Full Form of WTO – World Trade Organization
World Trade Organization is the full form of WTO. It operates as an intergovernmental institution (international organization) which is responsible for taking care of the foreign trade between two or more nations and it has its headquarters in Geneva, Switzerland and it was founded on the 1st of January, 1995 with the purpose of reducing tariffs and such other underlying barriers to international trade and at present it has a membership of not less than 164 member states.
WTO was enacted to act as a replacement of GATT (General Agreement on Tariffs and Trade). GATT was enacted after the end of World War 2 solely for the purpose of establishing global economic cooperation. GATT was created in the year 1947 and it consisted of 23 members. GATT had its headquarters in Geneva, Switzerland and it was a part of the Breton Woods System. The purpose behind introducing GATT was to ensure the practice of a stable trade as well as an economic world environment.
Later International Trade Organization (ITO) came into the picture and it was believed that GATT might become a part of ITO and even a negotiation was done for this very reason in the year 1948 in Havana. The purpose behind introducing ITO was to lay out the general basic rules with respect to foreign trade and such other global economic matters. The charter that was submitted failed to receive approval of the U.S. congress and hence, WTO came into existence. WTO was established in the year 1995 and it acted as a full proof replacement for GATT. This is also why WTO is termed as the successor to the GATT. WTO is the only intergovernmental organization in the world that deals with the rules pertaining to foreign trade happening between countries.
Objectives of WTO
The objectives of the World Trade Organization are discussed below:
- WTO aims at improving the standard of living of every individual belonging to its member nations.
- WTO aims at ensuring a hundred percent employment as well as a rise in demand for goods and services.
- WTO aims at enlarging the production and trading of products and services.
- WTO also aims at ensuring that there is full utilization of national and international resources.
- WTO even aims at safeguarding the environment from getting depleted as a result of human interference.
- WTO aims at ensuring that all companies accept and abide by the concept of sustainable development.
- WTO also aims at implementing a new foreign trade mechanism in a way as it was provided in the Agreement.
- WTO aims at promoting international trade that can certainly benefit all the countries.
- To remove the existing obstacles present in an open global trading system.
- WTO even aims at taking special steps towards the development of the poorest and underdeveloped countries.
- WTO even aims at enhancing competitiveness between all the member countries in order to benefit the maximum number of customers.
Functions of WTO
The functions of the World Trade Organization are discussed 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).
The advantages of WTO are discussed below:
- WTO helps in the promotion of peace and wellness amongst countries.
- With WTO, disputes between member nations can be constructively handled.
- WTO helps in the stimulation of economic growth.
- WTO provides assistance to developing nations
- WTO ensures that there is an adequate level of corporate governance and ensures free trade which means the cost of living is reduced.
- 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 WTO offers better and more choice with respect to goods and services.
- WTO even boosts agricultural exports and international trade.
- WTO even enhances the inflow of FDI (foreign direct investment) and helps in restricting dumping.
- WTO provides huge benefits for industries like cloth and textiles.
The world trade organization has a lot of drawbacks too. The dark side of the World Trade Organization is discussed below:
- The world trade organization is threatening for the agricultural sector. This is because of the fact that it reduces subsidy and leverages the import of food crops.
- World trade organization imposes a huge threat on industries that operates on a national scale.
- World trade organization even has significant impacts on human and employee rights.
- World trade organization undermines national sovereignty and decision making that is made at the local level.
- WTO even increases economic instability at the national level.
- New industries may find it difficult to get themselves established in an extensive competitive environment.
WTO is the short form for the World Trade Organization. It was established in the year 1995. It has its headquarters in Geneva, Switzerland. At present, the WTO has around 164 member states and 117 developing nations. WTO regulates the foreign trade that takes between two or more nations. It was introduced as a better version of GATT.
WTO is run by the minister of every member nation and 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, to safeguard the environment, to promote peace, to ensure 100 percent employment and to stimulate free trade which would ultimately result in economic growth.
This has been a guide to the Full Form of WTO and its definition. Here we learn the objectives, functions of WTO, along with advantages and disadvantages. You may refer to the following articles to learn more about finance –