World Trade Organization (WTO)

The World Trade Organization, or WTO, is the only global body that makes and enforces rules for trade between countries. Its members agree on rules such as how high their import taxes can be and how they must treat each other's goods. When two members fight over trade, the WTO has a system to settle the dispute. It is based in Geneva, Switzerland, and has 166 members.

Why does it exist?

Imagine a big market where every shop can suddenly raise prices only for certain customers, or shut its doors to others. Nobody could plan their business. Before the Second World War, many countries did exactly this with trade. They raised tariffs to protect their own industries, others hit back, and world trade collapsed during the Great Depression of the 1930s.

After the war, countries wanted fair and predictable rules so that trade could grow and trade fights would not turn into bigger conflicts. The WTO provides those rules and a referee.

Where did it come from?

The WTO grew out of an older agreement called the General Agreement on Tariffs and Trade (GATT).

• GATT (1947): Signed by 23 countries in 1947 and in force from 1 January 1948. India was one of the 23 founding members. GATT was only an agreement, not a full organisation, and it covered mainly trade in goods.
• Rounds of talks: Countries cut tariffs through several rounds of negotiations. The biggest was the Uruguay Round (1986 to 1994). It added new rules for services and intellectual property, and a stronger dispute system.
• Marrakesh Agreement (15 April 1994): Signed at the end of the Uruguay Round. It created the WTO.
• WTO born: 1 January 1995. India has been a member from day one.
• Doha Round (2001): Launched at the fourth Ministerial Conference in Doha, Qatar, in November 2001. It focused on the needs of developing countries. It has never been completed.
• Recent members: Comoros (165th) and Timor-Leste (166th) joined in August 2024.

How is the WTO organised?

• Ministerial Conference: The top body. Trade ministers of all members meet at least once every two years. The 14th Ministerial Conference (MC14) was held in Yaoundé, Cameroon, in March 2026, the first ever held in Africa.
• General Council: Runs the WTO between Ministerial Conferences. It also sits as the Dispute Settlement Body and the Trade Policy Review Body.
• Secretariat: The staff in Geneva, headed by the Director-General. Dr Ngozi Okonjo-Iweala of Nigeria holds the post; her second four-year term began on 1 September 2025.
• Decisions by consensus: Almost all decisions are taken by consensus. This means a decision passes only if no member present formally objects. So even one member can block a decision.

The basic rules (principles)

• Most-Favoured-Nation (MFN), GATT Article I: A member must treat all other members equally. If India cuts its tariff on a product for one member, it must give the same cut to all. The name is confusing: it really means "no favourites".
• National Treatment, GATT Article III: Once imported goods enter a country, they must be treated the same as local goods, for example in internal taxes.
• Bound tariffs: Each member promises a maximum tariff (the "bound rate") for each product and should not charge above it.
• Exception for trade deals, GATT Article XXIV: Members may form free trade areas or customs unions and give each other lower tariffs than they give others. But such a deal must remove duties on "substantially all the trade" between them.
• Special and Differential Treatment (S&DT): Developing countries get extra time and some flexibility in following rules. The WTO has no definition of a "developing country", so members declare it themselves.

How does dispute settlement work?

The WTO is like a court for trade fights. First, the two members must hold consultations for up to 60 days. If that fails, a panel of experts hears the case and gives a report. Either side could then appeal to the Appellate Body, a standing group of seven judges.

Since December 2019, the Appellate Body has not worked. The United States blocked the appointment of new judges, so there are not enough members to hear appeals. Now, a member that loses a panel case can appeal "into the void", and the case stays stuck. In 2020, the EU and some other members set up the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary fix. India has not joined it.

The key agreements UPSC asks about

• Agreement on Agriculture (AoA): Sorts farm subsidies into boxes. Amber Box subsidies distort trade and are limited. For developing countries, the "de minimis" limit is 10% of the value of production. Green Box subsidies (like research) are allowed without limit. Blue Box covers support tied to production limits.
• TRIPS: Rules on intellectual property such as patents and copyrights.
• GATS: Rules for trade in services.
• Trade Facilitation Agreement: Makes customs procedures faster and simpler.
• Agreement on Fisheries Subsidies: Adopted at MC12 (2022), in force from 15 September 2025. It bans subsidies for illegal, unreported and unregulated fishing and for fishing overexploited stocks.

India's position and Indian examples

• Food security and the "peace clause": India buys grain from farmers at the Minimum Support Price (MSP) and stores it for the public distribution system. This support can cross the 10% limit. At the Bali Ministerial Conference (2013), members agreed on an interim "peace clause": no member would challenge such public stockholding subsidies in a WTO dispute. In November 2014, the General Council made it last until a permanent solution is found. India first used this clause in April 2020 for rice.
• Disputes: India is defending several cases, including on sugar subsidies and on tariffs on information and communication technology (ICT) products. In the sugar case, a panel ruled against India in 2021, and India appealed "into the void".
• Multilateralism first: India prefers rules made by all members together. It has opposed adding new subjects such as the Investment Facilitation for Development Agreement through smaller groups of members (plurilateral deals).
• E-commerce moratorium: Since 1998, members agreed not to charge customs duties on electronic transmissions. India has argued that this costs developing countries revenue. At MC14 (March 2026), members could not agree to extend it, and it lapsed for the first time.

Commonly confused concepts

• GATT vs WTO: GATT (1947) was an agreement mainly on goods. The WTO (1995) is a permanent organisation that covers goods, services and intellectual property, and has a stronger dispute system. GATT still exists as a set of rules inside the WTO (as "GATT 1994").
• WTO vs UNCTAD: UNCTAD (United Nations Conference on Trade and Development, 1964) is a UN body that studies trade and development. It does not make binding trade rules. The WTO is not a UN agency.
• Multilateral vs plurilateral vs bilateral: Multilateral means all WTO members; plurilateral means only a group of willing members; bilateral means just two countries (like the India-US BTA).
• Bound tariff vs applied tariff: The bound tariff is the legal maximum a member promised at the WTO. The applied tariff is what it actually charges, which can be lower.
• MFN vs national treatment: MFN is about treating foreign countries equally with each other. National treatment is about treating foreign goods equally with local goods.

Issues, criticism and the way forward

• Broken appeals system: Without the Appellate Body, WTO rulings are easy to escape. Reform of dispute settlement is the top demand of many members, including India.
• Slow decision-making: Consensus makes it very hard to agree on new rules. The Doha Round is stuck after more than two decades.
• Rise of unilateral tariffs and trade deals: Large economies now often use their own tariff laws and bilateral deals instead of WTO rules. Critics say this weakens the MFN principle. Supporters of these moves argue the WTO has failed to deal with problems like industrial overcapacity and state subsidies.
• Developing-country status: Some developed members say big emerging economies should not claim S&DT. India's position is that S&DT is a right needed for development and food security.
• Way forward: Experts suggest restoring a working appeals system, finding a permanent solution on public stockholding, and making room for new issues like digital trade and climate without sidelining developing countries.

Concepts to Know

• Tariff: A tax charged on goods when they are imported into a country. It makes foreign goods costlier.
• Consensus: A way of deciding in which nobody present formally objects. It is different from a vote.
• Subsidy: Money or support the government gives to producers, which lowers their costs.
• Moratorium: An agreed pause on doing something, here a pause on charging customs duty on digital transmissions.
• Customs union: A group of countries with free trade among themselves and a common tariff on goods from outside (for example, the European Union).