If we want to understand international business, then we have to understand WTO and in the coming future the boundaries of business are going to end and we will be able to do business in any corner of the world by sitting at one place. For which we need to know international law and agreements. Through this article, we will try to know how WTO started and what is its history.
WTO This international organization is an organization made to make trade accessible in different countries, but it is also accused of this, it is an organization made for the benefit of developed countries. We will also try to do a critical analysis of WTO and see how much it really benefits the developing and poor countries. Because after the end of colonialism after the second world, a new world order was created which is called globalization.
If globalization is used honestly, poor countries and developing countries can really benefit themselves, but we will try to see whether all this happens in reality or not. It is said that the model of capitalist democracy is truly a model of good economic development, but we see that China has proved it wrong and how capitalist economic system can be successful in poor and developing countries, it needs to be amended. subject is.
What is World Trade Organization –
WTO It is an organization designed to make international trade accessible to all countries of the world, to determine the rate of different goods or services, to provide protection to intellectual property and to solve economic problems between two countries. Providing a platform to provide There is an association made for all such trade related things which runs through an agreement in which Purana GATT is the main agreement.
From 1947 to 1994, the General Agreement on Tariff & Trade (GATT), this agreement was used for international trade, in which WTO was established after a lot of amendments in 1994, under which these two concepts of service and intellectual property were introduced through this organization. There were additional rules in which we saw a lot of changes through information and technology. Because of which it was necessary for us to change the interpretation of international trade.
Through this association, it is said that this was an initiative so that poor and developing countries can get the benefit of the economic system of the developed countries. These other countries of the world have benefited from this, but on the contrary, developed countries use the wealth of these countries for their own benefit and occupy the market. It is equally important to do it.
History of World Trade Organization –
After World War II, important organizations like World Bank and International Monetary Fund were established and efforts were made to control international trade through agreements like GATT. The International Trade Organization was established before this, but an important country like America had refused to become a member due to some reasons. Because of this, this organization had to be closed later.
From 1947 to 1994 General Agreement on Te riff & Trade (GATT) This agreement was used for international trade. Which was changed in 1994 and started through WTO. On which there is a lot of influence of developed countries like Europe and America. The economic depression of the 1930s made it the most important thing to do this, which led to demands from the developed countries that international trade should be promoted.
The economic recession of 1930 had bankrupted America’s big financial institutions and production companies and unemployment had increased a lot, so that such economic crisis can be avoided through globalization, it came to the fore and how important it is to make the international market available to its production. Hey America got it. Meanwhile, the Second World War started and its economic and political consequences were seen, after which European countries also felt the need for international trade.
LPG Reforms in India & WTO –
The end of the Cold War and the establishment of the WTO are major events in interrelated world politics, in which LPG reforms were done in India in 1991, this is also considered an important political and economic event from India’s point of view. The countries which were running on the model of America’s democracy did not have to face this economic crisis, but those which were running democracy had to accept the capitalist economic system due to economic compulsion.
Only time will tell how economical this LPG policy will be for India, but India got a solution to the foreign exchange problem of that time and instead India had to open its economy to the international market. By the way, India has been a member of GATT since 1948 and became a member of WTO at the time of its inception.
Under which India has bound itself to follow all the rules of WTO and through LPG policy has bound itself in the regulation of organizations like World Bank and IMF and through this financial assistance is taken. By which the country can be benefited, but how much it has benefited us till date, only the arrogant can tell. But this has made a big market like India available to the developed countries for business.
Most Favored Nation Principle –
WTO uses this principle while regulating international trade, in which no country should get special facilities in trade and all countries should get equal treatment, this is the important objective of its back. If any one country has to be given special facilities, then this facility can be given by making a separate agreement, in which this facility can be given to any one country or a group of countries can be given this facility.
The important objective of WTO has been made that the poor and developing countries can get the benefit of the development of Europe and America, so the principle of Most Favored Nation is not implemented in this trade and such countries are given separate facilities, so that their economy May you get help in growing. That’s why this exception is considered very important for this principle.
The third important exception is Unfair Trade Practice, in which a country is helping the producer companies of its country through subsidies, due to which it is not a fair competition for the producer companies of the country where the products are exported, hence such exports But the rights to ban have been given to that country on the principle of Most Favored Nation of WTO.
General Agreement on Trade in Services / GATS –
GATS is an international agreement made on services, which mainly covers the services for which these agreements are made, which mainly have four types of agreements. The GATT Agreement of 1947 only included trade related to products, in which changes have been made in 1995 to extend the agreement of Services and Intellectual Property by keeping the agreement of GATT as it is.
GATS agreements are mainly divided into four parts
- Mode 1 Services – Cross border supply of services eg. B.P.O.
- Mode 2 Services – Consumption Abroad eg Foreign Education
- Mode 3 Services – Commercial Presence eg FDI
- Mode 4 Services – Movement of Natural Persons / Professionals
Agreements are made through WTO in services through the above four mediums, which are related to international trade only for services. Most of the services in India are provided abroad through Mode 1 and Mode 2 because foreign companies get these services at a lower price from India. The benefit of this agreement is more in terms of employment to the developing and poor countries.
Services are very expensive in companies of foreign and developed countries, for which they get these services from developing countries at a lower cost and professionals educated in India work abroad, in which the number of doctors is very high. Talking about Mode 3, students from India go to Europe and America to study, but the number of students studying in India from there is negligible.
GATT Agreement and WTO –
As we saw, there were many reasons why the initiative of international trade started coming from America and European countries, in which the economy of whole Europe was completely ruined due to the Second World War. Which was very important to improve, for international trade it was most important. America was also in the same situation, but they did not suffer economic losses due to World War II, but the demand for war materials was fulfilled by American companies.
Despite this, the economic recession of 1930 made it clear to him that it was very important to increase America’s trade. During this time United Nation and World Bank and International Monetary Fund were also established. Maintaining peace in the world and improving the economic condition had become the most important issue for all the countries. Asian and African countries were under European countries which were liberated and international trade was promoted.
International Trade Organization was established but it was opposed by America due to which trade continued till 1995 through GATT, which was not an organization but an international agreement. Among the important changes that took place after the establishment of WTO, first of all the service sector was added and intellectual property was protected at the international level. Courts were established by WTO for the economic problems of two countries.
WTO & Dispute Redressal –
GATT It was an agreement designed to regulate world trade from 1947 to 1994 as an agreement, which was included in the WTO and other facilities were added to it. In which dispute resolution is considered to be the most important component of WTO, in which first if there is any dispute between two countries or a group of countries, then efforts are made to end it by discussion.
If this issue is not resolved by discussion, then its investigation is done through a three-member committee and whatever report is prepared, it has to be accepted by both the parties. In this, violations of all WTO regulations are investigated and a report is presented along with the facts. In the matter of tariff violation, America had gone to the WTO dispute committee against India where it accused India of violating WTO’s tariff law.
At the time of the establishment of WTO, the Disputes Committee was formed to protect the interest of the member countries through it, due to which the faith of the member countries remained on WTO. In international trade, there will definitely be disputes while controlling the goods and services of all countries, considering that there should be a special arrangement that does not create problems for the economic trade of any country and this dispute should be resolved as soon as possible. Due to this, the law and order related to international trade from WTO remains intact, due to which the member countries get protection.
WTO & Intellectual Property Rights –
Agreement on Trade related aspects of Intellectual Property Rights (TRIPS) This agreement was made in the Uruguay Round from 1986-94 to secure the property related rights under this agreement. In the matter of information and technology and the services sector was growing rapidly in the world equal to the goods trade, therefore this agreement is considered to be the most important component of WTO for its protection.
Innovation, creativity and branding It is considered to be the most important link in international trade, through which countries which are developed in technology, such countries can also take advantage of themselves and the rest of the world can also get this technology to use this regulation. were created. The countries of America and Europe got the most benefit from this because they have been far ahead of the rest of the world in the matter of amendment.
Today we see how important it is to develop in technology from the point of view of security and from the economic point of view, for this we can see a small country like Israel, which has succeeded in keeping its control over the countries of East Asia on the power of technology. . More important than how much military power you have in the future, how modern your technology is, your power to become a superpower is decided on this. For example, America is at the forefront of intellectual property.
Features of World Trade Organization –
- World Trade Organization is the concept of developed countries like Europe and America through which they want to spread their trade to Asia and Africa.
- Starting in 1947 through the GATT agreement, this group included all forms of trade through the WTO in 1994.
The Disputes Committee was established through the WTO, in which a platform was created to settle trade-related disputes.
- After the 1930’s America’s economic depression, all the countries tried to secure their internal trade, so there should be some system to regulate the trade system of the world, this concept came to the fore, first GATT and later WTO was created.
- Before 1994, GATT was not an organization, it was only an agreement made between the member countries.
Goods and services were brought under one roof through the WTO in 1994 and intellectual property was also included in it.
- The people of all countries started getting good price for the use of products and services from this and the dictatorship of any one company got control from it.
- Poor and developing countries started getting the benefit of the technology of developed countries and instead of employment, treaties started being made.
- Through WTO, the initiative to end the subsidy given under all the countries was started and rules were also made.
- The principle that no country would discriminate while doing business with any country was used.
- By using natural wealth, the whole world can take advantage of each other’s natural wealth for its own development, like Arab countries have reserves of oil and gas but do not have food items, in such a situation international trade becomes effective.
In this way, we have tried to understand the importance of WTO in international trade. The companies and countries of Europe and America benefit the most from this, but poor countries and developing countries can also take advantage of their development. America is at the forefront of technology, which can be taken advantage of by developing and poor countries through WTO.
The main objective of WTO was to give more emphasis to the economy of developed countries, which benefits other countries as well as these developed countries. We saw the circumstances under which WTO was created and how international trade used to run before that. America’s economic crisis of 1930 and Europe’s deteriorated economy after World War II were started through GATT agreement to give force to it.
Earlier an attempt was made to form a union through the International Trade Organization but it failed. WTO was established in true sense in 1995 and today almost all the countries of the world are doing business by joining it. Today a country like China has understood how important it is to be economically capable, that’s why it also joined WTO later. In this way, through this article, we have tried to know how important the importance of WTO is from the point of view of international trade.