WTO, INTERNATIONAL ECONOMIC INSTITUTIONS AND REGIONAL TRADE BLOCKS
The global economy is shaped by various international economic institutions and regional trade blocs that facilitate and regulate trade and economic cooperation among countries. The World Trade Organization (WTO) plays a crucial role in promoting free trade by providing a platform for negotiating trade agreements and settling disputes. Alongside the WTO, institutions such as the International Monetary Fund (IMF) and the World Bank help maintain global financial stability and support economic development. Additionally, regional trade blocs like the European Union (EU), the North American Free Trade Agreement (NAFTA), and the Association of Southeast Asian Nations (ASEAN) foster regional economic integration and cooperation. Together, these entities work to enhance economic growth, reduce trade barriers, and ensure a more interconnected and resilient global economy.
|
Aspect |
GATT (General Agreement on Tariffs and Trade) |
WTO (World Trade Organization) |
|
Establishment and Scope |
Established in 1947 as a provisional agreement to promote international trade by reducing trade barriers. GATT was a legal agreement among countries, not an organization. |
Established on January 1, 1995, following the Uruguay Round of trade negotiations. The WTO is a permanent international organization overseeing global trade rules, ensuring smooth, predictable, and free trade. |
|
Coverage of Trade Issues |
Focused primarily on the trade of goods. Provided a framework for negotiating trade agreements and settling disputes. |
Covers a broader range of trade issues: goods (GATT), services (GATS), and intellectual property rights (TRIPS). Also deals with trade-related investment measures and sanitary and phytosanitary measures. |
|
Institutional Framework |
Lacked a permanent institutional framework; managed by a small secretariat in Geneva. |
Has a permanent institutional structure with a larger secretariat in Geneva. The WTO has formal procedures for decision-making, dispute resolution, and monitoring trade policies. |
|
Dispute Settlement Mechanism |
Relatively weak; based on diplomatic negotiations. Panel rulings could be blocked by any member, leading to delayed or ineffective resolutions. |
More robust and binding. The Dispute Settlement Body (DSB) can authorize sanctions if a member fails to comply with rulings, making the system more enforceable and credible. |
|
Legal Status |
Functioned as a provisional agreement; more a set of rules for international trade. |
A formal international organization with legal personality, providing it with authority and a structured governance system. WTO agreements are binding for all member countries. |
|
Membership and Coverage |
Initially had 23 member countries, mainly developed economies. Membership expanded over time but remained limited in scope compared to WTO. |
Broader membership with 164 member countries as of 2021, representing over 98% of global trade. Covers a more comprehensive range of issues, including agriculture, textiles, and services, which were not adequately addressed under GATT. |
1.Administering WTO Trade Agreements
i.Oversight and Implementation: The WTO administers various trade agreements that govern international trade practices. It ensures that member countries adhere to their commitments under these agreements, which include GATT, GATS, TRIPS, and others.
ii.Monitoring Compliance: The WTO monitors compliance with trade agreements through regular reviews and consultations. It assesses whether countries are following the agreed rules and regulations.
2.Forum for Trade Negotiations