Meaning: -The World Trade Organisation came into existence with effect from 1-1-1995. The WTO replaced General Agreement on Tariffs and Trade (GATT). The main objective of WTO is to increase world trade and thereby employment. In 1947, 23 countries including India signed the General Agreement on Tariffs and Trade (GATT). GATT was created to reduce the tariff barriers. GATT has been replaced by WTO in 1995. WTO is wider in scope. It is concerned with not only reducing or eliminating tariff barriers but also non-tariff barriers such as quotas. In April 2004, the membership of WTO was 147 countries including India.
The Main Objectives of the WTO are as follows:
1. Trade without Discrimination: -Trade without Discrimination through the application of most favoured nation (MFN) principle. As per MFN clause, a member nation of WTO must accord the same preferential treatment (in case of tariff reduction or concession) to other member nations which it gives to any other member nation.
2. Settlement of Disputes: - Settlement of Disputes among members through consultation, conciliation, and as a last resort through dispute settlement procedure.
3. Raising Standard of living: - Raising standard of living and incomes and ensuring full employment of the citizens of its member nations.
4. Optimum use of world resources: - Ensuring optimum use of world’s resources and, thereby, expanding world production and trade of goods as well as services.
5. Protection of environment: -Preserving and protecting the environment of the world so as to benefit all the nations of the world.
6. Growth of less developed countries: - Recognises the need for positive efforts, designed to ensure that developing countries. Especially the less developed countries, secure a better share of growth in international trade.
7. Employment: - WTO aims at generating full employment and broad increase in effective demand.
8. Enlargement of Protection and Trade: -WTO aims to enlarge production and trade of goods as well as services.