GATT and the World Trade Organization

Detail

1. Where GATT and the WTO fit in the history of trade

• Trade grew in stages. It began as barter (swapping goods with no money). It then moved along long routes such as the Silk Route. In the 20th century it came under rules agreed between many countries.
• After the Second World War, countries had high customs tariffs. A customs tariff is a tax charged on goods when they cross a border. Countries also used other limits on trade, such as quotas.
• To free the world from these barriers, some countries formed GATT in 1948.
• In 1994, members decided to set up a permanent institution for free and fair trade. GATT became the WTO on 1 January 1995.

2. GATT (General Agreement on Tariffs and Trade)

• GATT is an agreement, not a full organisation. It is a set of shared rules for cutting tariffs and other limits on trade in goods.
• Signing: the deal was signed on 30 October 1947. The 23 countries that signed it are called its founding "contracting parties" [2]. It came into force in 1948.
• First round: the first GATT trade round was held in Geneva in 1947 with 23 countries [2].
• Negotiating rounds: GATT ran eight rounds. A round is a long set of talks in which members swap tariff cuts.
• Growth: membership rose from 23 under GATT to 166 under the WTO. Together these economies now account for about 98% of world trade [2][3].

3. The Uruguay Round (1986–94) and the Marrakesh Agreement

• The Uruguay Round was the eighth and last GATT round. It ran from 1986 to 1994, and it led to the creation of the WTO [2].
• It ended at Marrakesh (Morocco) in April 1994 with the Marrakesh Agreement, which set up the WTO.
• It brought new areas under trade rules for the first time:

Agreement	Full form	What it covers
GATS	General Agreement on Trade in Services	Services such as telecom, banking and transport
TRIPS	Trade-Related Aspects of Intellectual Property Rights	Patents, copyrights and trademarks (ownership of ideas)
AoA	Agreement on Agriculture	Farm subsidies, market access and export support

4. The World Trade Organization (WTO)

• What it is: the WTO is the only international organisation that deals with global rules of trade between nations. It replaced GATT on 1 January 1995.
• What it does:
• sets rules for trade between nations;
• settles disputes between member countries;

• covers services (telecommunication, banking) and intellectual property, not just goods.

• Headquarters: Geneva, Switzerland.

• Members: 166 (NCERT: 166 members in December 2024). This is still the current figure [3].
• India: a founder member of the WTO (NCERT exercise 2(i)).

Structure:

• The Ministerial Conference is the top decision-making body. It meets every two years, and trade ministers of all members attend.
• The Appellate Body is the WTO's appeal court. It hears appeals against the rulings of dispute panels.

GATT vs WTO

Point	GATT	WTO
Nature	An agreement with temporary arrangements	A permanent organisation
Start	Signed 1947; in force 1948	1 January 1995
Scope	Trade in goods only	Goods, services (GATS) and intellectual property (TRIPS)
Disputes	Weak settlement system	Formal system with panels and an Appellate Body
Members	23 at the start	166 [3]

5. The Doha Development Round (2001)

• The Doha Development Round began in 2001 at Doha (Qatar). Its aim was to help developing countries, especially on farm trade.
• It has stalled. Rich and developing members disagree on farm subsidies and on opening their markets.

6. Criticism of the WTO (NCERT)

1. The gap between rich and poor gets wider

• Free trade does not make ordinary lives more prosperous.
• Powerful nations use the WTO to push their own business interests.
• As a result, the gap between rich and poor countries grows.

2. Market access is unequal

• Developed countries have not fully opened their markets to products from developing countries.

3. Social issues are ignored

• The WTO ignores health, workers' rights, child labour and the environment.

7. The dispute-settlement crisis

The Appellate Body has been paralysed since December 2019

• The US blocks the appointment of new judges.
• Old judges finished their terms and left, so the court no longer has enough judges to hear cases.
• Any losing country can now appeal "into the void". The case then stays unsettled.

The stop-gap fix

• Some members set up the MPIA (Multi-Party Interim Appeal Arbitration Arrangement). In the MPIA, appeals are decided by arbitrators the parties choose, instead of by the Appellate Body.
• India has not joined the MPIA.

8. India's positions at the WTO

• Public stockholding for food security: India buys grain at a support price and stores it to feed the poor. The Bali "peace clause" (MC9, Bali, Indonesia, 2013) stops other members from challenging such programmes at the WTO, even if they go beyond subsidy limits. India wants a permanent solution.
• E-commerce moratorium: the moratorium is a ban on charging customs duties on electronic transmissions, such as downloads and streamed content. India opposes extending it again and again, because it costs developing countries tariff revenue.
• "New issues": India opposes adding topics such as investment facilitation, which are outside the agreed mandate.
• Special and Differential Treatment (S&DT): S&DT means softer rules, longer deadlines and more flexibility for developing countries. India defends it.
• Fisheries: India accepted the WTO Agreement on Fisheries Subsidies on 20 July 2026. It was the 123rd member to do so [5].

9. Recent Ministerial Conferences

Conference	Place, year	Main outcome
MC12	Geneva (Switzerland), June 2022	Agreement on Fisheries Subsidies; TRIPS waiver for COVID-19 vaccines
MC13	Abu Dhabi (UAE), February 2024	Little progress
MC14	Yaoundé (Cameroon), 26–30 March 2026	Three decisions; e-commerce and WTO reform left unfinished [6]

Fisheries Subsidies Agreement (MC12 → in force 2025)

• It was adopted at MC12 in June 2022 [4].
• It entered into force on 15 September 2025, once two-thirds of WTO members had accepted it [4].
• It bans three kinds of subsidy [4]:
• subsidies for IUU fishing (illegal, unreported and unregulated fishing);
• subsidies for fishing overfished stocks (fish populations already caught faster than they can breed);

• subsidies for fishing on the unregulated high seas (open ocean outside any country's control).

• This is the first WTO agreement with an environmental goal: protecting marine fish stocks [4].

MC14, Yaoundé (2026)

• It was the second Ministerial Conference held in Africa. Nearly 2,000 officials and more than 90 ministers attended [6].
• Three decisions were adopted [6]:
• better integration of small economies into the trading system;
• better use of S&DT under the SPS (food safety, animal and plant health) and TBT (technical standards) agreements;

• continued negotiations on fisheries subsidies.

• Ministers "ran out of time" on the e-commerce work programme, the e-commerce moratorium and the TRIPS non-violation moratorium [6]. The e-commerce moratorium was due to expire at the end of March 2026 [6].

• The unfinished "Yaoundé package" went back to Geneva [6]. It holds:
• a draft declaration on WTO reform;
• a draft decision on e-commerce;
• a draft decision on the TRIPS non-violation moratorium;

• an LDC package (LDC: least developed country).

• After MC14:

• May 2026: at the General Council, Türkiye said it would not block a temporary extension of the e-commerce moratorium [7].
• July 2026: the General Council still had no consensus on the e-commerce moratorium. The TRIPS non-violation item had "no progress". Some LDC proposals were approved [8].

Prelims Hooks

• GATT was signed on 30 October 1947 by 23 contracting parties and came into force in 1948. The WTO started on 1 January 1995 [2].
• Uruguay Round (1986–94) → Marrakesh Agreement (April 1994) → WTO. It also gave GATS (services), TRIPS (intellectual property) and the Agreement on Agriculture.
• WTO headquarters: Geneva. Members: 166, about 98% of world trade [3]. India is a founder member.
• Top body: the Ministerial Conference, which meets every two years. (Trap: it is not the General Council.)
• Conference–place pairs: Bali 2013 (peace clause) → Geneva 2022 (MC12) → Abu Dhabi 2024 (MC13) → Yaoundé, Cameroon 2026 (MC14) [6].
• Fisheries Subsidies Agreement: in force 15 September 2025 after two-thirds acceptance. It bans subsidies for IUU fishing, overfished stocks and the unregulated high seas [4]. India joined on 20 July 2026 as the 123rd member [5].
• The Appellate Body has been paralysed since December 2019 because the US blocks appointments. India is not part of the MPIA.
• The Doha Development Round (2001) is still unfinished.
• Trap: GATT covered only goods. Services and intellectual property came in only with the WTO.

Mains Points

• Why GATT turned into the WTO: GATT was temporary, covered only goods and had weak dispute settlement. The WTO added a permanent organisation, services (GATS), intellectual property (TRIPS) and binding dispute settlement. It is now the only global rule-maker for trade.
• Is the WTO fair to developing countries? (GS-II/GS-III)
• NCERT criticism: the rich–poor gap is growing, developed countries keep their markets closed, and health, labour, child labour and environment are ignored.
• Rich countries' farm subsidies remain, while India's food-security stockholding has only the temporary cover of the Bali peace clause.

• India's answer: defend S&DT, ask for a permanent food-security solution, and oppose the e-commerce moratorium and "new issues".

• Crisis of multilateralism:

• The Appellate Body has been paralysed since 2019.
• The Doha Round has stalled since 2001.
• MC13 made little progress, and MC14 "ran out of time" on e-commerce and reform [6][8].

• Result: countries move towards regional trade blocs and FTAs (free trade agreements).

• Trade and environment: the Fisheries Subsidies Agreement (2025) shows that trade rules can protect marine stocks [4]. India took part with safeguards for small fishers [5]. The WTO has used it to answer the NCERT charge that it "ignores the environment".