Full Form of WTO – World Trade Organization

The World Trade Organization is the full form of WTO. It operates as an intergovernmental institution (international organization) responsible for handling foreign trade between two or more nations. It has its headquarters in Geneva, Switzerland. It was founded on the 1st of January 1995 to reduce tariffs and other underlying barriers to international tradeInternational TradeInternational Trade refers to the trading or exchange of goods and or services across international borders. read more. At present, it has a membership of not less than 164 member states.

History

WTO acts as a replacement for GATT (General Agreement on Tariffs and Trade). GATT was enacted after World War 2 solely to establish global economic cooperation. GATT was created in 1947, and it consisted of 23 members. GATT’s headquarters in Geneva, Switzerland, was a part of the Bretton Woods System. The purpose behind introducing GATT was to ensure the practice of a stable trade as well as an economic world environment.

Later, the International Trade Organization (ITO) came into the picture. It believed that GATT might become a part of ITO, and it even negotiated for this reason in the year 1948 in Havana. Introducing ITO was to lay out the general basic rules regarding foreign trade and other global economic matters. Unfortunately, the submitted charter failed to receive the U.S. Congress’s approval, so WTO came into existence. WTO was established in 1995 and acted as a foolproof replacement for GATT. It is also why WTO calls the successor to the GATT. WTO is the only intergovernmental organization dealing with foreign trade rules between countries.

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Objectives of WTO

The objectives of the World Trade Organization are below:

  • WTO aims to improve the standard of living of every individual belonging to its member nations.WTO aims to ensure a hundred percent employment and a rise in demand for goods and services.WTO aims to enlarge the production and trading of products and services.WTO also aims to ensure the full utilization of national and international resources.WTO even aims to safeguard the environment from depletion due to human interference.WTO aims to ensure that all companies accept and abide by the concept of sustainable development.WTO also aims to implement a new foreign trade mechanism as provided in the Agreement.WTO aims to promote international trade that can certainly benefit all countries.To remove the existing obstacles present in an open global trading system.WTO even aims to take certain steps towards developing the poorest and underdeveloped countries.WTO even aims to enhance competitiveness between all the member countries to benefit the maximum number of customers.

Functions of WTO

The functions of the World Trade Organization are below:

  • The World Trade Organization shall administer the TPRM (Trade Policy Review Mechanism).The World Trade Organization shall administer the World Trade Organization agreements.The World Trade Organization shall monitor domestic trade policies.The World Trade Organization shall handle trade-related disputes.The World Trade Organization shall provide an open forum for trade-related negotiations.The World Trade Organization shall offer technical assistance for countries that are on the developing front.The World Trade Organization shall cooperate with similar intergovernmental organizations.The World Trade Organization shall cooperate with the IMF (International Monetary Fund) and IBRD (International Bank for Reconstruction and Development).

Advantages

The advantages of WTO are below:

  • First, WTO helps in the promotion of peace and wellness amongst countries.With WTO, one can constructively handle disputes between member nations.Second, WTO helps in the stimulation of economic growth.WTO assists developing nations.WTO ensures an adequate level of corporate governance and free trade, reducing the cost of living.Trade between nations under the governance of WTO raises employment and income opportunities for the participants.WTO protects the government from attacks like lobbying.The free trade ensured by the WTO offers better and more choices concerning goods and services.WTO even boosts agricultural exports and international trade.WTO even enhances the inflow of FDIFDIA foreign direct investment (FDI) is made by an individual or an organization, into a business located in a foreign country. The host nation receives job creation prospects, advanced technology, a higher standard of living, infrastructural development, and overall economic growth.read more (foreign direct investment) and helps restrict dumping.WTO provides huge benefits for industries like cloth and textiles.

Disadvantages

The World Trade Organization has a lot of drawbacks too. The dark side of the World Trade Organization is below:

  • The world trade organization is threatening the agricultural sector. It is because it reduces subsidiesSubsidyA subsidy in economics refers to direct or indirect financial assistance from the government to an individual, household, business, or institution to promote social and economic policies.read more and leverages the import of food crops.The World Trade Organization imposes a huge threat on industries that operate nationally.The World Trade Organization even has significant impacts on human and employee rights.World trade organization undermines national sovereignty and decision-making made at the local level.WTO even increases economic instability at the national level.New industries may find it difficult to establish themselves in an extensive competitive environment.

Conclusion

WTO is the short form for the World Trade Organization. Established in 1995, with headquarters in Geneva, Switzerland. The WTO currently has around 164 member states and 117 developing nations. WTO regulates the foreign trade that takes place between two or more nations. In addition, it introduces a better version of GATT.

The minister of every member nation runs WTO. It trades in various industrial products, agricultural goods, and services. The important objective of WTO is to enrich the standard of living of the individuals belonging to member countries, safeguard the environment, promote peace, ensure 100 percent employment, and stimulate free trade, ultimately resulting in economic growth.

This article guides the Full Form of WTO and its definition. Here, we learn the WTO’s objectives, functions, and advantages and disadvantages. You may refer to the following articles to learn more about finance: –

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