IGNOU : M.COM : IBO 1 : UNIT 10 : Q - 1. Distinguish between GATT and WTO. Explain the structure and functions of WTO.

 

Ans. Basic Differences Between GATT and WTO

There are six major differences between GATT and the WTO

1. Whereas the GATT framework allowed for the existence of a number of important side agreements negotiated and concluded by certain GATT contracting parties in the framework of the various GATT Rounds, the WTO administers a unified package of agreements to which all members are committed (i.e., the Uruguay Round Agreement now forms an integral part of the WTO);

2. The WTO has considerably expanded the role of GATT by including Trade in Services and IPR within the multilateral trading system. In addition, the environment becomes a major agenda item for the first time;

3. The WTO contains an improved version of the original GATT rules - GATT 1994, which restate and strengthen the original GATT rules concerning trade in goods;

4. GATT trade opt-out agreements, such as those governing the clothing and textiles and agriculture sectors are to be gradually overturned and so-called 'grey area' measures including voluntary arrangements and export restraints are to be phased out. Virtually, all trade in goods will from now on be subject to GATT/WTO rules;

5. The potential membership of the WTO of some 150 countries is far wider than under the GATT. This fact undoubtedly serves to strengthen the arm of the WTO; and

6. WTO members cannot block decisions arrived at under the dispute settlement mechanism. Under the GATT, dispute panel findings were often blocked.

 

Functions of WTO

The most important function-of the WTO is to implement, administer, direct and further the objectives of the Multilateral and Plurilateral Trade Agreements resulting from the Uruguay Round. To achieve these ends, the WTO will :

1. Provide a forum for further trade liberalization negotiations arising from the Multilateral and Plurilateral Agreements;

2. Administer the new Dispute Settlement Procedure in such a manner as to regulaand ensure Members' compliance with the agreements;

3. Establish and direct a Trade Policy Review Mechanism to study the trade policies of Members;

4. Co-operate fully, and on an equal footing, with the International Monetary Fund and the World Bank for the furtherance of policy-making; and

5. Research and produce both specialized and general economic reports of international interest.