World Trade Organization
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"WTO" redirects here. For other uses, see WTO (disambiguation).
World Trade Organization (English)
Organisation mondiale du commerce (French)
Organización Mundial del Comercio(Spanish)
WTO founder members (January 1, 1995) WTO subsequent members
Formation January 1, 1995
Headquarters Centre William Rappard,Geneva, Switzerland
Membership 153 member states
Official languages English, French, Spanish[1]
Director-General Pascal Lamy
Budget 189 million Swiss francs(approx. 182 million USD)
in 2009.[2]
Staff 625[3]
Website www.wto.int
The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international
trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing
the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with
regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade
agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements
which are signed by representatives of member governments and ratified by their parliaments.[4][5]Most of the
issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay
Round (1986-1994).
The organization is currently endeavoring to persist with a trade negotiation called the Doha Development
Agenda (or Doha Round), which was launched in 2001 to enhance equitable participation of poorer countries
which represent a majority of the world's population. However, the negotiation has been dogged by
"disagreement between exporters of agricultural bulk commodities and countries with large numbers of
subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in
imports. At this time, the future of the Doha Round is uncertain." [6]
The WTO has 153 members,[7] representing more than 97% of total world trade[8] and 30 observers, most
seeking membership. The WTO is governed by a ministerial conference, meeting every two years; a general
council, which implements the conference's policy decisions and is responsible for day-to-day administration;
and a director-general, who is appointed by the ministerial conference. The WTO's headquarters is at
the Centre William Rappard, Geneva,Switzerland.
Contents
[hide]
1 History
o 1.1 ITO and GATT 1947
o 1.2 GATT rounds of negotiations
o 1.3 Ministerial conferences
o 1.4 Doha Round
2 Functions
3 Principles of the trading system
4 Organizational structure
o 4.1 Voting system
5 Dispute settlement
6 Accession and membership
o 6.1 Accession process
o 6.2 Members and observers
7 Agreements
8 Effectiveness
9 See also
10 References and notes
11 External links
o 11.1 Official WTO pages
o 11.2 Government pages on the WTO
o 11.3 Media pages on the WTO
o 11.4 Non-governmental organization pages
on the WTO
[edit]History
See also: Timeline of the World Trade Organization
[edit]ITO and GATT 1947
See also: International Trade Organization
Harry Dexter White (l) and John Maynard Keynes at the Bretton Woods Conference — Both economists had been strong
advocates of a liberal international trade environment, and recommended the establishment of three institutions: the IMF
(fiscal and monetary issues), the World Bank (financial and structural issues), and the ITO (international economic
cooperation).[9]
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World
War II in the wake of other new multilateral institutions dedicated to international economic cooperation —
notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. A
comparable international institution for trade, named the International Trade Organization was successfully
negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers
but other issues indirectly related to trade, including employment, investment, restrictive business practices,
and commodity agreements. But the ITO treaty was not approved by the U.S. and a few other signatories and
never went into effect.[10][11][12]
In the absence of an international organization for trade, the GATT would over the years "transform itself" into
a de facto international organization.[13]
[edit]GATT rounds of negotiations
See also: General Agreement on Tariffs and Trade
The GATT was the only multilateral instrument governing international trade from 1948 until the WTO was
established in 1995.[14] Despite attempts in the mid 1950s and 1960s to create some form of institutional
mechanism for international trade, the GATT continued to operate for almost half a century as a semi-
institutionalized multilateral treaty regime on a provisional basis. [15]
[edit]From Genève to Tokyo
Seven rounds of negotiations occurred under the GATT. The first real GATT trade rounds concentrated on
further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought about a GATT anti-
dumping Agreement and a section on development. The Tokyo Round during the seventies was the first major
attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series
of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke
entirely new ground. Because these plurilateral agreements were not accepted by the full GATT membership,
they were often informally called "codes". Several of these codes were amended in the Uruguay Round, and
turned into multilateral commitments accepted by all WTO members. Only four remained plurilateral (those on
government procurement, bovine meat, civil aircraft and dairy products), but in 1997 WTO members agreed to
terminate the bovine meat and dairy agreements, leaving only two. [14]
[edit]Uruguay Round
During the Doha Round, the US government blamed Brazil and India for being inflexible, and the EU for impeding
agricultural imports.[16] The President of Brazil, Luiz Inácio Lula da Silva, responded to the criticisms by arguing that progress
would only be achieved if the richest countries (especially the US and countries in the EU) make deeper cuts in their
agricultural subsidies, and further open their markets for agricultural goods. [17]
Main article: Uruguay Round
Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a
new globalizing world economy.[18][19] In response to the problems identified in the 1982 Ministerial Declaration
(structural deficiencies, spill-over impacts of certain countries' policies on world trade GATT could not manage
etc.), the eighth GATT round — known as the Uruguay Round — was launched in September 1986, in Punta
del Este, Uruguay.[18]
It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system
into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive
sectors of agriculture and textiles; all the original GATT articles were up for review. [19] The Final Act concluding
the Uruguay Round and officially establishing the WTO regime was signed during the April 1994 ministerial
meeting at Marrakesh, Morocco, and hence is known as theMarrakesh Agreement.[20]
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay
Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT 1947,
the original agreement which is still the heart of GATT 1994).[18] GATT 1994 is not however the only legally
binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes,
decisions and understandings was adopted. The agreements fall into a structure with six main parts:
The Agreement Establishing the WTO
Goods and investment — the Multilateral Agreements on Trade in Goods including the GATT 1994
and the Trade Related Investment Measures
Services — the General Agreement on Trade in Services
Intellectual property — the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
Dispute settlement (DSU)
Reviews of governments' trade policies (TPRM)[21]
[edit]Ministerial conferences
The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two
years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial
Conference can take decisions on all matters under any of the multilateral trade agreements. The inaugural
ministerial conference was held in Singapore in 1996. Disagreements between largely developed and
developing economies emerged during this conference over four issues initiated by this conference, which led
to them being collectively referred to as the "Singapore issues". The second ministerial conference was held
in Geneva in Switzerland. The third conference in Seattle, Washington ended in failure, with massive
demonstrations and police and National Guard crowd control efforts drawing worldwide attention. The fourth
ministerial conference was held in Doha In Persian Gulf nation of Qatar. The Doha Development Round was
launched at the conference. The conference also approved the joining of China, which became the 143rd
member to join. The fifth ministerial conference was held in Cancún, Mexico, aiming at forging agreement on
the Doha round. An alliance of 22 southern states, the G20 developing nations (led by India, China[22] and
Brazil), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an
end to agricultural subsidies within the EU and the US. The talks broke down without progress.
The sixth WTO ministerial conference was held in Hong Kong from 13-18 December 2005. It was considered
vital if the four-year-old Doha Development Agenda negotiations were to move forward sufficiently to conclude
the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the
end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing
countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed
Countries, following the Everything But Arms initiative of the European Union — but with up to 3% of tariff lines
exempted. Other major issues were left for further negotiation to be completed by the end of 2010. The WTO
General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva
from 30 November-3 December 2009. A statement by chairman Amb. Mario Matus acknowledged that the
prime purpose was to remedy a breach of protocol requiring two-yearly "regular" meetings, which had lapsed
with the Doha Round failure in 2005, and that the "scaled-down" meeting would not be a negotiating session,
but "emphasis will be on transparency and open discussion rather than on small group processes and informal
negotiating structures". The general theme for discussion is "The WTO, the Multilateral Trading System and the
Current Global Economic Environment"[23]
[edit]Doha Round
Main article: Doha Round
The Doha Development Round started in 2001 and continues today.
The WTO launched the current round of negotiations, the Doha Development Agenda (DDA) or Doha Round,
at the fourth ministerial conference in Doha, Qatar in November 2001. The Doha round was to be an ambitious
effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and
subsidies in farming.[24] The initial agenda comprised both further trade liberalization and new rule-making,
underpinned by commitments to strengthen substantial assistance to developing countries. [25]
The negotiations have been highly contentious and agreement has not been reached, despite the intense
negotiations at several ministerial conferences and at other sessions. Disagreements still continue over several
key areas including agriculture subsidies.[26]
[show]GATT and WTO trade rounds[27]
[edit]Functions
Among the various functions of the WTO, these are regarded by analysts as the most important:
It oversees the implementation, administration and operation of the covered agreements. [28][29]
It provides a forum for negotiations and for settling disputes. [30][31]
Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the
coherence and transparency of trade policies through surveillance in global economic policy-making. [29]
[31]
Another priority of the WTO is the assistance of developing, least-developed and low-income countries in
transition to adjust to WTO rules and disciplines through technical cooperation and training. [32]
The WTO is also a center of economic research and analysis: regular assessments of the global trade picture
in its annual publications and research reports on specific topics are produced by the organization. [33]Finally,
the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the
World Bank.[30]
[edit]Principles of the trading system
The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is
concerned with setting the rules of the trade policy games. [34] Five principles are of particular importance in
understanding both the pre-1994 GATT and the WTO:
1. Non-Discrimination. It has two major components: the most favoured nation (MFN) rule, and
the national treatment policy. Both are embedded in the main WTO rules on goods, services, and
intellectual property, but their precise scope and nature differ across these areas. The MFN rule
requires that a WTO member must apply the same conditions on all trade with other WTO members,
i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain
product type to all other WTO members.[34] "Grant someone a special favour and you have to do the
same for all other WTO members."[35] National treatment means that imported goods should be
treated no less favorably than domestically produced goods (at least after the foreign goods have
entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards,
security standards et al. discriminating against imported goods). [34]
2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the
MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to
negotiate, it is necessary that the gain from doing so be greater than the gain available
from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise.
[36]
3. Binding and enforceable commitments. The tariff commitments made by WTO members in a
multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions.
These schedules establish "ceiling bindings": a country can change its bindings, but only after
negotiating with its trading partners, which could mean compensating them for loss of trade. If
satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement
procedures.[35][36]
4. Transparency. The WTO members are required to publish their trade regulations, to maintain
institutions allowing for the review of administrative decisions affecting trade, to respond to requests
for information by other members, and to notify changes in trade policies to the WTO. These internal
transparency requirements are supplemented and facilitated by periodic country-specific reports
(trade policy reviews) through the Trade Policy Review Mechanism (TPRM). [37] The WTO system tries
also to improve predictability and stability, discouraging the use of quotas and other measures used to
set limits on quantities of imports.[35]
5. Safety valves. In specific circumstances, governments are able to restrict trade. There are three types
of provisions in this direction: articles allowing for the use of trade measures to attain noneconomic
objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade
for economic reasons.[37] Exceptions to the MFN principle also allow for preferential treatment
ofdeveloping countries, regional free trade areas and customs unions.[citation needed]
[edit]Organizational structure
The General Council has multiple bodies which oversee committees in different areas, and they are the
following:
Council for Trade in Goods
There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All
members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the
other committees but still under the jurisdiction of Goods Council. The body has its own chairman and
only 10 members. The body also has several groups relating to textiles. [38]
Council for Trade-Related Aspects of Intellectual Property Rights
Information on intellectual property in the WTO, news and official records of the activities of the TRIPS
Council, and details of the WTO’s work with other international organizations in the field. [39]
Council for Trade in Services
The Council for Trade in Services operates under the guidance of the General Council and is
responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It
is open to all WTO members, and can create subsidiary bodies as required. [40]
Trade Negotiations Committee
The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks
round. The chair is WTO’s director-general. The committee is currently tasked with the Doha
Development Round.[41]
The Service Council has three subsidiary bodies: financial services, domestic
regulations, GATS rules and specific commitments. [38] The General council has several
different committees, working groups, and working parties.[42] There are committees on
the following: Trade and Environment; Trade and Development (Subcommittee on
Least-Developed Countries); Regional Trade Agreements; Balance of Payments
Restrictions; and Budget, Finance and Administration. There are working parties on the
following: Accession. There are working groups on the following: Trade, debt and
finance; and Trade and technology transfer.
[edit]Voting system
The WTO operates on a one country, one vote system, but actual votes have never
been taken. Decision making is generally by consensus, and relative market size is the
primary source of bargaining power. The advantage of consensus decision-making is
that it encourages efforts to find the most widely acceptable decision. Main
disadvantages include large time requirements and many rounds of negotiation to
develop a consensus decision, and the tendency for final agreements to use ambiguous
language on contentious points that makes future interpretation of treaties difficult. [citation
needed]
In reality, WTO negotiations proceed not by consensus of all members, but by a process
of informal negotiations between small groups of countries. Such negotiations are often
called "Green Room" negotiations (after the colour of the WTO Director-General's Office
in Geneva), or "Mini-Ministerials", when they occur in other countries. These processes
have been regularly criticised by many of the WTO's developing country members which
are often totally excluded from the negotiations..[citation needed]
Richard Harold Steinberg (2002) argues that although the WTO's consensus
governance model provides law-based initial bargaining, trading rounds close through
power-based bargaining favouring Europe and the U.S., and may not lead to Pareto
improvement.[43] 123
[edit]Dispute settlement
Main article: Dispute settlement in the WTO
In 1994, the WTO members agreed on the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU) annexed to the "Final Act" signed in
Marrakesh in 1994.[44] Dispute settlement is regarded by the WTO as the central pillar of
the multilateral trading system, and as a "unique contribution to the stability of the global
economy".[45] WTO members have agreed that, if they believe fellow-members are
violating trade rules, they will use the multilateral system of settling disputes instead of
taking action unilaterally.[46]
The operation of the WTO dispute settlement process involves the DSB panels, the
Appellate Body, the WTO Secretariat, arbitrators, independent experts and several
specialized institutions.[47]
[edit]Accession and membership
Main article: WTO accession and membership
The process of becoming a WTO member is unique to each applicant country, and the
terms of accession are dependent upon the country's stage of economic development
and current trade regime.[48] The process takes about five years, on average, but it can
last more if the country is less than fully committed to the process or if political issues
interfere.[49] As is typical of WTO procedures, an offer of accession is only given once
consensus is reached among interested parties. [50]
[edit]Accession process
Status of WTO negotiations: members (including dual-representation with the European
Union) Draft Working Party Report or Factual Summary adopted Goods and/or Services offers
submitted Memorandum on Foreign Trade Regime submitted observer, negotiations to start later or
no Memorandum on FTR submitted frozen procedures or no negotiations in the last 3 years no
official interaction with the WTO
A country wishing to accede to the WTO submits an application to the General Council,
and has to describe all aspects of its trade and economic policies that have a bearing on
WTO agreements.[51] The application is submitted to the WTO in a memorandum which
is examined by a working party open to all interested WTO Members. [50]
After all necessary background information has been acquired, the working party
focuses on issues of discrepancy between the WTO rules and the applicant's
international and domestic trade policies and laws. The working party determines the
terms and conditions of entry into the WTO for the applicant nation, and may consider
transitional periods to allow countries some leeway in complying with the WTO rules. [48]
The final phase of accession involves bilateral negotiations between the applicant nation
and other working party members regarding the concessions and commitments on tariff
levels and market access for goods and services. The new member's commitments are
to apply equally to all WTO members under normal non-discrimination rules, even
though they are negotiated bilaterally.[51]
When the bilateral talks conclude, the working party sends to the general council or
ministerial conference an accession package, which includes a summary of all the
working party meetings, the Protocol of Accession (a draft membership treaty), and lists
("schedules") of the member-to-be's commitments. Once the general council or
ministerial conference approves of the terms of accession, the applicant's parliament
must ratify the Protocol of Accession before it can become a member.[52]
[edit]Members and observers
The WTO has 153 members (almost all of the 123 nations participating in the Uruguay
Round signed on at its foundation, and the rest had to get membership). [53] The 27
states of the European Union are represented also as the European Communities. WTO
members do not have to be full sovereign nation-members. Instead, they must be a
customs territory with full autonomy in the conduct of their external commercial relations.
Thus Hong Kong (as "Hong Kong, China" since 1997) became a GATT contracting
party, and the Republic of China (ROC)(commonly known as Taiwan, whose
sovereignty has been disputed by the People's Republic of China or PRC) acceded to
the WTO in 2002 under the name of "Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu" (Chinese Taipei).[54]
A number of non-members (30) are observers at WTO proceedings and are currently
negotiating their membership. As observers, Iran, Iraq and Russia are not yet
members. Russia is the biggest economy outsideWTO and after the completion of
Russia's accession, Iran would be the biggest economy outside the WTO. [55] With the
exception of the Holy See, observers must start accession negotiations within five years
of becoming observers. Some international intergovernmental organizations are also
granted observer status to WTO bodies.[56] 14 states and 2 territories so far have no
official interaction with the WTO.
[edit]Agreements
Main article: Uruguay Round
The WTO oversees about 60 different agreements which have the status of international
legal texts. Member countries must sign and ratify all WTO agreements on accession.
[57]
A discussion of some of the most important agreements follows. The Agreement on
Agriculture came into effect with the establishment of the WTO at the beginning of 1995.
The AoA has three central concepts, or "pillars": domestic support, market
access and export subsidies. The General Agreement on Trade in Services was created
to extend the multilateral trading system to service sector, in the same way the General
Agreement on Tariffs and Trade(GATT) provides such a system for merchandise trade.
The Agreement entered into force in January 1995. The Agreement on Trade-Related
Aspects of Intellectual Property Rights sets down minimum standards for many forms
of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay
Round of the General Agreement on Tariffs and Trade (GATT) in 1994.
The Agreement on the Application of Sanitary and Phytosanitary Measures — also
known as the SPS Agreement was negotiated during the Uruguay Round of the General
Agreement on Tariffs and Trade, and entered into force with the establishment of the
WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on
members' policies relating to food safety (bacterial contaminants, pesticides, inspection
and labelling) as well as animal and plant health (imported pests and diseases).
The Agreement on Technical Barriers to Trade is an international treaty of the World
Trade Organization. It was negotiated during the Uruguay Round of the General
Agreement on Tariffs and Trade, and entered into force with the establishment of the
WTO at the end of 1994. The object ensures that technical negotiations and standards,
as well as testing and certification procedures, do not create unnecessary obstacles to
trade".[58] The Agreement on Customs Valuation, formally known as the Agreement on
Implementation of Article VII of GATT, prescribes methods of customs valuation that
Members are to follow. Chiefly, it adopts the "transaction value" approach.
[edit]Effectiveness
Main article: Criticism of the World Trade Organization
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