2. Introduction
The World Trade Organization (WTO), is an international organization
designed to supervise and liberalize international trade. The WTO came into
being on January 1, 1995, and is the successor to the General Agreement
on Tariffs and Trade (GATT), which was created in 1947, and continued to
operate for almost five decades as a de facto international organization.
The World Trade Organization deals with the rules of trade between nations
at a near-global level; it is responsible for negotiating and implementing
new trade agreements, and is in charge of policing member countries'
adherence to all the WTO agreements, signed by the bulk of the world's
trading nations and ratified in their parliaments.
3. Introduction..
Most of the WTO's current work comes from the 1986-94 negotiations called
the Uruguay Round, and earlier negotiations under the GATT. The
organization is currently the host to new negotiations, under the Doha
Development Agenda (DDA) launched in 2001.
The WTO is governed by a Ministerial Conference, which meets 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 are in Geneva, Switzerland.
4. History : ITO and GATT 1947
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
now known as the World Bank and the International Monetary
Fund.
A Preparatory Committee was established in February 1946,
and worked until November 1947 on the charter of an
international organization for trade. By October 1947 an
agreement on the GATT was reached in Geneva, and on
October 30, 1947 twenty three countries signed the "Protocol
of Provisional Application of the General Agreement on Tariffs
and Trade".
5. History : GATT Rounds of Negotiations
From Geneva to Tokyo
Seven rounds of negotiations occurred under the GATT. The first
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.
6. History : GATT Rounds of Negotiations
Uruguay Round
The eighth GATT round — known as the Uruguay Round — was launched in
September 1986, in Punta del Este, Uruguay. All the original GATT articles were up
for review.
The GATT 1994 is not however the only legally binding agreement included in the
Final Act; a long list of about 60 agreements, annexes, decisions and
understandings was adopted. In fact, the agreements fall into a simple structure
with six main parts:
An umbrella agreement (the Agreement Establishing the WTO);
Agreements for each of the three broad areas of trade that the WTO covers:
Goods and Investment (the Multilateral Agreements on Trade in Goods including the GATT 1994
and the TRIMS (Trade Related Investment Measures)
General Agreement on trade in Services (GATS),
Trade Related Aspects of Intellectual Property Rights (TRIPS);
Dispute Settlement Understanding (DSU); and
Trade Policy Reviews Mechanism (TPRM).
7. History : GATT Rounds of Negotiations
Doha Round
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.
The initial agenda comprised both further trade liberalization
and new rule-making, underpinned by commitments to
strengthen substantially assistance to developing countries.
8. Mission
The WTO's stated goal is to improve the welfare of
the peoples of its member countries, specifically by
lowering trade barriers and providing a platform for
negotiation of trade.
Its main mission is "to ensure that trade flows as
smoothly, predictably and freely as possible". This
main mission is further specified in certain core
functions serving and safeguarding five fundamental
principles, which are the foundation of the multilateral
trading system.
9. Functions
Among the various functions of the WTO, these are regarded by
analysts as the most important
To oversee the implementation, administration and operation of the covered
agreements.
To provide a forum for negotiations and for settling disputes.
To review the national trade policies, and to ensure the coherence and
transparency of trade policies through surveillance in global economic policy-
making.
To assist developing, least-developed and low-income countries in transition to
adjust to WTO rules and disciplines through technical cooperation and training.
The WTO is also a center of economic research and analysis.
Finally, the WTO cooperates closely with the two other components of the Bretton
Woods system, the IMF and the World Bank.
10. Principles of Trading System
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. "Grant someone a special favor and you have to do the
same for all other WTO members.
"National treatment means that imported and locally-produced goods should be
treated equally (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).
11. Principles of Trading System
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 materialize.
12. Principles of Trading System
Binding and Enforcable Commitments
The tariff commitments made by WTO members in a
multilateral trade negotiation and on accession are
enumerated in a schedules (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.
13. Principles of Trading System
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).
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.
14. Principles of Trading System
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 noneconomical
objectives;
articles aimed at ensuring "fair
competition"; an
provisions permitting intervention in trade
for economic reasons.
15. Formal Structure
Highest level: Ministerial Conference
“The topmost decision-making body of the WTO is
the Ministerial Conference, which has to meet at
least every two years. It brings together all
members of the WTO, all of which are countries or
separate customs territories. The Ministerial
Conference can make decisions on all matters
under any of the multilateral trade agreements.”
16. Formal Structure
Second level: General Council: The daily work of the
ministerial conference is handled by three groups:
1. The General Council: The WTO’s highest-level decision-making body in Geneva,
meets regularly to carry out the functions of the WTO. It has representatives
(usually ambassadors or equivalent) from all member governments and has the
authority to act on behalf of the ministerial conference which only meets about
every two years. The council acts on behalf on the Ministerial Council on all of the
WTO affairs. The current chairman is Amb. Muhamad Noor Yacob (Malaysia).
2. The Dispute Settlement Body is made up of all member governments, usually
represented by ambassadors or equivalent. The current chairperson is H.E. Mr.
Bruce Gosper (Australia).
3. The WTO General Council meets as the Trade Policy Review Body (TPRB) to
undertake trade policy reviews of Members under the TRPM. The TPRB is thus
open to all WTO Members. The current chairperson is H.E. Ms. Claudia Uribe
(Colombia).
17. Formal Structure
Third level: Councils for Trade :
There are three councils. Apart from these three councils, six other bodies report to the General Council reporting
on issues such as trade and development, the environment, regional trading arrangements and administrative
issues.
1. Council for Trade in Goods - The workings of the General Agreement on Tariffs and
Trade (GATT) which covers international trade in goods, are the responsibility of the
Council for Trade in Goods. It is made up of representatives from all WTO member
countries. The current chairperson is Amb. Yonov Frederick Agah (Nigeria).
2. 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.
3. 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’s open to all WTO members, and can
create subsidiary bodies as required.
18. Formal Structure
Fourth level: Subsidiary Bodies
There are subsidiary bodies under each of the three councils.
The Goods Council - subsidiary under the Council for Trade in Goods. It has 11 committees
consisting of all member countries, dealing with specific subjects such as agriculture,
market access, subsidies, anti-dumping measures and so on. Committees include the
following
Information Technology Agreement (ITA) Committee
State Trading Enterprises
Textiles Monitoring Body - Consists of a chairman and 10 members acting under it.
Groups dealing with notifications - process by which governments inform the WTO about new
policies and measures in their countries.
The Services Council - subsidiary under the Council for Trade in Services which deals with
financial services, domestic regulations and other specific commitments.
Dispute Settlement panels and Appellate Body - subsidiary under the Dispute Settlement
Body to resolve disputes and the Appellate Body to deal with appeals.
19. Formal Structure
Other committees on
Trade and Environment
Trade and Development (Subcommittee on
Least-Developed Countries)
Regional Trade Agreements
Balance of Payments Restrictions
Budget, Finance and Administration
Working parties on Accession
Working groups on
Trade, debt and finance
Trade and technology transfer