WTO and SAFTA

World Trade Organization (WTO)

World Trade Organization is known as WTO, a specialized organization of United Nations. The foundation of WTO was developed in 8^th GATT (General Agreement on Trade and Tariffs) in Uruguay in 1994. WTO is an international level organization established to manage, regulate and facilitate the global trade by maintaining trade discipline among member nations. It was established on 1st January 1995. It aims to develop trade rules, extend trade and solve trade problems among member countries. It works to maintain a fair and healthy competition among the member nations in their trade activities.

Functions of WTO

The following are the main functions of WTO as specified in its Charter:

1. To administer and implement the trade agreements
2. To act as a forum for multilateral trade negotiations
3. To seek to resolve trade disputes
4. To oversee national trade policies
5. To co-operate with other international institutions involved in making global economic policy
6. To act as a watchdog of international trade by examining the trade rules of member countries
7. To act as a management consultant for international trade
8. To provide technical assistance and training for developing countries
9. To maintain trade-related database

South Asian Free Trade Area (SAFTA)

SAFTA means South Asian Free Trade Area. It is a new business strategy developed during 10^th SAARC Summit held in Kathmandu. SAFTA is a mutual agreement made by SAARC countries to promote the mutual trade and enhance economic cooperation by ensuring the free flow of goods and services among member countries. It came into effect on 1st July 2006 which replaced the earlier SAPTA. It is established to promote regional trade among the SAARC countries which include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri-Lanka. The main objective of SAFTA is to promote fair competition in trade in SAARC countries to ensure their equitable benefits for economic development.

Functions of SAFTA

The major functions of SAFTA are as follows:

1. To establish a free trade area in South Asia through the elimination of tariffs
2. To form and implement the rules of origin to ensure that the product is manufactured by the country which is desirous to export
3. To allow member countries to prepare a list of products which are to be restricted to import for the protection of national interest
4. To form compensation scheme for the losses of revenue to the least developed member countries due to the arrangement of free trade area
5. To provide technical support to the least developed member countries to promote export competitiveness