<<–2/”>a href=”https://exam.pscnotes.com/5653-2/”>p>The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) are two pivotal institutions in the realm of international trade. Established post-World War II, GATT was designed to promote international trade by reducing trade barriers and providing a platform for the negotiation of trade agreements. In 1995, the WTO succeeded GATT, expanding its scope and establishing a formal institutional structure to oversee global trade. This ARTICLE delves into the key differences, advantages, disadvantages, and similarities between GATT and WTO, concluding with frequently asked questions to provide a comprehensive understanding of these two entities.
| Feature | GATT | WTO |
|---|---|---|
| Establishment | Established in 1948 | Established on January 1, 1995 |
| Nature | A multilateral treaty without an institutional framework | An international organization with a permanent institution |
| Scope | Focused primarily on trade in goods | Covers trade in goods, Services, and intellectual property |
| Dispute Settlement | Dispute resolution mechanism was weaker and non-binding | Robust, binding dispute settlement mechanism |
| Membership | Contracting parties (123 by the end) | Members (164 as of 2021) |
| Trade Rounds | Conducted eight rounds of negotiations | Conducts trade negotiations through various rounds (e.g., Doha Round) |
| DECISION MAKING | Consensus-based, but some decisions were made by majority | Consensus-based, but more formalized decision-making process |
| Agreements | Consisted of a series of agreements and protocols | Comprises a single undertaking, meaning all members are bound by all agreements |
| Secretariat | No formal secretariat; GATT relied on a temporary secretariat | Has a permanent secretariat based in Geneva |
| Legal Status | GATT was a provisional agreement | WTO is a permanent organization with a legal basis |
The main difference lies in their scope and structure. GATT was a multilateral treaty focusing primarily on trade in goods without a formal institutional framework, while the WTO is an international organization covering trade in goods, services, and intellectual property, with a permanent institutional structure.
GATT was replaced by the WTO to address its limitations, such as the lack of a binding dispute resolution mechanism, limited scope, and provisional nature. The WTO was established to provide a more comprehensive and permanent framework for global trade.
The WTO’s dispute settlement mechanism involves consultation, panels, and an appellate body to resolve disputes. If consultations fail, a panel is established to examine the case. The panel’s report can be appealed to the Appellate Body, whose decision is binding.
Benefits include access to a stable and predictable trading Environment, the ability to participate in global trade negotiations, protection under the dispute settlement mechanism, and the promotion of economic Growth through trade Liberalization-2/”>Liberalization.
The WTO provides special and differential treatment provisions for developing countries, technical assistance, and capacity-building programs. It also includes initiatives like the Aid for Trade program to help developing countries benefit from global trade.
Yes, a country can leave the WTO by providing written notice of its intention to withdraw. The withdrawal takes effect six months after the notice is received by the WTO.
Current challenges include addressing trade tensions between major economies, reforming the dispute settlement system, ensuring equitable trade rules for developing countries, and adapting to emerging trade issues such as digital trade and Climate change.
Decisions in the WTO are generally made by consensus among all member countries. In cases where consensus cannot be reached, decisions can be made by a majority vote.
The Doha Round, launched in 2001, is a series of trade negotiations aimed at achieving major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. It focuses on improving trade prospects for developing countries.
The WTO administers the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets minimum standards for the protection of intellectual property rights and provides mechanisms for enforcement and dispute resolution.
The MFN principle requires that any favorable trading terms offered by one GATT member to another must be extended to all other GATT members. This ensures non-discrimination and equal trading opportunities among members.
The single undertaking means that all WTO agreements are binding on all members, ensuring comprehensive compliance and preventing members from selectively adhering to only certain agreements.
In conclusion, both GATT and WTO have played crucial roles in shaping international trade. While GATT laid the foundation for modern trade practices, the WTO has built on this legacy, addressing its predecessor’s shortcomings and expanding its scope to create a more comprehensive and structured global trade system. Understanding the differences, advantages, and challenges of these entities is essential for appreciating their impact on the global Economy.