Relevance Of WTO In Multilateral Trading System


The multilateral trading system became popular after the days of the Silk Road. The origin of the system can be traced back to the 1990s. However, it became more popular only after World War II when nations were rebuilding themselves after a huge global war that had created a great global economic depression. So, nations realized that they need to join hands to entangle economic growth and world peace. Subsequently, the nations joined together for international trade in order to boost their economies. As a result of this, there emerged a need for international economic regulation.

This created the need for multilateral trading agreements between nations. At this point came the General Agreement on Tariffs and Trade [GATT] in 1947. GATT contained rules and obligations that governed trade in the International sphere. World Trade Organization has stepped into the shoes of GATT since 1945 and it performed the role of regulating international trade. It’s clear from the above discussion that WTO is an organization that regulates the international trading system. Multilateral trading systems are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading economies, and ratified in their parliaments.


A multilateral trading agreement is an agreement between more than one country. The multilateral trading system has been one of the important pillars of international cooperation. It has contributed greatly to liberalizing world trade and improving market access. It is also a major driving force for global economic growth, job creation and wider consumer choice. The multilateral trading system was based on the principle of non-discrimination. In the early 1990s, India embarked on a voluntary mode of economic liberalization which subsequently changed with multilateral trade negotiations after the establishment of the WTO in 1995.

The creation of this system surely ranks among the greatest economic achievements of the post-World War II era. For the war-torn international community, the system gave substance to a shared dream of a fair and open world trading system. More than that, it has directly led to the breaking down of barriers not just between countries but also between peoples. At the heart of the system are its rules-based structure and the principle of non-discrimination. The multilateral trading system continues to grow in scope and credibility.

Countries more actively engaged in the multilateral trading system:

  1. To facilitate domestic reform and enhance access for India’s exports;
  2. To serve as a commitment to good policies;
  3. To serve as a means for securing market access rights that have already been established; and
  4. To serve as a bulwark against regionalism.


The Multilateral trading system has witnessed great success after the creation of WTO. The fundamental strength of the system was its rule-based nature. WTO pursued various rounds of negotiations to bring out a reduction in trade barriers. As we know, free trade improves global efficiency in resource allocation and it allows consumers to benefit from more efficient production methods. Multilateral agreements became widely established only after the conclusion of the Uruguay Round, which of course led to the establishment of the WTO.

During the six decades of the existence of the multilateral trading system under the aegis of GATT (General Agreement on Tariffs and Trade) and now under its new avatar WTO (World Trade Organization), the support for the multilateral trading system has not waned but multiplied. The Uruguay Round (1986-1994) of the GATT proved to be a turning point in the history of the multilateral trading system.

The implementation phase of the Uruguay Round agreements under the WTO was associated with some striking changes in the global economic landscape. As regards India the unilateral reforms initiated in the early 1990s and its WTO-triggered trade policy changes have had a positive impact on exports and in turn, resulted in higher economic growth. One important feature of this high export growth is that it has been realized primarily through an increase in India’s export to its traditional trading partners, USA and the EU and a huge expansion in its trade with China.


India’s impressive economic growth record has been facilitated by the sharp rise in the importance of the external sector in the Indian economy. The growth of the external sector can be attributed in large measure to the environment created by multilateral trade liberalization. Most of the growth in trade owes its genesis to multilateral sources. In the end, the many benefits of multilateralism such as its inclusiveness and ability to facilitate coordination of diverse national trade policies and achieve a happy marriage between domestic interests and trade policy should make it enduring.

A gloomy economic outlook demands a global approach to this situation, as the international community did in launching the Doha Round after the 9/11 disaster. Besides this, an integrating global economy requires global economic governance through institutions like the WTO, and not fragmented institutional structures of regional bodies/agreements.



This Article is Authored by Haripriya. B, 5th Year B.A.LLB(Hons) Student at Tamil Nadu Dr. Ambedkar Law University, School of Excellence in Law.

Also Read – World Trade Organization(WTO) Dispute Settlement: The Process

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