Consider the following statements :
(I) WTO (1995) was established on the basis of Dunkal proposal in place of GATT (1947).
(II) WTO has been established on the basis of an international treaty approved by the parliaments of the member countries.
Choose the correct option:

Question

Accepted Answer

The correct option is 3: Both (I) and (II) are correct.

The correct option is 3:
Both statements (I) and (II) accurately describe the establishment and nature of the World Trade Organization (WTO). The foundation of the WTO lies in the successful completion of the Uruguay Round of trade negotiations, which spanned from 1986 to 1994. Statement (I) is correct because the final comprehensive agreement, known as the Marrakesh Agreement, was based on the "Dunkel Draft" proposed by Arthur Dunkel, the Director-General of the GATT at the time. This proposal transformed the temporary framework of the General Agreement on Tariffs and Trade (GATT 1947) into a permanent, institutionalized body, the WTO, which formally began operating in 1995. Statement (II) is also correct because the WTO is fundamentally an international organization governed by treaties. The Marrakesh Agreement Establishing the WTO, along with its annexed agreements, is a binding international treaty. For these treaties to take effect in any member nation, they must first undergo the process of ratification and approval by the respective country's parliament or legislative body, thereby giving the WTO its formal legal status in the international system.

The incorrect option is 1: Only (I) is correct.
This option is incorrect because, while statement (I) is factually accurate regarding the historical transition from GATT to WTO via the Dunkel proposal, statement (II) is equally correct and essential to understanding the WTO's structure. The WTO is not a mere agreement like GATT; it is a permanent body created by an international convention. Every major international treaty, especially one governing global commerce, requires domestic legislative approval (parliamentary ratification) from its sovereign member states to ensure compliance and constitutional adherence. Thus, ignoring statement (II) provides an incomplete picture of the organization's legal foundation.

The incorrect option is 2: Only (II) is correct.
This option is incorrect as it dismisses the historical and conceptual precursor to the WTO. Statement (I) provides the crucial context for the organization's creation: the WTO was indeed established in 1995 to succeed GATT, and the detailed framework for this transition came directly from the Dunkel Draft. Without the eight years of negotiations culminating in the Dunkel proposals under the GATT system, the international treaty (Marrakesh Agreement) mentioned in statement (II) would not have existed. Therefore, both the foundational draft (Dunkel proposal) and the required legal framework (international treaty approved by parliaments) are necessary facts.

The incorrect option is 4: Both (I) and (II) are wrong.
This option is entirely incorrect because both statements are historically and legally accurate. The establishment of the WTO in 1995 was the most significant outcome of the Uruguay Round, replacing the GATT. This transition was architected by the proposals laid out by Arthur Dunkel. Furthermore, the WTO's establishment as an international body, in contrast to the GATT's status as a provisional agreement, mandated that the foundational treaty be fully ratified by the national legislatures of all contracting parties, making both statements correct.