The World Trade Organisation (WTO) is an intergovernmental organisation that regulates and supports international trade. Governments use the organisation to create, update, and enforce international trade rules. The structure of WTO is governed by its highest authority, the Ministerial Conference, which is made up of delegates from all WTO members and is obligated to meet at least every two years and has the authority to make decisions on any topics under any multilateral trade agreement. It is a crucial topic in the Economy syllabus for the UPSC Examination. The article below briefs the structure of WTO followed by UPSC - perspective explanations.

What is WTO?

• The World Trade Organization (WTO) is the only international organisation that deals with trade regulations.
• At its core are the World Trade Organization (WTO) accords, which have been negotiated and ratified by the majority of the world's trading nations and are recognised by their parliaments.
• The headquarters of the World Trade Organization is in Geneva, Switzerland.
• The Ministerial Conference, which meets twice a year and is made up of all member states, is the organisation's highest decision-making body.
• There are 164 countries in the World Trade Organization (WTO) (160 UN countries, EU, Hong Kong, Macau and Taiwan).

Structure

• The daily work is handled between Ministerial Conferences by three bodies whose membership is the same; the only difference is the terms of reference under which each body is created.
• The General Council
• The Dispute Settlement Body
• The Trade Policy Review Body

• The General Council, whose Chair is David Walker of New Zealand as of 2020, has the following subsidiary bodies that oversee various committees:

Council for Trade in Goods

• The Goods Council oversees 11 committees, each with its own set of responsibilities.
• The committees are made up of all WTO members.
• The Textiles Monitoring Body is different from the other committees, but it is nonetheless subject to the Goods Council's jurisdiction.
• Only ten members make up the body, which is led by a chairman.

Council for Trade-Related Aspects of Intellectual Property Rights

• The Council on Trade-Related Aspects of Intellectual Property Rights is a non-profit organisation that promotes trade-related aspects of intellectual property rights.
• Information about intellectual property at the WTO, including news and official records of the TRIPS Council's actions, as well as facts on the WTO's collaboration with other international organisations.

Council for Trade in Services

• The General Council directs the work of the Council for Trade in Services, which is in charge of overseeing the operation of the General Agreement on Trade in Services (GATS).
• It is open to all WTO members and has the authority to establish subsidiary bodies if needed.

Trade Negotiations Committee

• The Trade Negotiations Committee (TNC) is in charge of the current round of trade discussions. The director-general of the World Trade Organization (WTO) is the chairperson. The Doha Development Round was assigned to the committee in June 2012.
• Financial services, domestic regulations, GATS standards, and particular commitments are the three subsidiary bodies of the Service Council.
• There are numerous committees, working groups, and working parties within the council.
• Trade and Environment, Trade and Development (Subcommittee on Least-Developed Countries), Regional Trade Agreements, Balance of Payments Restrictions, and Budget, Finance, and Administration are among the committees.
• As of December 31, 2019, there were 338 women and 285 men working for the WTO on a regular budget.

Accession and Membership

• Each applicant country's process for joining the WTO is unique, and the terms of membership are determined by the country's economic development stage and current trading system.
• On average, the procedure takes around five years, although it can take longer if the country isn't totally committed to it or if political obstacles arise.
• The Kyrgyz Republic had the quickest accession negotiations, whereas Russia had the longest.
• Russia applied to join GATT in 1993, was authorised for membership in December 2011, and became a WTO member on August 22, 2012.
• Kazakhstan had a lengthy admission procedure as well.

Conclusion

According to studies, the WTO encouraged trade. According to research, in the absence of the WTO, the average country's export duties would climb by 32 percentage points. Almost all contemporary preferential trade agreements (PTAs) include explicit references to the World Trade Organization (WTO), typically dozens of times over numerous chapters. Similarly, we find that considerable chunks of treaty language—sometimes the majority of a chapter—are taken identically from a WTO agreement in many of these same PTAs.. the prominence of the WTO in PTAs has grown over time.

FAQs

MCQs

1. What is the primary function of the WTO?

A) To impose tariffs on all global trade
B) To facilitate and regulate international trade
C) To provide loans to developing countries
D) To regulate domestic industries

2. Which body is the highest decision-making authority in the WTO?

A) General Council
B) Appellate Body
C) Ministerial Conference
D) Dispute Settlement Body

3. What is the role of the WTO General Council?

A) To implement national trade policies
B) To oversee day-to-day operations of the WTO
C) To provide financial assistance to member countries
D) To enforce local trade laws

4. Which of the following handles trade disputes in the WTO?

A) General Council
B) Dispute Settlement Body
C) Trade Policy Review Body
D) Appellate Body

5. Which agreement led to the establishment of the WTO in 1995?

A) Bretton Woods Agreement
B) General Agreement on Tariffs and Trade (GATT)
C) Uruguay Round Negotiations
D) Doha Round Negotiations

GS Mains Questions and Model Answers

Q1: Analyze the role of the World Trade Organization (WTO) in promoting global trade and resolving trade disputes.

Answer: The WTO plays a critical role in promoting global trade by providing a platform for member countries to negotiate trade agreements and reduce trade barriers. Its trade rules promote free trade, ensuring that member nations follow non-discriminatory practices. The WTO also has a robust dispute resolution mechanism that enables countries to resolve trade disagreements through consultations, adjudication, and appeals, ensuring that trade disputes do not escalate into political or economic conflicts.

Q2: Discuss the structure of the WTO and its importance in ensuring global trade transparency.

Answer: The WTO is structured around key bodies such as the Ministerial Conference, General Council, and subsidiary councils for goods, services, and intellectual property. This structure ensures that all aspects of global trade are governed by a set of transparent rules and regulations. The importance of this structure lies in its ability to foster cooperation between nations, monitor compliance with trade agreements, and ensure fair play in the international trading system. The institutional setup of the WTO also allows for continuous monitoring and adaptation to new global trade challenges.

Q3: Evaluate the challenges faced by the WTO in the 21st century. How can these challenges be addressed?

Answer: The WTO faces multiple challenges, including rising protectionism, trade tensions between major economies, and the lack of consensus on issues like agricultural subsidies and intellectual property rights. Additionally, the organization's dispute resolution system has come under strain due to political disagreements over its appellate body. To address these challenges, the WTO needs to reform its decision-making processes, encourage multilateral cooperation, and update trade rules to reflect the realities of modern trade, such as digital commerce and environmental sustainability.

Previous Year Questions on WTO

1. UPSC CSE Prelims 2021:

Question: Which of the following is the highest decision-making body of the WTO?

A) General Council
B) Ministerial Conference
C) Appellate Body
D) Dispute Settlement Body

Answer: (B)

Explanation: The Ministerial Conference is the highest decision-making body of the WTO, where major decisions about global trade agreements and reforms are made by representatives of all member countries.

2. UPSC CSE Mains 2020 (GS Paper 3):

Question: "Examine the role of the WTO in promoting free trade and addressing trade-related disputes. How effective is the dispute resolution mechanism in ensuring compliance with WTO rules?"

Answer: The WTO has played a pivotal role in promoting free trade by reducing tariffs and trade barriers, ensuring that member nations follow common rules. Its dispute resolution mechanism has been largely effective in resolving trade disputes by providing a neutral platform for consultation and adjudication. However, recent challenges, including political disagreements over the appellate body, have highlighted the need for reforms to strengthen this mechanism and ensure greater compliance with WTO rulings.