct Option: C
Marrakesh Agreement was signed on 15 April 1994; WTO began operations on **1 January 1995**.
Q 02
Rounds
Medium
Which GATT round was responsible for the creation of the WTO?
View solution
Correct Option: C
The **Uruguay Round (1986-94)** produced the Marrakesh Agreement that created the WTO.
Q 03
Principles
Medium
"A concession granted to one WTO member must be extended to all members." This is the principle of:
View solution
Correct Option: B
MFN (GATT Article I) is non-discrimination between trading partners.
Q 04
Modes
Medium
Match each GATS mode with its example:
| Mode | Example | ||
| (i) | Mode 1 — Cross-border supply | (a) | Citibank branch in Mumbai |
| (ii) | Mode 2 — Consumption abroad | (b) | BPO call answered from Bangalore |
| (iii) | Mode 3 — Commercial presence | (c) | Indian IT engineer working in the US on H-1B |
| (iv) | Mode 4 — Movement of natural persons | (d) | Foreign patient travels to India for surgery |
View solution
Correct Option: A
Mode 1 — cross-border; Mode 2 — consumption abroad; Mode 3 — commercial presence; Mode 4 — movement of natural persons.
Q 05
AoA
Medium
Under the WTO Agreement on Agriculture, the "boxes" classify:
View solution
Correct Option: B
**Amber / Blue / Green** boxes classify *domestic support* by its trade-distorting effect.
Q 06
Boxes
Medium
Match each AoA box with its character:
| Box | Character | ||
| (i) | Amber Box | (a) | Non-distorting support — R&D, training, food-security stockholding |
| (ii) | Blue Box | (b) | Trade-distorting support tied to price or output |
| (iii) | Green Box | (c) | Production-limiting payments |
View solution
Correct Option: A
Amber — trade-distorting; Blue — production-limiting; Green — non-distorting.
Q 07
De minimis
Hard
India's "de minimis" ceiling for Amber Box farm support is:
View solution
Correct Option: B
Developing-country ceiling is **10 %** of value of production (developed countries: 5 %).
Q 08
TRIPS
Easy
Under TRIPS, the minimum patent term is:
View solution
Correct Option: C
TRIPS requires a minimum **20-year** patent term from the filing date.
Q 09
TRIMS
Medium
Which of the following is prohibited under TRIMS?
View solution
Correct Option: B
TRIMS prohibits **local content requirements**, trade-balancing requirements, forex restrictions tied to firm-level forex earnings, and similar performance requirements.
Q 10
Ministerials
Medium
The "Doha Development Agenda" was launched at the WTO Ministerial Conference held in:
View solution
Correct Option: C
Doha 4th Ministerial, **November 2001**.
Q 11
India
Medium
India amended its Patents Act in 2005 to comply with TRIPS, primarily by:
View solution
Correct Option: B
India's pre-1995 regime allowed only *process* patents in pharma; TRIPS required *product* patents — the 2005 amendment introduced them.
Q 12
Peace Clause
Hard
The "Peace Clause" (Bali 2013) protects which Indian programme from WTO challenge?
View solution
Correct Option: A
The Peace Clause shields developing-country **public stockholding for food security** programmes (India's MSP-based procurement) from legal challenge.
Q 13
DSU
Medium
The "crown jewel" of the WTO refers to:
View solution
Correct Option: B
The **DSU** is widely described as the WTO's "crown jewel" because of its compulsory and binding dispute-settlement procedures.
Q 14
DG
Hard
The current WTO Director-General (assumed 2021), who is the first African and first woman to hold the post, is:
View solution
Correct Option: A
Nigeria's **Ngozi Okonjo-Iweala** has been WTO DG since 1 March 2021.
Q 15
TFA
Medium
The **Trade Facilitation Agreement (TFA)** was concluded at the WTO Ministerial in:
View solution
Correct Option: C
**Bali 2013 (MC-9)** concluded the TFA — first major multilateral deal under the WTO. Entered into force February 2017.
Q 16
National Treatment
Medium
"Imported goods, once they have entered the territory, must be treated no less favourably than domestic ones." This is:
View solution
Correct Option: B
National Treatment (GATT Article III) — non-discrimination between imported and domestic goods after border clearance.
Q 17
Bodies
Medium
Match each WTO body with its role:
| Body | Role | ||
| (i) | Ministerial Conference | (a) | Peer review of each member's trade policy |
| (ii) | General Council | (b) | Settles trade disputes between members |
| (iii) | Dispute Settlement Body | (c) | Highest decision-making body — meets at least every two years |
| (iv) | Trade Policy Review Body | (d) | Operates between Ministerial sessions |
View solution
Correct Option: A
MC — highest body; GC — between MCs; DSB — disputes; TPRB — peer review.
Q 18
Compulsory Licence
Hard
India's first ever compulsory licence under TRIPS — for the cancer drug Nexavar — was granted by the Controller of Patents in 2012 to:
View solution
Correct Option: B
**Natco Pharma** received India's first compulsory licence (2012) for sorafenib (Bayer's Nexavar).
Q 19
Appellate Body
Hard
The WTO Appellate Body has been functionally paralysed since December 2019 because:
View solution
Correct Option: B
The **USA** has blocked appointment of new Appellate Body members since 2017, leaving the body without quorum since December 2019.
Q 20
India role
Medium
In WTO agriculture negotiations, India is a leading member of which coalition demanding flexibility for developing-country farm support?
View solution
Correct Option: B
India leads the **G-33** coalition of developing countries seeking *special products* and *special safeguard mechanism* protection.
9.12 Quick Recall
ImportantQuick recall
- GATT entered into force 1 January 1948; the WTO began on 1 January 1995 after the Uruguay Round (1986-94) / Marrakesh Agreement (15 April 1994). HQ Geneva. 164 members. DG since 2021: Ngozi Okonjo-Iweala.
- Five WTO functions: administer agreements; forum for negotiations; DSU; TPRM; cooperation with IMF/WB.
- Five core principles: MFN, National Treatment, tariff binding, fair competition, S&DT.
- Structure: Ministerial Conference (every 2 yrs) → General Council → Councils for Goods, Services, TRIPS; DSB; TPRB.
- Key ministerials: Singapore 1996, Doha 2001 (DDA), Cancún 2003 (collapsed), Bali 2013 (TFA + Peace Clause), Nairobi 2015 (export-subsidy abolition), Geneva 2022 (fisheries; TRIPS waiver), Abu Dhabi 2024.
- AoA three pillars: market access, domestic support (Amber/Blue/Green), export subsidies. De minimis — developed 5 %, developing 10 %. Peace Clause for food stockholding.
- GATS four modes: 1 cross-border, 2 consumption abroad, 3 commercial presence, 4 movement of natural persons. India’s offensive — Modes 1 & 4.
- TRIPS: 20-year patent minimum; covers copyright, trademarks, GIs, designs, patents, layouts of ICs, trade secrets; compulsory licensing allowed; Doha Declaration 2001 on Public Health.
- TRIMS bans: local content, trade balancing, forex restrictions, domestic sales, export restrictions inconsistent with GATT.
- DSU “crown jewel”; Appellate Body non-functional since December 2019 (US block).
- India: founding member; Patents Act 2005; Peace Clause Bali 2013; G-33 leader; Natco-Bayer Nexavar compulsory licence 2012; TFA ratified 2017.