Q.Why is it necessary to became a member of WTO?

The WTO Membership Rationale: Why Countries Line Up to Join

Think about a local market in your town. If every shopkeeper could set their own rules—some measure cloth in metres, others in hands; some accept returns, others don't; some charge you extra just because you're from the next village—buying and selling would be a nightmare. You'd waste time, get cheated, and eventually stop trusting the market altogether.

Now scale that up to the entire world. That's the problem the World Trade Organization (WTO) was created to solve.

The Core Idea: Rules for the Global Marketplace

The WTO is not a bank that lends money or a charity that gives aid. It is a rule-making and dispute-settlement body for international trade. The rationale for a country to join the WTO is simple: to get a seat at the table where the rules of global trade are written and enforced.

Before the WTO (and its predecessor GATT), trade between nations was chaotic. A powerful country could suddenly double the tax (tariff) on your exports, and you had no recourse. A richer nation could give massive subsidies to its farmers, making it impossible for farmers in developing countries to compete. There was no neutral judge.

The Precise Meaning: What Membership Actually Gives You

When a country becomes a WTO member, it signs on to a set of binding agreements. The most important principle is Non-Discrimination, which has two parts:

1. Most-Favoured-Nation (MFN) Principle: If you give a special low tariff to one WTO member (say, on steel from Japan), you must give the same low tariff to all other WTO members. No playing favourites.
2. National Treatment: Once foreign goods have paid the tariff and entered your market, you must treat them the same as your own domestic goods. You cannot slap extra taxes or regulations on them just because they are foreign.

Why It Matters: The Three Big Benefits

1. Market Access and Export Growth

As a member, your exporters face lower and more stable tariffs in 164 other member countries. A garment exporter from India knows exactly what tariff they will face when selling to Brazil or Germany. This certainty allows businesses to plan, invest, and hire. Without membership, your exporters could be shut out or hit with arbitrary taxes.

2. Dispute Settlement Mechanism (DSM)

This is the WTO's crown jewel. If another country breaks the rules—say, it bans your agricultural products without scientific evidence—you don't have to start a trade war or go to war. You file a case at the WTO. A panel of independent experts hears both sides and issues a binding ruling. A small country like Ecuador can win a case against a giant like the EU. This is impossible without membership.

3. Domestic Reforms and Credibility

Joining the WTO forces a country to clean up its own house. It must make its trade laws transparent, reduce red tape, and protect intellectual property. This signals to foreign investors that the country is serious about rule of law. It's like a student who joins a study group—the external discipline helps them study better.

The Trade-Off: Sovereignty vs. Rules

Here is the tension. When you join the WTO, you give up some freedom. You cannot suddenly raise tariffs to protect a struggling industry. You cannot give unlimited subsidies. You must follow the rules even when they hurt.

The rationale is that the long-term gain from a stable, rule-based system outweighs the short-term loss of policy freedom. It is the same reason you follow traffic rules—you lose the freedom to drive at 200 km/h, but you gain the safety of knowing others will stop at red lights.

A Simple Diagram (In Words)

Imagine a circle labelled "WTO Members." Inside the circle, trade flows smoothly under agreed rules. Outside the circle, trade is chaotic—countries can block, tax, or ban your goods at will. The rationale for joining is to move from the chaotic outside to the orderly inside.