Role of the WTO in trade policy:

You have learnt in international trade  theory that buying and  selling of  goods and  services between  the  countries enhances efficiency and welfare  in the countries. You  have  also learnt that countries sometimes put  restraints on imports and  sometimes even  on  exports in certain circumstances. But if countries  put  such  restraints erratically or at their will, it will cause major uncertainty in  international  trading  transactions. Industry and  trade cannot plan  out  their operations and strategy of growth  in  such unstable  situation.

Hence countries have come together and mutually,agreed  to have  a set of  rules that will guide them in  formulation and condict of their international trade policy. The World Trade Organisation (WTO) agreements provide such set of rules.

Actually  the exercise for establishing a multilateral  framework for international trade started towards the end of the Second World War. The US and the CTK started working out a blue print for such a framework which emerged in 1947 as a multilateral agreement in the form of the General Agreement on Tariffs and Trade (GATT). It contained provisions on the export and import of goods across countries.

Thereafter several "rounds"  of multilateral trade negotiations (MTN) among countries have  taken place  in GATT  for liberalisation of international trade. These  are  listed below:(i) Geneva (1947), (ii) Annecy  (1948), (iii) Torquay (1950),  (iv) Geneva  (1956),  (v) Dillon (1960-1961),  (vi) Kennedy (1964-1967), (vii)  Tokyo  (1  973 -  1979),  and  (viii)  Uruguay  (1  986- 1994).  Currently, negotiations are going on since the end of 2001 as a follow up of Doha Work Programme (launched  in Doha in 2001). It has not been formally  called MTN, but it is as exhaustive and detailed as any MTN.

After a process of protracted negotiations during the Uruguay Round of MTN, the framework was expanded and  strengthened in  1995.  The  GATT  was expanded to form the World Trade Organisation (WTO). It  strengthened the disciplines on international trade of  goods and  also included disciplines on trade in services. Besides, a new area that has no direct link with trade, viz., intellectual property rights (IPR), was also included in this framework. In this way the WTO subsumes the GATT totally and it also covers other areas. A large number of the agreements are there in the WTO. It  is helpful to put them into some groups. The original GATT of 1947, its later amendments  and also the decisions taken under it are now clubbed into the entity called GATT 1994. Thus when we refer to  an article of GATT, e.g., Article I, we call  it "Article I of GATT 1994". The disciplines  in the area of goods are contained  in the GATT 1994 and a number of agreements on specific subjects in this area. Those in the area of services are contained  in the General Agreement on Trade in Services (GATS). Those in the area of intellectual property are contained in the Agreement on Trade Related Intellectual Property Rights (Agreement on TRIPS). The process of enforcement of the rights and obligations, i.e.,  the dispute settlement process, is given in the Dispute Settlement Understanding (DSU)  .

The disciplines  contained in  these agreements  are  generally  in the form of  rights and obligations of governments. The governments of  the countries that are members of  the WTO are responsible for implenlentation of these agreements. In case of a perceived  violation of any provision  of the agreements, a government (not a firm) can make a complaint in the WTO. Then a process of settlement of dispute sets in, as will be explained  later. First, we  should see what the disciplines are in the three areas: goods, services and IPR.