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Note on WTO and SAFTA

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World Trade Organization (WTO)


World Trade Organization (WTO) is an organization that deals with trade between the whole nations. Its main function is to ensure that trade flows as smoothly as possible. WTO was established on 1st January, 1995. It replaces the form of General Agreement on Trade and Tariffs (GATT). It headquarters is in Geneva, Switzerland and it is controlled by a General Council, made up of member states ambassadors who also serve on various subsidiary and special committees.

In the context of Nepal, Nepal applied for the membership of WTO in 1995, 5th December. And in 2003 11th September, Nepal was given a decision for a membership of WTO. In 23rd March, 2004, Nepal accepted a protocol. As of 2016, the WTO has 163 members.


Following the 2nd World War, the Bretton Wood conference held in 1994 had proposed to form international trade organization to establish rules and regulation for trade among the countries. But, due to various disagreement among the nations, only on the provision of General Agreement on Tariffs and Trade (GATT) of ITO continue to exist. Based on this agreement, the Uruguay round to meet concluded in 1995 agreed to promote GATT which an agreement into the structural institution called WTO.


  • To raise living standard of a people
  • To enhance the employment opportunities
  • Expanding the production
  • Optimum allocation and resource utilization
  • Sustainable development and environment preservation
  • Effective demand and increases


  • The member countries of WTO can have freedom to carry out international trade among them.
  • The trade among member countries will lead to liberalization reducing customs duties, import taxes, quota system, and exchange rate in their business transaction.
  • The WTO provides a security guarantee to its member countries regarding capital investment and an establishment of multinational countries all around the world.
  • To develop free trade competition among the member nations.
  • To build up a competitive capacity of developing nations.


  • Providing the forum for negotiation among its member concerning their multilateral trade relation.
  • Evaluating and monitoring the trade policy implemented by member countries.
  • Review of trade policies.
  • Provide technical assistance and trading for developing countries.
  • To solve the conflict that would arise among or between the member nations through scientific solutions.
  • Cooperation with the IMF and the World Bank.


Nepal got the permission of membership Baisakh 11,2061 B.S. from WTO. Nepal is 147th member of WTO. It helps in a trade. WTO promotes the world trade. WTO facilitates in increasing the production and productivity and the income level of an ordinary people. There has been an advance improvement of technology, electronics and other modern facilities in Nepal after being a member of WTO. Apart from this Nepal is still struggling to get benefits as a member of an organization for which it negotiates for 14 years since re-establishment of WTO.(The World Around Us)

South Asian Free Trade Agreement (SAFTA)


All the member states of the South Asian Association for Regional Cooperation (SAARC) were signed the agreement on South Asian Free Trade (SAFTA) during the twelfth ‘SAARC Summit’ held in Islamabad on 4-6th January 2004. SAFTA came into force from 1st January 2006.

SAARC was established in Dhaka on December 7-8, 1985 with the objective of:

  • To eliminate barriers to trade in the territories of the member countries.
  • To promote fair competition in the free trade area.
  • To form common currency for the region.
  • To create an effective mechanism for the implementation and application of this agreement.
  • Establishing a framework for further regional cooperation to expand and enhance the mutual benefits of this agreement.
  • To promote and enhance mutual trade and economic cooperation among contracting members.

Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sir Lanka are the members of SAFTA. In April 2007, Afghanistan becomes its eighth member, at the Association’s 14th summit.

(Jha, Bhusal, and Bista)


  • SAFTA will be governed by the provisions of the agreement and also by the rules, regulations, and protocols to be agreed upon with its framework by the contracting states.
  • The contracting states affirm their existing rights and obligations with respect to each other.
  • SAFTA shall be based and applied on the principles of overall reciprocity and mutually advantages in such a way as to benefit equitably all contracting states.
  • SAFTA shall involve the free movement of goods between countries through the elimination of tariffs and non-tariffs restrictions on the movement of goods and any other equivalent measures.
  • SAFTA shall entail the adoption of trade facilitation and other measures and the progressive harmonization of legislations by the contracting states in the relevant areas.
  • The special needs of the least developed contracting states shall be clearly recognized by adopting concrete preferential measures in their favor on a non-reciprocal basis.

(Khanal, Poudel, and Thapa)


Jha, P.K., et al. Economics II. Kalimati, Kathmandu: Dreamland Publication, 2011.

"Supply." Khanal, Dr.Rajesh Keshar, et al. Economics II. Kathmandu: Januka Publication Pvt. Ltd., 2013. 20-26.

The World Around Us. 11 04 2011. 30 06 2016 <http://hetaudakathmandu.blogspot.com/2011/04/nepal-as-member-of-wto.html>.

  1. World Trade Organization (WTO) is an organization that deals with trade between the whole nation.
  2. WTO is replacing form of General Agreement on Trade and Tariffs (GATT). 
  3. WTO was established on 1st January 1995.
  4. SAARC was established in Dhaka on December 7-8, 1985.

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