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GS Foundation 2025
International Institution - WTO Batch D1D2D3 - #ECO030

1. General Agreement on Tariffs & Trade (GATT)

- Bretton Woods Conference (1944) (United Nations Monetary and Financial
Conference) discussed the establishment of → a) International Monetary Fund (IMF)
to promote stability of exchange rates and financial flows b) International Bank for
Reconstruction and Development (IBRD) to aid post war reconstruction of countries
c) International Trade Organization (ITO) to establish rules and regulation for
international trade; IMF and IBRD came into existence but ITO did not.
- GATT → a formal agreement between many countries aimed at reducing or
abolishing trade barriers like tariffs or quotas; from 1947 to 1995 there were eight
rounds of Multilateral Trade Negotiations;
- Uruguay Round (eight round 1986 - 1994) → widened the negotiating mandate of
GATT to include a) Services b) Intellectual Property Rights c) Trade Related
Investment issues d) Inclusion of Agriculture (Trade in agricultural products) e)
Integration of Textiles and clothing sector
2. World Trade Organization (WTO)
- Established on 1 Jan 1995; successor to GATT; 164 members; only international
organization dealing with the global rules of trade; Marrakesh Agreement led to
establishment of WTO
- WTO Structure → Ministerial Conference - Highest decision making body (meet
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once in two years); General Council - carries out decision of MC; Dispute Settlement
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body; Trade Policy Review Body

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- Decisions in WTO are taken based on consensus; one country - one vote
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3. WTO Principles
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- Trade Without Discrimination

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- Most Favoured Nation (MFN) → treating other people equally; if a country

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grants a special favour (lowering custom duty) to one of its trading partner,
it has to do the same for all its trading partners - whether rich or poor, weak
or strong; Exceptions → FTA, Security Clause, Special and Differential
Treatment given to developing / poor countries
- National Treatment → Treating foreigners and locals equally; Imported and
locally-produced goods /service should be treated equally — at least after
the foreign goods / services have entered the market.
- Predictability and Transparency → member countries are required to publish their
trade policies and practices; periodic review of trade policies by WTO (Trade policy
Review mechanism)
- Freer trade (gradually, through negotiation) → lowering trade barriers such as tariffs
(custom duty), quota, import ban etc; The WTO agreements allow countries to
introduce changes gradually, through “progressive liberalization”. Developing
countries are usually given longer to fulfil their obligations.
- Promoting fair trade → settling trade disputes through Dispute Settlement Body
- Encouraging Trade and Development → Special and Differential treatment for
developing/ poor countries; WTO-led Aid-for-Trade Initiative - to mobilize
resources to address the trade-related constraints identified by developing and
least-developed countries.

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 Page 2 of 5

GS Foundation 2025
International Institution - WTO Batch D1D2D3 - #ECO030

4. WTO Agreements

Umbrella Agreement Establishing WTO

Goods Services Intellectual

Property

Basic Principles GATT GATS TRIPS

Additional Details Other goods Services annexes

agreements
and annexes

Market Access Countries’ Countries’ schedules

Commitments schedules of of commitments(and
commitments MFN exemptions)

Dispute settlement Dispute Settlement Body

Transparency Trade Policy Review C

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- GATT (1994) → Some of the important agreement under it are:

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- Agreement having Sectoral Focus → Agreement on Agriculture; Agreement

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on Textile & Clothing

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- Agreement on Procedural Issues → Agreement on Pre-shipment Inspection;

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Agreement on Rules of Origin; Agreement on Import Licensing Procedures;

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Agreement on Trade Related Investment Measures; Agreement on Trade

Facilitation
- Harmonisation of Standards → Agreement on the Application of Sanitary and
Phytosanitary Measures; Agreement on Technical Barriers to Trade
- Trade Defense Measures → Agreement on Subsidies and Countervailing
measures; Agreement on Safeguards; Anti-dumping
- General Agreement on Trade in Services (GATS)
- Trade Related Aspects of Intellectual Property Rights (TRIPS)
5. Agreement on Agriculture (AoA)
- provides a framework to make agricultural trade fairer and more market oriented
(excludes fishery and forestry products as well as rubber, jute, sisal, abaca and coir)
- Three Pillars of AoA →
- Market Access → lowering of tariffs and non tariff barriers (quota etc)
- Domestic Support → calls for reduction in trade distorting domestic
subsidies; Classifies subsidies into 3 types - Green Box (permitted), Blue Box
(slow down — i.e. need to be reduced) & Amber Box (forbidden)

ForumLearning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
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GS Foundation 2025
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Green Box Blue Box Amber Box

subsidies do not distort trade, Direct payments under Domestic support that
or at most cause minimal production limiting distort production and
distortion; allowed without programmes exempt from trade;
limits reduction if: based on fixed
area and yields & livestock
payment based on number of
heads

They have to be government- Allowed without limits Any support measure

funded and must not involve which do not fall in Green
price support. Box and Amber Box; WTO
members should try to
reduce it

e.g. R&D Support, training, E.g - include measures to

extension /advisory services; support prices, or
infrastructure support subsidies directly related
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to production quantities.
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- Export Subsidies → Government support/ subsidy on inputs of agriculture

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which make export cheaper; may lead to dumping of products in other

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countries
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- AoA also provides for Special Safeguard Mechanism (SSM) → developing

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countries can temporarily impose higher than bound tariff rates in case of
sudden surge in imports
- AoA& Related Issues →
- De Minimis: Minimal amounts of domestic support that are allowed even
though they distort trade → up to 5% of the value of production for
developed countries, 10% for developing; prices taken of reference period
1986-88;
- Peace Clause (2013 Bali Ministerial Conference) → no penalty against
a country even if it breached de minimis level; India insists that
member countries of the WTO agree to a permanent solution to the
dispute over public stockholding of foodgrains.
- Market Access → Market opening has mainly occurred in developing nations.
Products from developing countries are still unable to access developed
country markets due to trade distorting domestic support policies and high
tariffs. Developed countries use SPS measures and technical trade barriers
to selectively exclude imports from developing countries by imposing higher
standards than international bodies.
- Developed countries provide high trade distorting subsidies than developing
countries like India; In 2015, USA provided average subsidy of $7860 to its
farmers as compared to India of $ 417
ForumLearning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
 Page 4 of 5

GS Foundation 2025
International Institution - WTO Batch D1D2D3 - #ECO030

6. Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)

- Provides rule for food safety and animal and plant health standards
- When used arbitrarily, may hamper agricultural export → EU banning import of
Indian mangoes saying it contains harmful organisms (2014); India’s export of basmati
rice restricted due to pesticide residues
7. Trade Facilitation Agreement (TFA)
- to simplify customs rules across all international borders for faster movement of
goods and services; India ratified TFA in April 2016; TFA came into effect in Feb 2017
after 2/3rd member countries ratified it
8. Information Technology Agreement (ITA)
- to completely eliminate tariffs on IT products covered by the Agreement; India is
signatory to ITA;
- ITA - II → Few developed countries proposed to broaden the scope and coverage of
the ITA (Nairobi Ministerial Conference 2015); India has decided not to participate in
this for the time being because India’s experience with the ITA-I has been most
discouraging, which almost wiped out the IT industry from India.
9. Agreement on Trade Related Investment Measures (TRIMS)
- countries should not adopt the investment measure which restrict and distort trade;
national treatment for foreign investment; list of prohibitive investment measure -
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domestic content requirement; technology transfer requirement, export obligation

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etc
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10. General Agreement on Trade in Services (GATS)

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- negotiated in Uruguay Round; applies in principle to all service sectors; exceptions

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→ Government services (social security schemes etc); Four Modes of Supply of

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services → Mode 1 (cross border trade); Mode 2 (Consumption Abroad); Mode 3

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(Commercial Presence); Mode 4 (temporary movement of natural persons)

11. Trade Related Aspects of Intellectual Property Rights (TRIPS)
- Provides for a) Protection of IPR → (Patents, Copyrights, Trademark, Industrial
Design, Geographical Indications, Layout designs of integrated circuits, Trade
Secrets); b) Enforcement; c) Technology Transfer
- TRIPS Plus → developed countries demanding stricter IPR protection than TRIPS;
opposed by developing countries
12. India and WTO - Various Issues
- Agricultural Subsidies
- Liberalisation of Movement of Professionals (Mode 4)
- Negotiations on non trade issues (such as environment, labour standards etc); India
wants non trade issue to be kept out of negotiation.
13. WTO 13th Ministerial Conference (MC13) in Abu Dhabi
 Context: Increasingly challenging global trade environment.
Key Points
Challenges Addressed:
 Global Shocks: The global trading system has faced significant disruptions,
including:
o Conflicts impacting critical shipment routes.

ForumLearning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]
 Page 5 of 5

GS Foundation 2025
International Institution - WTO Batch D1D2D3 - #ECO030

o Recalibrations in supply chains to reduce dependence on single suppliers like

China.
o Increasing inward-looking, tariff-heavy trade policies among nations,
counter to WTO’s goal of open trade.
 Abu Dhabi Declaration: Emphasizes the need for open, inclusive, and resilient supply
chains, but lacks concrete steps or commitments.

Persistent Divergences:
 Agriculture:
o Public Stockholding: Aimed at ensuring domestic food security, discussions
have been ongoing for over two decades with limited progress.
o Fisheries Subsidies: Continued disagreements over subsidies.
o Progress: A text has been developed for future negotiations.
 E-commerce:
o Customs Duties: Exemption for e-commerce extended for another two
years.
o India's Stance: Commerce Minister Piyush Goyal indicated India is not fully
opposed to this exemption.
 Dispute Resolution Body:
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o Current Status: Non-functional for four years.

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o Commitment: Geneva commitment to revive the body by 2024 reiterated.

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India’s Position and Outcomes:

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 Blocking Investment Facilitation Pact:

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o India, along with South Africa, successfully thwarted a proposal led by China
and supported by over 120 countries to introduce an investment facilitation
pact into the WTO framework.
 Future Focus:
o India aims to maintain policy space for sensitive sectors, especially
agriculture.

Conclusion
 WTO’s Relevance: Needs to enhance its efforts to stay relevant amidst global
polarization.
 Member's Perception: Labeling the biennial meetings as successes despite limited
achievements highlights the WTO's waning efficacy.

ForumLearning Centre:Delhi - 2nd Floor, IAPL House, 19 Pusa Road, Karol Bagh, New Delhi - 110005 | Patna - 2nd floor, AG Palace, E Boring Canal
Road, Patna, Bihar 800001 | Hyderabad - 1st & 2nd Floor, SM Plaza, RTC X Rd, Indira Park Road, Jawahar Nagar, Hyderabad, Telangana 500020
9311740400, 9311740900 | https://academy.forumias.com | [email protected] | [email protected]