GATT to WTO: the world trading order, MFN, national…

Core facts

GATT: General Agreement on Tariffs and Trade, signed at Geneva, 30 October 1947 by 23 countries; in force 1 January 1948. India was a founding member.
GATT was an agreement, not an organisation; the planned International Trade Organization (ITO) (Havana Charter, 1948) never came into being.
Eight GATT rounds: Geneva (1947), Annecy (1949), Torquay (1950–51), Geneva (1956), Dillon (1960–61), Kennedy (1964–67), Tokyo (1973–79), Uruguay (1986–94).
Marrakesh Agreement establishing the WTO signed 15 April 1994 (Marrakesh, Morocco).
WTO established 1 January 1995, headquarters Geneva. India a member from day one.
Members: 166 (since 2024, when Comoros and Timor-Leste joined).
Director-General: Ngozi Okonjo-Iweala (Nigeria), first woman and first African DG, since March 2021; second term from September 2025.
Highest body: Ministerial Conference, meets at least once every two years; day-to-day: General Council (also sits as Dispute Settlement Body and Trade Policy Review Body).
MFN (most-favoured-nation): GATT Article I; a concession to one member must be given to all.
National treatment: GATT Article III; imported goods, once inside, treated no worse than domestic goods.
Main agreements: GATT 1994 (goods), GATS (services), TRIPS (intellectual property), TRIMs (investment measures), Agreement on Agriculture (AoA), SPS, TBT, anti-dumping, subsidies and countervailing measures, safeguards.
Dispute settlement: Dispute Settlement Understanding (DSU); panels, then the Appellate Body (7 members).
Doha Development Round launched in 2001 (4th Ministerial, Doha); not concluded.

Explained

GATT and WTO compared

Point	GATT	WTO
Nature	Provisional agreement	Permanent organisation
Members called	Contracting parties	Members
Coverage	Goods only	Goods, services, IPR
Disputes	Slow; one party could block	Binding, time-bound

Principles of the trading system

Non-discrimination: MFN between members and national treatment inside the border.
Freer trade: gradual lowering of tariffs through negotiation.
Predictability through binding: members "bind" tariffs at a ceiling (bound rate); the applied rate can be lower but not higher.
Fair competition: rules on dumping and subsidies.
Special and differential treatment for developing countries: longer time limits, lower commitments.

Exceptions to MFN

Free trade areas and customs unions (GATT Article XXIV).
Enabling Clause (1979) for preferences to developing countries, e.g. the Generalised System of Preferences (GSP).
Anti-dumping and countervailing duties against unfair trade from a particular source.
General exceptions (Article XX: health, conservation) and security exceptions (Article XXI).

Agreement on Agriculture: the boxes

Box	What it covers	Limit
Amber	Trade-distorting support (price support, input subsidies)	Capped; de minimis 5% (developed), 10% (developing) of production value
Blue	Support tied to production-limiting programmes	No cap
Green	Minimal distortion: research, extension, food security stocks, direct income support	No cap

Development box (Article 6.2) exempts investment and input subsidies to low-income farmers in developing countries.

Other agreements in brief

TRIPS: minimum standards for patents, copyright, trademarks, geographical indications; India amended its Patents Act (2005) to allow product patents in pharmaceuticals.
GATS: four modes of supply: (1) cross-border, (2) consumption abroad, (3) commercial presence, (4) movement of natural persons (India's interest).
TRIMs: bans investment conditions that discriminate against imports, such as local content requirements.
SPS / TBT: food safety, animal and plant health; technical standards and labelling.
Trade Policy Review Mechanism: regular review of each member's trade policies.

Dispute settlement steps

Consultations (60 days).
Panel of three (normally reports within about 6 months).
Appeal to the Appellate Body, on points of law only.
Report adopted by the Dispute Settlement Body unless all members agree to reject it (negative or reverse consensus).
Compliance; if not, compensation or authorised retaliation.

Deeper

Uruguay Round results: created the WTO; brought agriculture and textiles under rules (the Multi-Fibre Arrangement was phased out by 1 January 2005); added services, IPR and investment measures.
Single undertaking: members accept nearly all agreements as one package. Exceptions are plurilateral agreements, such as the Government Procurement Agreement (India is an observer, not a party) and Civil Aircraft.
Appellate Body crisis: since 11 December 2019 it has lacked the minimum three members, because the United States blocks new appointments. Appeals "into the void" leave panel reports unadopted. A group led by the EU formed the Multi-Party Interim Appeal Arbitration Arrangement (MPIA, 2020); India has not joined.
India's cases: the quantitative restrictions case (US complaint) went against India in 1999; India removed balance-of-payments QRs by April 2001. India also faced challenges on sugar subsidies and export incentive schemes (MEIS was replaced by RoDTEP in 2021).
Ministerial milestones

Year	Place	Outcome
2001	Doha	Doha Development Agenda; TRIPS and public health declaration
2013	Bali	Trade Facilitation Agreement (in force 22 Feb 2017); interim peace clause on public stockholding
2015	Nairobi	End of agricultural export subsidies
2022	Geneva (MC12)	Fisheries subsidies agreement; TRIPS waiver for COVID-19 vaccines
2024	Abu Dhabi (MC13)	E-commerce duty moratorium extended; accessions of Comoros and Timor-Leste approved (members from August 2024)

Peace clause: India's public stockholding for food security (MSP procurement) is protected from disputes even if it breaches the amber box limit; made indefinite in November 2014 until a permanent solution.
Fisheries subsidies agreement (first phase: illegal, unreported and unregulated fishing, overfished stocks) entered into force on 15 September 2025.

Common traps

✗ "GATT was an organisation like the IMF." ✓ It was an agreement; the ITO failed. The WTO is the organisation.
✗ "The WTO was set up in 1994." ✓ Agreement signed 15 April 1994; WTO began 1 January 1995.
✗ "The Uruguay Round was the first round." ✓ It was the eighth; the first was Geneva 1947.
✗ "MFN means special favours to one country." ✓ It means equal treatment of all members.
✗ "National treatment applies at the border to tariffs." ✓ It applies after goods enter (internal taxes and rules); tariffs at the border are allowed.
✗ "Green box subsidies are capped." ✓ Amber box support is capped; green box is not.
✗ "India is a party to the Government Procurement Agreement." ✓ India is an observer.
✗ "WTO headquarters is in New York." ✓ Geneva.

Quick revision

GATT: 30 Oct 1947, Geneva, 23 countries, in force 1 Jan 1948.
Eight rounds; last = Uruguay (1986–94).
Marrakesh 15 Apr 1994; WTO from 1 Jan 1995, Geneva.
MFN = Art. I; national treatment = Art. III; FTAs = Art. XXIV.
Agreements: GATT 1994, GATS, TRIPS, TRIMs, AoA, SPS, TBT.
AoA boxes: amber capped (de minimis 10% developing), blue and green not.
DSU: consultations, panel, Appellate Body; reverse consensus.
Appellate Body non-functional since Dec 2019.
Doha Round 2001; Bali TFA 2013 (in force 2017).
DG Ngozi Okonjo-Iweala; 166 members.

Go deeper: Mains writing (beyond what APPSC Paper I usually asks)

Mains writing Mains writing

Frame: the WTO gave rules-based, non-discriminatory trade; its negotiating and dispute functions are now weak.
Gains for India: stable market access, a forum where small economies can challenge large ones, services and IT growth.
Concerns: agricultural subsidy rules based on 1986–88 reference prices; TRIPS and access to medicines; developed countries' non-tariff barriers.
Present stress: stalled Doha Round, Appellate Body paralysis, rise of mega-regional FTAs and unilateral tariffs.
Way forward: restore two-tier dispute settlement, a permanent solution on public stockholding, keep special and differential treatment, and combine WTO work with balanced bilateral FTAs.

Medha AI writes its own notes and checks them against the sources listed. Medha AI is an independent preparation service. It is not affiliated with, endorsed by or connected to APPSC, TSPSC, MPSC, UPSC or any other commission or government body.

2.1.4 GATT to WTO: the world trading order, MFN, national treatment, agreements and dispute settlement

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