Master of Business Administration- MBA Semester 4MB0053 –International Business Management -4 Credits(Book ID: B1315)
arrangements with competitors and to embark on a subsidies race to maintain their holds onagricultural trade. Both these changes undermined the credibility and effectiveness of GATT.
World Trade Organization came into existence in 1995 after the desolation of General Agreement onTariff and Trade (GATT).The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does thisby:
Administering trade agreements
Acting as a forum for trade negotiations
Settling trade disputes
Reviewing national trade policies
Assisting developing countries in trade policy issues, through technical assistance and trainingprograms
Cooperating with other international organizationsThe WTO has nearly 150 members, accounting for over 97% of world trade. Around 30 others arenegotiating membership. Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements have been ratified in all members’parliaments.The WTO’s top level decision-making body is the
which meets at least onceevery two years. Below this is the
which meets several times a year in the Genevaheadquarters. The General Council also meets as the Trade Policy Review Body and the DisputeSettlement Body. At the next level, the
Goods Council, Services Council and Intellectual Property(TRIPS) Council
report to the General Council.Numerous
specialized committees, working groups
deal with the individualagreements and other areas such as the environment, development, membership applications andregional trade agreements.The WTO Secretariat, based in Geneva, has around 600 staff and is headed by a director-general. Itsannual budget is roughly 160 million Swiss francs. It does not have branch offices outside Geneva.Since decisions are taken by the members themselves, the Secretariat does not have the decision-making role that other international bureaucracies are given with.
Sem Assignment International Business Management
Abhishek Jain - 511035358
Page 2 of 15
Master of Business Administration-MBA Semester 4
International Business Management
Assignment Set - 2
Q1 .What is WTO? Explain its objectives, functions and structure.
Ans: World Trade Organization (WTO). WTO was established on 1st January 1995. In April 1994, theFinal Act was signed at a meeting in Marrakesh, Morocco. The Marrakesh Declaration of 15th April1994 was formed to strengthen the world economy that would lead to better investment, trade,income growth and employment throughout the world. The WTO is the successor to the GeneralAgreement on Tariffs and Trade (GATT). India is one of the founder members of WTO. WTO representsthe latest attempts to create an organizational focal point for liberal trade management and toconsolidate a global organizational structure to govern world affairs. WTO has attempted to createvarious organizational attentions for regulation of international trade. WTO created a qualitativechange in international trade. It is the only international body that deals with the rules of tradesbetween nations.The WTO agreements are a set of rules that are followed by the member governments whileformulating policies and practices in the area of international trade. The agreements mainly cover goods, services and intellectual property. The agreements comprise the rights and obligations of thegovernment that are enforceable in multilateral framework. The agreement supports individual
countries’ commitments to lower customs tariffs and other trade barriers, and to open services
markets. The agreements recommend governments to make their trade policies transparent.According to the agreement, the government must notify the WTO about the measures adopted tomake their trade policies transparent
Objectives and functions
The key objective of WTO is to promote and ensure international trade in developing countries. Theother major functions include:
Helping trade flows by encouraging nations to adopt discriminatory trade policies.
Promoting employment, expanding productions and trade and raising standard of living andincome and utilizing
the world’s resources.
Ensuring that developing countries secure a better share of growth in world trade.
Providing forum for trade negotiations.
Resolving trade disputes.The important functions of the WTO as stated in the WTO agreement are the following:
Developing transitional economies
Majority of the WTO members belong to developingcountries. The developing countries such as India, China, Mexico, Brazil and others have animportant role in the organization. The WTO helps in solving the problems of developingeconomies. The developing states are provided with trade and tariff data. This depends on the
country’s individual export interest and their participation in WTO
-bodies. The new membersbenefit hugely from these services.
Providing help for export promotion
The WTO provides specialized help for export promotion toits members. The export promotion is done through the International Trade Center established bythe GATT in 1964. It is operated by the WTO and the United Nations. The center accepts requestsfrom member countries, usually developing countries for support in formulating andimplementing export promotion programmes. The center provides information on export marketand marketing techniques. The center also provides assistance in establishing export promotionand marketing services. Through this WTO proves its commitment in the upliftment of the worldeconomy.
Cooperating in global economic policy-making
The main function of the WTO is to cooperatein global economic policy-making. In the Marrakesh Ministerial Meeting in April 1994, a separatedeclaration was adopted to achieve this objective. The declaration specifies the responsibility ofWTO as, to improve and maintain the cooperation with international organizations such as theWorld Bank, International Monetary Fund (IMF) that are involved in monetary and financialmatters. WTO analyses the impact of liberalization on the growth and development of nationaleconomies which is the important factor in the success of the economy.
Monitoring implementation of the agreement
The WTO administers sixty different agreementsthat have the statue of international legal documents. The member-governments sign andconfirm all WTO agreements on attainment.