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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. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (19861994). The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on addressing the needs of developing countries. As of June 2012, the future of the Doha Round remains uncertain: The work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed (So was the next unofficial target of the end of 2006.) The further imposition of free trade on industrial goods and services and the protectionism on farm subsidies to domestic agricultural sector requested from the developed countries, and the substantiation of the international liberalization of fair trade on agricultural products from developing countries remain the major obstacles. These points of contention have hindered any progress to launch new WTO negotiation beyond the Doha Development Round. As a result of this impasse, there has been an increasing amount of bilateral free trade agreements. WTO's current Director-General is Pascal Lamy, who leads a staff of over 600 people in Geneva, Switzerland.

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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. In the absence of an international organization for trade, the GATT would over the years "transform itself" into a de facto international organization. GATT rounds of negotiations The GATT was the only multilateral instrument governing international trade from 1946 until the WTO was established on January 1, 1995. 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. From Geneva to Tokyo Seven rounds of negotiations occurred under 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,

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bovine meat, civil aircraft and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two. 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. 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. 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. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed April 15, 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement. 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). 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 (TRIMS) 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).
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In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986-1994 talks. 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 the 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 Cancun, Mexico, aiming at forging agreement on the Doha round. An alliance of 22 southern states, the G20 developing nations (led by India, China, Brazil, ASEAN led by the Philippines), 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 Round 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

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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 was "The WTO, the Multilateral Trading System and the Current Global Economic Environment." Doha Round (The Doha Agenda) The WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This 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 substantial assistance to developing countries. The negotiations have been highly contentious. Disagreements still continue over several key areas including agriculture subsidies, which emerged as critical in July 2006. According to a European Union statement, "The 2008 Ministerial meeting broke down over a 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." The position of the European Commission is that "The successful conclusion of the Doha negotiations would confirm the central role of multilateral liberalisation and rule-making. It would confirm the WTO as a powerful shield against protectionist backsliding." An impasse remains and As of June 2012, agreement has not been reached, despite intense negotiations at several ministerial conferences and at other sessions.

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General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement regulating international trade. According to its preamble, its purpose is the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. The original GATT text (GATT 1947) is still in effect under the WTO framework, subject to the modifications of GATT 1994. GAAT Rounds GATT held a total of 8 rounds,
GATT and WTO trade rounds Countries Subjects covered




Geneva Annecy

Apr-1946 Apr-1949

7 months 5 months

23 13

Tariffs Tariffs

Torquay Geneva II Dillon Kennedy Tokyo

Sep-1950 Jan-1956

8 months 5 months

38 26 26 62 102

Tariffs Tariffs, admission of Japan Tariffs Tariffs, Anti-dumping Tariffs, non-tariff measures, "framework" agreements

Sep-1960 11 months May-1964 37 months Sep-1973 74 months

Achievements Signing of GATT, 45,000 tariff concessions affecting $10 billion of trade Countries exchanged some 5,000 tariff concessions Countries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25% $2.5 billion in tariff reductions Tariff concessions worth $4.9 billion of world trade Tariff concessions worth $40 billion of world trade Tariff reductions worth more than $300 billion dollars achieved The round led to the creation of WTO, and extended the range of trade negotiations, leading to major reductions in tariffs (about 40%) and agricultural subsidies, an agreement to allow full access for textiles and clothing from developing countries, and an extension of intellectual property rights.


Sep-1986 87 months


Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc




Tariffs, non-tariff measures, agriculture, labor standards, environment, competition, investment, transparency, patents etc The round is not yet concluded.

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Annecy Round - 1949 The second round took place in 1949 in Annecy, France. 13 countries took part in the round. The main focus of the talks was more tariff reductions, around 5000 in total. Torquay Round - 1951 The third round occurred in Torquay, England in 1950. Thirty-eight countries took part in the round. 8,700 tariff concessions were made totaling the remaining amount of tariffs to of the tariffs which were in effect in 1948. The contemporaneous rejection by the U.S. of the Havana Charter signified the establishment of the GATT as a governing world body. Geneva Round - 1955-1956 The fourth round returned to Geneva in 1955 and lasted until May 1956. Twenty-six countries took part in the round. $2.5 billion in tariffs were eliminated or reduced. Dillon Round - 1960-1962 The fifth round occurred once more in Geneva and lasted from 1960-1962. The talks were named after U.S. Treasury Secretary and former Under Secretary of State, Douglas Dillon, who first proposed the talks. Twenty-six countries took part in the round. Along with reducing over $4.9 billion in tariffs, it also yielded discussion relating to the creation of the European Economic Community (EEC). Kennedy Round - 1962-1967 Kennedy Round took place from 1962-1967. $40 billion in tariffs were eliminated or reduced. Tokyo Round - 1973-1979 Reduced tariffs and established new regulations aimed at controlling the proliferation of non-tariff barriers and voluntary export restrictions. 102 countries took part in the round. Concessions were made on $190 billion worth.

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Uruguay Round - 1986-1994 The Uruguay Round began in 1986. It was the most ambitious round to date, hoping to expand the competence of the GATT to important new areas such as services, capital, intellectual property, textiles, and agriculture. 123 countries took part in the round. The Uruguay Round was also the first set of multilateral trade negotiations in which developing countries had played an active role. Agriculture was essentially exempted from previous agreements as it was given special status in the areas of import quotas and export subsidies, with only mild caveats. However, by the time of the Uruguay round, many countries considered the exception of agriculture to be sufficiently glaring that they refused to sign a new deal without some movement on agricultural products. These fourteen countries came to be known as the "Cairns Group", and included mostly small and medium sized agricultural exporters such as Australia, Brazil, Canada, Indonesia, and New Zealand. The Agreement on Agriculture of the Uruguay Round continues to be the most substantial trade liberalization agreement in agricultural products in the history of trade negotiations. The goals of the agreement were to improve market access for agricultural products, reduce domestic support of agriculture in the form of price-distorting subsidies and quotas, eliminate over time export subsidies on agricultural products and to harmonize to the extent possible sanitary and phytosanitary measures between member countries.

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GATT and the World Trade Organization In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO). The 75 existing GATT members and the European Communities became the founding members of the WTO on 1 January 1995. The other 52 GATT members rejoined the WTO in the following two years (the last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members have joined and 29 are currently negotiating membership. There are a total of 155 member countries in the WTO, with Montenegro and Samoa being new members as of 2012. Of the original GATT members, Syria and the SFR Yugoslavia has not rejoined the WTO. Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in two), is not recognised as a direct SFRY successor state; therefore, its application is considered a new (non-GATT) one. The General Council of WTO, on 4 May 2010, agreed to establish a working party to examine the request of Syria for WTO membership. The contracting parties who founded the WTO ended official agreement of the "GATT 1947" terms on 31 December 1995. Serbia and Montenegro are in the decision stage of the negotiations and are expected to become the newest members of the WTO in 2012 or in near future. Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to include trade within the service sector and intellectual property rights. Although it was designed to serve multilateral agreements, during several rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation among members. WTO arrangements are generally a multilateral agreement settlement mechanism of GATT.

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Objectives and operation

The WTO has six key objectives: 1. to set and enforce rules for international trade, 2. to provide a forum for negotiating and monitoring further trade liberalization, 3. to resolve trade disputes, 4. to increase the transparency of decision-making processes, 5. to cooperate with other major international economic institutions involved in global economic management, and 6. to help developing countries benefit fully from the global trading system. Although shared by the GATT, in practice these goals have been pursued more comprehensively by the WTO. For example, whereas the GATT focused almost exclusively on goodsthough much of agriculture and textiles were excluded the WTO encompasses all goods, services, and intellectual property, as well as some investment policies. In addition, the permanent WTO Secretariat, which replaced the interim GATT Secretariat, has strengthened and formalized mechanisms for reviewing trade policies and settling disputes. Because many more products are covered under the WTO than under the GATT and because the number of member countries and the extent of their participation has grown steadilythe combined share of international trade of WTO members now exceeds 90 percent of the global totalopen access to markets has increased substantially. The rules embodied in both the GATT and the WTO serves at least three purposes. First, they attempt to protect the interests of small and weak countries against discriminatory trade practices of large and powerful countries. The WTOs most-favoured-nation and national-treatment articles stipulate that each WTO member must grant equal market access to all other members and that both domestic and foreign suppliers must be treated equally. Second, the rules require members to limit trade only through tariffs and to provide market access not less favourable than that specified in their schedules (i.e., the commitments that they agreed to when they were granted WTO membership or subsequently). Third, the rules are designed to help governments resist lobbying efforts by domestic interest groups seeking special favours.

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Although some exceptions to the rules have been made, their presence and replication in the core WTO agreements were intended to ensure that the worst excesses would be avoided. By thus bringing greater certainty and predictability to international markets, it was thought; the WTO would enhance economic welfare and reduce political tensions.

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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. It provides a forum for negotiations and for settling disputes.

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. 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. 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. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

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. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: 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 favour and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered

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the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods). 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. 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. 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. Safety valves: In specific circumstances, governments are able to restrict trade. The WTOs agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. There are three types of provision in this direction: articles allowing for the use of trade measures to attain non-economic objectives; articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies. provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.
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Organizational structure
The General Council has the following subsidiary bodies which oversee committees in different areas: 1. 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. 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 is open to all WTO members, and can create subsidiary bodies as required. 4. 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. As of June 2012 the committee was tasked with the Doha Development Round. The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The General council has several different committees, working groups, and working parties. 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.

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The Ministerial Conference (MC) is at the top of the structured organization of the WTO. It is the supreme governing body which takes ultimate decisions on all matters. It is constituted by representative (usually, Ministers of Trade) all the member countries. The General Council (GC) is composed of the representatives of all the members. It is the real engine of WTO which acts on behalf of the MC. It also acts as the Dispute Settlement Body as well as the Trade Policy Review Body. There are three councils viz: the Council for Trade Related Aspects of Intellectual Property Rights (TRIPS) operating under the GC. These councils with their subsidiary bodies carry out their specific responsibilities. Further there are three committee, viz, the committee on Balance of Payments Restrictions (CBOPR) and the committee o Budget, Finance and Administration (CFBA) which execute the functions assigned to them by the WTO Agreement and the GC.
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The Administration of the WTO is conducted by the Secretariat which is headed by the Director General (DG) appointed by the MC for the tenure of four years. He is assisted by the four Deputy Directors from different member countries. The annual budget estimates and financial statement of the WTO are presented by the DG to the CBFA for reivew and recommendations for the final approval by the GC. The Ministerial Conference The Ministerial Conference is the governing body of the WTO. It has the authority to adopt final decisions on all WTO matters. It meets at least once every two years for about four days, and is composed of trade ministers of all Members. Any Member can offer to host the Ministerial Conference, and Members decide on the venue by consensus. The next Conference is scheduled to take place in December 2005 in Hong Kong. The trade minister of the host country usually chairs the Ministerial Conference and can play a significant role. For example, after the collapse of the Conference in Cancn in 2003, some participants pointed the finger at the Mexican trade minister (and conference chair) Luis Ernesto Derbez, saying that he had decided to end the meeting prematurely although there was still a chance of reaching agreement. Ministerial Conferences are where final decisions, such as whether to launch new negotiations, are taken. Members begin preparing for Ministerials months in advance. This often involves intense negotiations in Geneva where delegates discuss numerous draft Ministerial texts for ministers to decide upon during the Conference, usually leaving the most contentious issues to be determined at the ministerial level. In practice, only issues concerning the strategic directions of the WTO are decided there, the bulk of the WTOs work being carried out by councils and committees that meet throughout the year in Geneva. NGOs who can demonstrate genuine interest in trade are eligible for accreditation to Ministerials, which is not the case for other WTO bodies. Almost 800 NGOs including business groups were accredited to participate in the Cancn Ministerial Conference. However,unlike the UN, where the Credentials Committee of ECOSOC has clear procedures for granting NGOs consultative status, the WTOs selection criteria are not clearly defined, and remain ad hoc. Since the Seattle Ministerial Conference in 1999, which saw unprecedented street protests, the WTO Secretariat has placed increasingly
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strict controls on the number of accredited NGO personnel that may attend. In Doha in 2001, each accredited NGO was allowed only two passes to enter the Conference site; in Cancn, NGOs were only allowed one. WTO Ministerial Conferences

The General Council The General Council is the highest ruling body of the WTO when the Ministerial Conference is not in session, and the only one which can make binding decisions outside the Ministerial Conference. For instance, in July 2004 the General Council adopted a package of agreements, referred to as the July Framework, which effectively broke months of deadlock following the collapse of minister-level talks in Cancn in September 2003. The General Council can meet whenever Members want. In practice its meetings usually take place every two months, and are attended by the highest rank of trade diplomats in Geneva, mostly ambassadors. It is common practice for the General Council to elect its chairperson and those of other WTO bodies during its first meeting of the calendar year. The Councils meetings are often preceded by informal sessions that are not announced publicly. The functions of the General Council are wide-ranging: it follows up on issues arising from Ministerials it oversees the operation of WTO agreements, and shares with the Ministerial Council the responsibility of adopting interpretations of the WTO Agreement. An example is its 2003 decisions on TRIPS and public health.

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it grants and extends waivers from WTO rules, on behalf of the Ministerial Conference. An example is the Kimberley Process waiver, to prevent trade in blood diamonds.

it meets as the Trade Policy Review Body (TPRB) and the Dispute Settlement Body (DSB); the two bodies and the General Council are considered as second level bodies after the Ministerial Conference.

it deals with accession-related matters, including authorizing the accession of new Members when the Ministerial Conference is not in session. For accession matters, the General Council decides on the establishment of working parties on accession, and endorses accession packages upon completion of negotiations.

it supervises the overall conduct of negotiations such as the Doha Work Programme. Since the Trade Negotiations Committee (TNC) was set up to carry out the Doha negotiations, the General Council has regularly reviewed its work under a standing agenda item. The TNC reports to each regular meeting of the General Council on the activities of its negotiating groups.

The General Council also deals with systemic issues (such as selection of Directors-General and external transparency), and performs specific tasks assigned to it by the Ministerial Conference.

The WTO describes itself as "a rules-based, member-driven organization all decisions are made by the member governments, and the rules are the outcome of negotiations among members". The WTO Agreement foresees votes where consensus cannot be reached, but the practice of consensus dominates the process of decision-making. 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.

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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. 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. The shortest accession negotiation was that of the Kyrgyz Republic, while the longest was that of Russia, which, having first applied to join GATT in 1993, was approved for membership in December 2011 and became a WTO member on August 22, 2012. The second longest was that of Vanuatu, whose Working Party on the Accession of Vanuatu was established on 11 July 1995. After a final meeting of the Working Party in October 2001, Vanuatu requested more time to consider its accession terms. In 2008, it indicated its interest to resume and conclude its WTO accession. The Working Party on the Accession of Vanuatu was reconvened informally on 4 April 2011 to discuss Vanuatus future WTO membership. The re-convened Working Party completed its mandate on 2 May 2011. The General Council formally approved the Accession Package of Vanuatu on 26 October 2011. On 24 August 2012, the WTO welcomed Vanuatu as its 157th member. An offer of accession is only given once consensus is reached among interested parties. Accession process 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. The application is submitted to the WTO in a memorandum which is examined by a working party open to all interested WTO Members. 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. 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

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WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. 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.

WTO accession progress: 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 (FTR) 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

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Members and Observers The WTO has 157 members and 27 observer governments. In addition to states, the European Union is a member. WTO members do not have to be full sovereign nationmembers. 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 (Taiwan) acceded to the WTO in 2002 as "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei) despite its disputed status. The WTO Secretariat omits the official titles (such as Counselor, First Secretary, Second Secretary and Third Secretary) of the members of Chinese Taipei's Permanent Mission to the WTO, except for the titles of the Permanent Representative and the Deputy Permanent Representative. Iran is the biggest economy outside the WTO. With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. A number of international intergovernmental organizations have also been granted observer status to WTO bodies. 14 states and two territories so far have no official interaction with the WTO.

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. 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 as the General Agreement on Tariffs and Trade (GATT) provided 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

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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 Measuresalso known as the SPS Agreementwas negotiated during the Uruguay Round of GATT, 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". 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. Marrakesh Agreement The Marrakesh Agreement Establishing the WTO incorporated several new substantive agreements, which gave the WTO a much broader mandate than GATT or any other trade agreement: The WTO introduced new rules on agriculture and textiles. Most significantly, and unlike GATT, the WTO encompasses areas beyond trade in goods. Three new subjects were brought into the multilateral trading system: trade in services through the General Agreement on Trade in Services (GATS); intellectual property rights through the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); and the question of textiles was addressed for the first time in a meaningful way. The Uruguay Round transformed the GATTs dispute settlement system, giving the WTO

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serious teeth with which to enforce its rules. WTO Members also agreed on a Trade Policy Review Mechanism.

All the WTOs legal texts are part and parcel of the so-called single undertaking of the WTO agreements: Members cannot pick and choose among the agreements but are bound by the package as a whole, with the exception of the two plurilateral agreements. The WTOs major legal texts

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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. 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". 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. 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. Bodies involved in the dispute settlement process, World Trade Organization. The Dispute Settlement Mechanism The Dispute Settlement Mechanism (DSM) is a quasi-judicial system for resolving trade disputes. The Dispute Settlement Body (DSB) can authorize trade retaliation measures, or suspension of concessions in WTO jargon if Members do not comply with DSM panel or Appellate Body rulings. This particular enforcement mechanism of the WTO regime, though a last resort, remains unique among international tribunals. The DSB is composed of all WTO Members. Its functions are: to establish panels which examine the case in dispute to appoint the members of the standing Appellate Body to adopt reports of panels and the Appellate Body (the body which deals with appeals) to monitor implementation of rulings and recommendations to authorize sanctions or retaliation measures under the WTO agreements to adjudicate cases on textiles and clothing if they are not resolved by the Textiles Monitoring Body (TMB), the only other WTO body dealing with disputes
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The WTO dispute settlement mechanism is arguably more efficient and effective than almost any other international tribunal dealing with non-criminal matters. The DSM sets clear timeframes for different stages in resolving trade disputes among Members, which avoids cases dragging on for a long time. It usually takes between 12 to 18 months to settle a dispute, but the application of rulings often takes longer. The system nevertheless seems slow to traders, especially when the disputed measures are temporary in nature. For example, the US decision to impose temporary (for three years) higher tariffs on certain steel products triggered a dispute case in March 2002. By the time the DSB made a final decision in December 2003 that the measures were illegal, the higher tariffs had been in place for 19 months, long enough for significant harm to have been caused to countries and companies exporting steel to the US. It is also worth noting that dispute complaints are typically filed at the request of business interests, who usually seek their own expensive legal advice before turning to their government to request it to take up their case. The mechanism applies to all WTO agreements, and can cover plurilateral agreements as well, should parties to these agreements so decide. It applies only to WTO agreements: a Member can only turn to the DSM for resolution of a dispute concerning a WTO rule. The DSM will therefore only rule on other matters, such as environmental policy, human rights or social questions, if these arise in a dispute concerning a WTO rule, as was the case in the Shrimp-Turtle dispute. The Shrimp-Turtle Case

Nevertheless, the concern remains that the broad reach of WTO rules and their implications for a wide array of domestic policies makes the DSM a particular threat because it ensures strong enforcement of rules designed to favour trade liberalization, rather than to promote well-being or respect for human rights.

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The dispute settlement process

Panels A panel is a quasi-judicial body which examines the evidence and decides on the merits of the case, according to the Dispute Settlement Understanding (DSU): A panel usually consists of three (but sometimes five) experts from different countries. Panellists for each case are chosen from a roster of qualified professionals or from elsewhere, in consultation with Members involved in the dispute. The Director-General can also appoint panellists if the parties cannot agree on the panel. In a dispute between a developed country and a developing country, the latter can request that at least one of the panellists be from a developing country. Panellists serve in their individual capacity and do not receive instructions from any government. In general, panellists are considered to be impartial and competent.

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Panels have the right to seek information and technical advice from any individual or body which they deem appropriate. In many disputes the panel has consulted scientific experts or appointed an expert review group to prepare an advisory report. However, the question of uninvited, non-governmental input into the dispute settlement process is a contentious issue.

Appellate Body Either party to a dispute may appeal to the standing Appellate Body against a panels ruling on points of law and legal interpretation of WTO agreements. The Appellate Body can uphold, modify or reverse the legal findings of a panel and its conclusion, but cannot re-examine existing evidence or examine new issues. The Appellate Body consists of seven permanent members, and three of them hear each appeal case: Members of the Appellate Body are individuals recognized in the field of law and international trade, and not affiliated to any government. Members are appointed for a four-year term by the DSB, renewable once. WTO Dispute Settlement and the Iceberg of Protectionism

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Implementation of dispute findings According to the DSU, panel or Appellate Body decisions must be implemented within a reasonable period of time, usually defined as 15 months, although the parties to a dispute may agree to extend this period. The winning party can request the DSB to authorize trade sanctions if no remedial action has been taken upon the completion of the implementation period. If the parties cannot agree on the level of sanctions, a WTO arbitrator will set the level.

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Figures on the use of the Dispute Settlement Mechanism

To date, NGOs continue to submit amicus briefs by sending them to the WTO Secretariat, though no specific guidelines exist for admitting or refusing them, either at the panel or the Appellate Body level. This means that in practice it is still up to the individual panels and/or Appellate Body members to decide on acceptance or refusal. In the absence of rules, no record is kept of which dispute panels or Appellate Bodies actually received, accepted or used amicus briefs. Hence the process remains case-by-case.

Trade policy reviews

The WTO also seeks to increase awareness of the extent and effects of trade-distorting policies, a goal that it accomplishes through annual notification requirements and through a policy-review mechanism. Notices of all changes in members trade and trade -related policies must be published and made accessible to their trading partners. For many developing countries and countries whose economies were formerly centrally planned, this requirement was a major step toward more transparent governance. The WTO reviews the trade policies of the worlds four largest traders (the European Union, the United States, Japan, and Canada) once every two years, the policies of the 16 next largest traders once every four years, and the policies of all other traders once every six or more years. After extensive consultations with the member country under review, the WTO Secretariat publishes its review together with a companion report by the countrys government. The process thus monitors the extent to which members are meeting their commitments and

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provides information on newly opened markets. It also provides a firmer basis for subsequent trade negotiations and the resolution of trade disputes. The Trade Policy Review Mechanism The WTO agreements stipulate that each Member shall ensure that its laws, regulations and administrative procedures conform to its WTO obligations. The Trade Policy Review Body (TPRB), through regular reviews of individual Members trade policies and practices, seeks to improve adherence by Members to the commitments made under the WTO agreements, and to facilitate the smooth functioning of the multilateral trading system by enhancing the transparency of Members trade policies. The frequency of reviews depends on a Members share of world trade. The Quad countries the EU, the US, Japan and Canada are examined once every two years. The next 16 Members, ranked according to their share of world trade, are reviewed every four years. The remaining Members are reviewed every six years, with the possibility of longer interim periods for the least-developed countries. Two reports are prepared for each review: 1. a government report or a policy statement by the Member under review. Members are required to report on changes in their trade policies and provide updated economic and trade statistics. There is no agreed format or standard guidelines on what elements should be included, and Members are free to submit whatever information they deem appropriate. The 2004 US report mentioned labour standards but in general, reports tend to focus on narrowly-defined trade issues, usually ignoring the broader economic or social effects of a countrys trade liberalization. 2. a detailed report prepared independently by economists in the Secretariats Trade Policy Review Division. So far, the reports prepared by the Secretariat have not explicitly included issues related to human rights or to labour standards, even though there has been discussion in the TPRB of the latter. The reports, together with the TPRB chairpersons concluding remarks, are made public and available to the press after the review process. Minutes of the TPRB meetings are published four weeks later.

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The review process allows other Members to submit written questions in advance of the TPRB meeting and to raise oral questions at the meeting. A discussant is chosen among representatives of Members to stimulate the debate.

In 2000, Canada proposed making the TPRM more transparent by opening it up to accredited observers from the public and webcasting its own trade policy review,

declaring that live web feeds of the meeting would enhance the quality of discussions between Members and provide a progressive example of the WTOs openness to public. The proposal was resisted by a number of developing countries, including India, Pakistan, Argentina and Mexico, who argued that opening up the process could threaten the intergovernmental character of the WTO and set a precedent for other committees that they were not prepared to consider. Without agreement on the matter, the TPRB remains closed to outsiders.

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The WTO Secretariat

The WTO is located in Geneva, Switzerland. Its official languages are English, French and Spanish. The Secretariat, with over 500 staff headed by the WTO Director-General, services the daily activities of different WTO bodies. Although the Secretariat is officially neutral, many observers criticize it for being too pro-trade liberalization, regardless of the benefits or otherwise for individual WTO Members. Other critics claim that the Secretariat defends the interests of the powerful WTO Members rather than being neutral or defending developing countries. The Director-General is chosen by Members through consensus. The office term of Supachai Panitchpakdi as Director-General comes to an end in August 2005. Given that Members themselves make all decisions concerning the organization, the position of Director-General has little formal authority, but does play an important informal role of facilitator among Member governments. This is particularly so during sensitive negotiations, such as those at Ministerial Conferences and under the current Doha negotiations: the Director-General chairs ex officio, the Trade Negotiating Committee.

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The Directors-General of the WTO have been: Pascal Lamy, 2005 Supachai Panitchpakdi, 20022005 Mike Moore, 19992002 Renato Ruggiero, 19951999 Peter Sutherland, 1995 The Directors-General of the precursor organization, GATT, were: Peter Sutherland, 19931995 Arthur Dunkel, 19801993 Olivier Long, 19681980 Eric Wyndham White, 19481968 The budget of the WTO In 2004, the WTO budget amounted to CHF 162 million (EUR 103 million). The budget is financed by membership fees determined according to each Members share of total world trade in the previous three years, including trade in goods, services and intellectual property rights. A minimum contribution of 0.015% applies to Members whose share in world trade is less than this percentage. While over two-thirds of WTO Members are developing countries, contributions from the Quad countries the US, the EU, Japan and Canada finance over half of the total budget.

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Indias role in forming WTO

When the Uruguay round of GATT talks was in progress during early 1990s, Indian economy was ailing and was totally out of track. Under this compelling situation, India adopted new economic reforms (NERS) in 1991 based on Rao-Manmohan Model as a crisis driven strategy. Macro Economic Stabilization (MES) which covered reforms in monetary policy, fiscal policy and external sector was brought to provide immediate relief to ailing economy. But, structural reforms, also called SAP(Structural Adjustment Programmes), was meant for long term reform process which covered components of industrial policy reform, PSU reform, financial sector reform and trade & capital flow reforms. Then crisis-driven reforms has now reached to consensus driven under second generation of our reform policies. These changes in Indian economy based on LPG gave rise to a new market economy that brought growth and development in India. In this context, the emergence of WTO as multilateral trade body to make trade friendly environment at the global level and Indian attachment to this body could be understood. India one of the founder member of WTO, had its own expectations as well as reservations about the new economic order. While it unleashed great opportunities for agriculture and textiles sectors by improving their access to developed countries (as provided by AoAAgreement on Agriculture and phasing out of MFA- Multi Fiber Agreement), it has some grey areas in the form of provisions for patent regime and services sector. As the events gradually unfolded, India, like other developing countries recognized that the rules of the game were not favorable to them and they must play on active role within the permissible limits to minimize the damage. In the last decade, our economic agenda and the policies to be pursued have been largely shaped by the WTO commitments. India adopted the process of globalization and WTO rulings as a facet of structural reforms. It brought devaluation in currency in 1991 and also adopted convertibility system in Indian rupees in different stages. Trade and current account have been made fully convertibility regime, though cautious and as a long term objective. Various steps have been taken towards import liberalization in India, for example, de-licensing, decanalization &expansion of OGL (open general license),removing quantitative restriction, lowering peak custom rate, etc,. India has also adopted a very liberal policy towards foreign capital to attract direct foreign investment and portfolio investment. Insurance and

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print media have been opened for private competition. India has made following changes in the economy as mandated by WTO. Quantitative restrictions have been completely phased out in 2000-01 and only the tariff structure remains which itself has been lowered considerably, with 67% of the tariff lines being bound. Patent law has been reformed with amendment of Patent act (2006). It provides for product patent in pharmaceutical and farm products. Under the TRIMS agreement, restrictions on entry of foreign investment and conditions upon various aspects have been removed and relaxed. Except a few sectors, FDI is being allowed upto 100% though automatic route and Indian companies are also free to invest abroad. Under the GATS (General Agreement on Trade in Services), India has made commitment in 33 activities where Foreign Service providers are allowed to enter keeping in view national interests. Indias legislation on Custom Valuation rules, 1998 has been amended to bring it in conformity with the provisions of WTO agreements on implementation of article VII of GATT 1994 and the Customs Valuation Agreement. A survey of last 15 years since adoption of new economic reforms and especially after joining WTO, it is now clear that we have done well and still a lot of scope remained for further development. The process of globalization and the provision of WTO have had, no doubt, some important positive implications. Under this process, a platform has been created for different types of multilateral agreements. Multilateral regulation and discipline have been established & imposed and up to certain extent, trade friendly environment has been created. Disputes are being solved & managed and trading activities are getting protection. India is also getting the benefits of this emerging trade friendly environment. Indian exports, especially exports of agricultural good, have been increased. The Doha development Agenda, though passing through hard times; is built on the long term objective of the AOA to establish a fair and a market oriented trading system. India could be highly advantaged with DDA. During the ongoing negotiations, India and other developing countries have sought a special safeguard mechanism (SSM) for addressing

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situations of import surges or swings in international prices of agricultural products. Other measures concerning developing countries in the WTO agreements include: Extra time for developing countries to fulfill their commitments (in many of the WTO agreements) Provisions designed to increase developing countries trading opportunities through greater market access (e.g. in textiles, services, technical barriers to trade) Provisions requiring WTO members to safeguard the interests of developing countries when adopting some domestic or international measures (e.g. in antidumping, safeguards, technical barriers to trade) Provisions for various means of helping developing countries (e.g. to deal with commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors). The WTO agreements, which were the outcome of the 198694 Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. Among the gains are export opportunities. They include: Fundamental reforms in agricultural trade Phasing out quotas on developing countries exports of textiles and clothing Reductions in customs duties on industrial products Expanding the number of products whose customs duty rates are bound under the WTO, making the rates difficult to raise Phasing out bilateral agreements to restrict traded quantities of certain goods these grey area measures (the so-called voluntary export restraints) are not really recognized under GATT-WTO.

world trade statistics

The WTO Secretariat and its predecessor the General Agreement on Tariffs and Trade (GATT) Secretariat have been providing trade statistics since 1948. These data have been regularly published in annual reports, which have changed in design and coverage over the years to keep up with the changing needs of users of the reports.

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World merchandise trade and trade in commercial services by region and selected economy, 2005-2010

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Growth in volume of world merchandise trade and GDP, 2000-11

Volume of world merchandise exports 1990-2011

Figures for 2011 are projections Source: WTO Secretariat

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Dispute settlement statistics

Between 1 January 1995 and 31 August 2006, 348 consultation requests were notified to the WT0.4 Compared to the less than 300 cases submitted to GATT dispute settlement in 47 years; this number already shows that the new system has been quite popular among Members so far. However, these numbers should not be over-interpreted: The old GATT had fewer members, and it covered fewer agreements and sectors of economic activity than the WO. Graph 3 shows the intensity in the use of the dispute settlement mechanism in its first eleven years, i.e., until 31 December 2005. The number of complaints increased sharply in the first three years after the mechanism had come into force, and it peaked in 1997 with 50 new consultation requests in one single year. Thereafter, the number of consultation requests dropped .to an annual average of 30 complaints in the period from 2000 to 2003, and further to only 1% new complaints in 2005, the lowest number since inception of' the new system, Figures for the first eight months of 2006 indicate a slight increase. The evolution of the number of panel reports circulated displays a similar pattern, yet with a certain time lag and a peak in 2000. Overall, the number of panel report is much lower than the number of consultation requests. This shows that mutually agreed solutions can be found in a considerable number of disputes prior to the circulation of the panel report (consultation or panel stage). Moreover, in some cases, several separate consultation requests are dealt with by one single panel (e.g., in cases with multiple complainants), which equally contributes to the difference in numbers. The number of Appellate Body reports peaked in 1999, while every panel report circulated in 1996 and 1997 had been subject to an appeal, this ratio dropped to an average of around two thirds for panel reports circulated after 2000. Overall, there have been relatively few complaints under Article 21.5 DSU regarding alleged non-compliance of defendants with panel rulings (so-called compliance reviews). The fairly small number is in stark contrast to the public perception of these "trade wars" as they concern "high profile' cases, including EC - Bananas,' EC Hormones16 and US - foreign Sales Corporations.

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In terms of usage by country, the United States and the European Communities (EC) have been the DSU's most frequent users by far: Together, they account for nearly half of the cases brought before the WO (see Graph 4). Among developing countries, Brazil and India are the most important users of the system. Developing countries' participation in dispute settlement proceedings is generally increasing, but still on a relatively modest level, given the high number of developing countries in the WO. The near absence of LDCs in dispute settlement activities is another salient feature: The first LDC to lodge a complaint was Bangladesh. In early 2004, the country asked for consultations with India regarding Indian anti-dumping measures against battery imports from Bangladesh.

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Regarding the subject matter, by far most disputes concern trade in goods, with the GATT being the agreement whose provisions are most often invoked in disputes. This dominance of goods trade in NTO dispute settlement becomes even more apparent when the c0mpil.sini.s relating to the special agreements in the goads sector (in particular those dealing with trade remedies such as the Agreement on Subsidies and Countervailing Measures and the Agreement on Antidurnping) are taken into account (see Graph 5). By comparison, the "new issues" - i.e., trade in services (GATS) and Trade-Related Intellectual Property Rights (TRIPS) - have not yet been frequent subjects of WO disputes. Nevertheless, it should be noted that one particularly "high profile" case - a dispute between the US and the EC on the one hand, and India on the other, regarding patent protection of pharmaceutical and agricultural chemical products - ranges among these dispute. Similarly, there have not been frequent disputes under the GATS. Some of these disputes, however, have considerable political and economic importance, i.e., a US complaint against Mexican measures affecting telecommunications and a complaint by the small Caribbean islands of Antigua and Barbuda against US measures affecting gambling services.

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OBSERVATIONS The pace of international economic integration via the GATT and WTO rounds of multilateral trade negotiations has been slower and less comprehensive than some members would prefer. Some have suggested that there should be additional integration among subgroups of (often neighbouring) member economiese.g., those party to the European Union, the North American Free Trade Agreement, and the Asia-Pacific Economic Cooperationfor political, military, or other reasons. Notwithstanding the most-favoured-nation clauses in the agreements establishing the WTO, the organization does allow such preferential integration under certain conditions. Even though many such integration agreements arguably do not involve substantially all tradethe WTOs main conditionthere has been little conflict over the formation of free-trade areas and customs unions. The most common omissions from such agreements are politically sensitive sectors such as agriculture. Beginning in the late 1990s, the WTO was the target of fierce criticism. Opponents of globalization, and in particular those opposed to the growing power of multinational corporations, argued that the WTO infringes upon national sovereignty and promotes the interests of large corporations at the expense of smaller local firms struggling to cope with import competition. Environmental and labour groups (especially those from wealthier countries) have claimed that trade liberalization leads to environmental damage and harms the interests of low-skilled unionized workers. Protests by these and other groups at WTO ministerial meetingssuch as the 1999 demonstrations in Seattle, Washington, U.S., which involved approximately 50,000 peoplebecame larger and more frequent, in part because the development of the Internet and e-mail made large-scale organizing and collective action easier. In response to such criticism, supporters of the WTO claimed that regulating trade is not an efficient way to protect the environment and labour rights. Meanwhile, some WTO members, especially developing countries, resisted attempts to adopt rules that would allow for sanctions against countries that failed to meet strict environmental and labour standards, arguing that they would amount to veiled protectionism. Despite these criticisms, however, WTO admission remained attractive for nonmembers, as evidenced by the increase in the number of members after 1995. Most significantly, China entered the WTO in 2001 after years of accession negotiations. The conditions for

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Chinese membership were in some ways more restrictive than those for developing countries, reflecting the concerns of some WTO members that the admission of such a large and still somewhat planned economy might have an overall negative effect on free trade.

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The world has changed a good deal over those six decades and so too has the multilateral trading system. Globalization has brought economic interaction among nations closer than ever before, thanks in no small part to revolutions in information and transport technology and growing openness in government policy. The trend towards increased interdependency has rendered international economic co-operation more complex and multifaceted. Co-operation among nations has become harder to manage and more influential in shaping the circumstances in which people live. The subject matter covered by the system has expanded significantly and many more players are involved in shaping the system. The 23 original signatories of the GATT have now become the 151 Members of the WTO. Governments embrace varying objectives at different times, reflecting, among other things, the relative standing of their economies in the international order, and the priorities imposed by their level of economic development. By demonstrating the sheer heterogeneity of interests at stake, the report highlights the fragile and incomplete nature of cooperative endeavors in a changing and uncertain world in other words, the continuing challenge of shaping and maintaining mutually advantageous co-operative arrangements. Effective co-operation among diverse economies with differing priorities requires clarity of thought and foresight, as well as a willingness to seek accommodation. A failure to secure co-operative outcomes may well disadvantage all parties to a potential agreement in one way or another, but deals can nevertheless prove elusive. An additional requirement for sustainable and stable co-operation is that governments find ways of addressing adjustment costs and the re-distributional impact of change in other words, of managing the challenges of globalization. Adjustment and income distribution have not been explored here, and they pose challenges that go well beyond the impact of trade policy changes in an economy. An historical review of trade relations prior to the establishment of the GATT/WTO strongly points to the importance of building and sustaining institutional arrangements to underwrite international trade relations. International institutions can become moribund, with shrinking relevance, if governments do not take care of them, and institutional decline will likely be harder to reverse the further it goes. At the same time, it has been repeatedly demonstrated that if institutions do not adapt to change, they will wither,

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becoming increasingly regarded as vestiges of an older world driven by different interests than those that shape the present. Even when governments show willing to adapt and refashion their co-operative arrangements in recognition of changing circumstances, there will always be a sense in which trade agreements remain incomplete. Agreements cannot foresee every eventuality. So while institutions and contractual provisions can mitigate the uncertainties connected with contractual incompleteness, they can hardly eliminate them. This brings with it two implications. One is that disputes are a natural outflow of contractual incompleteness. The other is that dealing with incompleteness requires a delicate balance between flexibility and adaptation on the one hand, and the preservation of predictability and stability on the other. An unvarnished look at the less than fully resolved issues of the past, the outstanding challenges, and the successes as attempted in this report will, we hope, stimulate thought on how best to manage the future.


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