Endrinal, Jeffrey C.

THE WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) is an international agency with 162 member countries and its
purpose is to promote international commerce. The WTO's main functions are to provide a forum for
negotiations to reduce barriers to international commerce, and to administer a system of rules
governing trade.

HISTORY

1. GATT negotiations before Uruguay - The World Trade Organization came into being in 1995. One of
the youngest of the international organizations, the WTO is the successor to the General Agreement on
Tariffs and Trade (GATT) established in the wake of the Second World War.

2. Uruguay round: 1986-1994

3. Ministerial Conferences

4. Doha Round (Doha Agenda): 2001-present The WTO was established in 1995, when it took over
essentially the same functions from the General Agreement on Tariffs and Trade (Gatt), which came into
force in 1948. One of the motivations for creating the Gatt was a wish to dismantle the barriers to trade
that had been erected between the two world wars. Most economists regard the establishment of these
interwar trade barriers as misguided and say they probably aggravated the Great Depression of the
1930s.

HOW WTO IS DIFFERENCE FROM GATT?

1. GATT was agreement between contracting parties and was not an international organisation
dealing in global trade
2. GATT deals with trade in good only while WTO covers trading of services as well as Intellectual
Property (IP)

PURPOSES/FUNCTIONS

1. Trade negotiations - The WTO facilitates trade negotiations among countries by providing a
framework to structure the agreements, as well as providing dispute resolution mechanisms. It creates
an international legal framework that ensures the smooth exchange of goods and services among the
member countries.

2. Implementation and monitoring - Once the agreements are negotiated, the job of the WTO is to
ensure that the signatory countries adhere to their commitments in practice. It also produces research
based on the impact of the agreements on the economies of the countries involved.

3. Dispute Settlement - The WTO also acts as a dispute settlement body when there is a trade conflict
between its member states. The members of the WTO can file complaints against other member states
if they feel the trade and economic policies of a country are divergent from their commitments under
one of the agreements of the WTO. Following the complaint, there are formal hearings like a court until
a settlement is reached.
4. Building Trade Capacity - The WTO runs special programs to support developing countries by helping
them build the capacity to participate in free trade with more developed countries. It also gives
concessions under certain agreements to low-development countries to ease them into free trade with
other countries.

5. Outreach - Finally, the WTO carries out lobbying and outreach across the world as a part of its larger
objectives to promote free trade. They try to persuade governments to reduce barriers to trade to free,
fair, and open markets around the world.

STRUCTURE (or how the WTO functions)

The secretariat of WTO is based in Geneva, Switzerland headed by Director General. The current
director-general of the World Trade Organization is Ngozi Okonjo-Iweala from Nigeria.

1. The Ministerial Conference -Based in Geneva, Switzerland. The supreme decision making body of the
WTO which meets periodically or at least every two years. In between each Ministerial Conference, the
daily work is handled by three bodies whose membership is the same; they only differ by the terms of
reference under which each body is constituted

2. The General Council - The General Council comprises the representatives of all member countries and
acts as the representative of the Ministerial Conference when it comes to daily operations. Its job is to
carry out the implementation and monitoring function of the WTO. The General Council is further
divided into multiple councils and committees that focus on specific topics. Examples of such bodies
include the Council on Goods, the Councils on Services, the Committee on Textiles under the Council on
Goods, etc.

Three more councils, each handling a different broad area of trade, report to the General Council:

The Council for Trade in Goods (Goods Council)

The Council for Trade in Services (Services Council)
The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council)

3. Dispute Settlement Body - The Dispute Settlement Body is a part of the General Council and is
responsible for settling trade disputes between member states. There is also an Appellate Body, where
member states can appeal any decisions made against them during a dispute settlement.

4. Trade Policy Review Body - The Trade Policy Review Body is also a part of the General Council and is
responsible for ensuring the trade policies of member states are in line with the goals of the WTO.
Member countries are required to inform the WTO about changes in their laws and trade policies. The
body undertakes regular reviews of the policies to ensure they conform to the rules of the WTO. This is
part of the monitoring function of the WTO, and it helps the WTO to adapt to the changing economic
landscape.

HOW WTO WORKS?

Decisions are made by the entire membership. This is typically by consensus. A majority vote is also
possible but it has never been used in the WTO, and was extremely rare under the WTO’s predecessor,
the GATT. The WTO’s agreements have been ratified in all members’ parliaments.
TRADING PRINCIPLES UNDER WTO

Trade without discrimination:

Most Favoured Nation

If a member country of WTO grants special favour in trade to some favoured country, then all other
WTO countries will be given the same favour. Thus all countries become the most favoured nation in all
other countries, thereby making every country equal.

National Treatment

It means treating foreign goods and services at par with local equally by all members of WTO

WTO AGREEMENTS

How can you ensure that trade is as fair as possible, and as open as is practical? By negotiating rules and
abiding by them.

The WTO’s rules – the agreements – are the result of negotiations between the members. The current
set is largely the outcome of the 1986- 94 Uruguay Round negotiations, which included a major revision
of the original General Agreement on Tariffs and Trade (GATT).

The Uruguay Round created new rules for dealing with trade in services and intellectual property and
new procedures for dispute settlement. The complete set runs to some 30,000 pages consisting of about
30 agreements and separate commitments (called schedules) made by individual members in specific
areas, such as lower tariffs and services market-opening.

Through these agreements, WTO members operate a non- discriminatory trading system that spells out
their rights and their obligations. Each member receives guarantees that its exports will be treated fairly
and consistently in other members’ markets. Each promises to do the same for imports into its own
market. The system also gives developing economies some flexibility in implementing their
commitments.

MEMBERSHIP

Members and observers

The WTO has over 160 members representing 98 percent of world trade. Over 20 countries are seeking
to join the WTO.

Accessions
To join the WTO, a government has to bring its economic and trade policies in line with WTO rules and
negotiate its terms of entry with the WTO membership.

BUDGET

The WTO derives most of the income for its annual budget from contributions by its members. These
contributions are based on a formula that takes into account each member's share of international
trade.

WTO ANNUAL REPORT

The WTO Annual Report provides a comprehensive overview of WTO activities over the past year and
includes information on the WTO's budget and staffing.