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“The entire world in an integrated economy, regulations are a must, but there ought to be autonomy.”

Globalization and international trade are believed to be the future of economic growth. But opening the doors of a nation needs some security and a proper framework. Just as we require judicial support in our countries, there must be an international body for the same. World Trade Organization, established on January 1, 1995, is an international organization which is the successor of GATT, General Agreement on Tariffs and Trade, formed in 1947, in the wake of World War II to boost the world economy by reducing high trade quotas and tariffs. WTO oversees global trade issues and regulations, negotiates and settles disputes between two trading countries. Currently having 164 trading member countries with 24 observer countries which represent more than 98% of the world’s trade, WTO has been in the middle of many controversies regarding its functioning and policies. In this article, some aspects of the same are unfolded to get a better understanding of the organization.


As we flip the coin, one might witness the negatives of WTO’s functioning. Be it the protests at the organization’s door during the Third Ministerial Conference held in Seattle, Washington 1999 or in Canada and Switzerland, WTO faces acute criticism where more powerful nations are believed to have an edge over small and developing countries.

Before 1947, GATT was based on the rationale of the most favored nation clause which, when assigned to one trading country by another, gave the trading partner privileged trading rights. Developed countries therefore would tend to rule the organization, with respect to how rules were laid, disputes were to be resolved and any other negotiation to be settled, would remain behind closed doors. This proves that the organization working towards democratic governance and non-discriminatory trade policies for international trade fails to be democratic itself with a lack of transparency as an international forum. Many countries have to compromise their own interests to avoid the breach of WTO agreements. As it is said, “Unfavoured governments who are in favour of huge interests and businesses remain in power at the cost of a representative government.”

Although free trade helps infuse cash into less influential economics, it’s the foreign investors who gain an edge over local industries, where many economists claim that WTO is a way to force politics into trade causing long-term problems. While anti-dumping acts allow “Big Players” to practice protectionism, they are fortunate enough to prevent their budding industries, at the same time, they have access to international markets. With very few agreements signed, the organization fails to confront ethical issues, tackle environmental problems and promote fair multilateralism as it leans towards those in power.

Even when it comes to intellectual property rights, countries getting patents for their medicines sell them at high prices even though some of these medicines are essential goods in less developed nations. Some countries in South America and Saharan Africa, could not afford such expensive medicines for HIV and AIDS, and therefore, could not save the lives of their people just because medicine prices grew exponentially when they were patented, by these powerful players, who took undue advantage of these rights.

Furthermore, the high costs of complying with WTO to the small countries have broadened the gap between the haves and the have nots. Trampling with human rights and labour laws is one such aspect that cannot be overlooked. On these grounds, WTO proves to be too poor to defend. One of the economists mentioned WTO as the “henchman of a shadowy clique of stronger nations.”


Being the watchdog of trade, WTO helps member countries access free and fair international trade. It focuses on establishing open lines of communication concerning trade among the member nations to make it smooth and predictable. While laying general rules for global trade, economic peace and stability in the world through a multilateral trading system based on consenting member states, WTO also acts as a dispute mediation entity. According to the principles of economics, trade makes everyone better off by providing a comparative advantage to countries, allowing them to specialize in what they do best, and in turn, raise the living standards of people globally. Being a system of rules dedicated to open, fair and undistorted competition, it strives to treat countries equally and eradicate discriminatory trade policies. It also strives to protect the intellectual property rights of the member countries.

WTO also promotes open markets, in its realm, it has been successful in increasing the volume of trade up to 270%, with the dollar value of world trade being increased by a factor of 3.8. Indirectly, more investments are fostered internationally, boosting the world economy and contributing to job opportunities, upward economic growth, and monitoring careful policy making. The organization also encourages good government which leads to reduced corruption. Through WTO, free international trade also enables business industries to exploit economies of scale and provide a wide variety to consumers of goods and services. WTO also helped prevent the trade war during the 2008-09 crisis and governments were shielded from lobbying, unlike the trade war after the 1930 recession.

To allow trade without discrimination, WTO is not entirely a free trade body, but it allows trade and tariff for the protection of infant industries such as anti-dumping trade policies. On the contrary, in the absence of shared rules and standards, businesses would have to spend an exorbitant amount of money to comply with a wide set of rules and regulations to trade outside the boundaries of their nations. Together, it helps make trade simpler, cut costs of the companies and enhance confidence in the future.


The world is complex and the WTO is a forum for countries to thrash out their differences. International trade without a leading entity cannot be imagined, hence, WTO continues to exist and thrive globally. An apex organization is needed to play the key role of a regulator to direct the flow of trade smoothly. According to Ralph Ossa, WTO’s success is “No trade agreement, but no trade war.”

While the control of the steering of the oar may lie in the hands of a few powerful countries it should be noticed that having a boat is of equal importance. To eradicate these bottlenecks, a more democratic and systematic path must be followed by the WTO. It needs to be transparent with representatives elected by member countries and must focus on taking its members into consideration.

WTO needs to update itself to justify and increase its value. Free trade must be practiced by countries provided national interest is not sacrificed. A proper functional structure must be followed which could be analyzed critically by the members giving them the right to participate in the policy framework and decision making. Without a binding organization like the WTO, it would be very difficult for countries to enter into trade agreements with each other. No matter how bitter their political rivalries are, all the countries must treat their trading partners equally. Keeping an eye on countries’ trade is also an essential task that the world can’t afford to overlook. It is true that without the support of powerful players like the US, the future of WTO would remain vague and uncertain. It must tread on the path of being a democratic organization with a defined set of rules and regulations, fair as well as just trade for everyone.

By Vanshika Anand


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