WTO (World Trade Organisation) was set up in 1995.

WTO replaced GATT (General Agreement on Tariffs and Trade) formalised in1947. GATT was all along concerned with the promotion of international trade through tariff reduction, doing away with nondiscriminatory practices among trading partners, and evolving rules to counter protectionism.

 The purpose of this clause was to discourage bilateralism and encourage multilateralism so that the world trade could expand in an orderly manner. The WTO is a new international organisation set up as permanent body and is designed to play the role of watchdog in the spheres of trade in goods, trade in services, foreign investment, intellectual property rights etc.

Functions of WTO
The WTO shall facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements, The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations.

 The WTO shall administer the Understanding on Rules and procedures Governing the Settlement of Disputes. The WTO shall administer the Trade Policy review Mechanism. With a view to achieving greater coherence in global economic policymaking, the world Trade Organisation shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies,.

WTO Agreements
1. Agreement on agriculture. This provides a framework for the long-term reform of agricultural trade and domestic policies over the years to come, with the objective of introducing increased market orientation in agricultural trade. The tariffs resulting from this transformation, as well as other tariffs on agricultural products are to be reduced on an average by 36 percent in the case of developed countries and 24 percent in the case of developing countries.

 Agreement on trade in textiles and clothing (Multi-Fibre Arrangement). As a result, quotas on textiles and clothing have now been abolished. Agreement on market access. The member nations will cut tariffs on industrial and farm goods by and average of about 37 percent. The USA and the European Union will cut tariff between them by onehalf.

 Agreement on TRIMs. It identifies 5 investment measures which are inconsistent with the GATT provisions on according national treatment and on general elimination of qualitative restrictions. Measures which impose on the foreign investors the obligation to use local inputs, and not to export more than a specified proportion of the local production.

 Agreement of TRIPs. The maximum divergence was observed in the case of the pharmaceutical sector where some countries protected the end product while many countries protected only the process of manufacturing and some chose to protect neither. Therefore, under TRIPs (Trade Related Intellectual Property Rights) Agreement as accepted in the Uruguay Round, these countries forced the adoption of stringent conditions for the protection of the intellectual property rights (IPRs).The regime of product patents has now been introduced.

 Agreement on services. The GATS (General Agreement on Trade in Services)provides a multilateral framework of principles and services which should govern trade in services under conditions of transparency and progressive liberalisation. It spells out certain obligations like grant of MFN status to the other member nations with regard to trade in services, maintenance of transparency and also a commitment for liberalisation in general terms.

 Disputes Settlement Body. The findings of the disputes settlement panels will be final and binding on all parties concerned. The Uruguay Round also reached agreements on the understanding and implications of certain articles of GATT, viz., pre-shipment inspection, rules of origin, import licensing, anti-dumping measures and countervailing duties, safeguard, subsidies etc.