Globalisation and the WTO
GATT, WTO principles, TRIPS, TRIMS and their impact on developing countries.
Globalisation
Globalisation is the growing integration of the world's economies through trade, investment, technology, migration and communication. It has increased growth and access to goods, but also raised concerns about inequality, loss of livelihoods and environmental pressure.
GATT
The General Agreement on Tariffs and Trade (GATT) was signed in 1947 in Geneva by 23 countries, including India, to reduce tariffs through rounds of negotiation. It was a set of rules, not a formal organisation. The Uruguay Round (1986–1994) was the most ambitious round; it extended rules to agriculture, services and intellectual property and led to the Marrakesh Agreement (1994).
World Trade Organization
The WTO came into being on 1 January 1995, with headquarters in Geneva. India is a founding member. Its highest body is the Ministerial Conference, which meets at least once every two years. It has a binding dispute settlement system.
Key principles:
- Most-Favoured-Nation (MFN): a trade concession given to one member must be given to all members (non-discrimination between trading partners).
- National treatment: imported goods, once inside the market, must be treated no worse than domestic goods.
- Reciprocity, transparency and predictability through bound tariffs.
- Special and differential treatment for developing countries.
Main agreements
- TRIPS (Trade-Related Aspects of Intellectual Property Rights): sets minimum standards for patents, copyright, trademarks and GIs in all members; for example, 20-year patent protection, including for pharmaceutical products.
- TRIMS (Trade-Related Investment Measures): forbids investment rules that distort trade in goods, such as local content requirements (forcing foreign firms to use a set share of local inputs) and trade-balancing requirements.
- Agreement on Agriculture (AoA): reduces trade-distorting farm subsidies (classified into amber, blue and green boxes), market access and export subsidies.
- GATS: General Agreement on Trade in Services.
Impact on developing countries
Gains include larger export markets and a rules-based system. Concerns include: TRIPS raising prices of medicines and seeds, TRIMS limiting industrial policy, continued large farm subsidies in rich countries hurting poor farmers, and the high cost of fighting disputes. The Doha Development Round (from 2001) tried to address these but has made limited progress.
Key points
- GATT 1947 → WTO 1 January 1995, Geneva.
- MFN = no discrimination among members; national treatment = no discrimination against imports.
- TRIPS = intellectual property; TRIMS = investment measures.
- Ministerial Conference is the top decision-making body.
Exam tips
- A question describing "same tariff for all members" points to MFN; "same tax on imported and local goods" points to national treatment.