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World Trade Organization

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v 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

v The World Trade Organization (WTO), established on 1 January 1995, is the legal and institutional foundation of the multilateral trading system. It provides the principal contractual obligations determining how governments frame and implement domestic trade legislation and regulations. And it is the platform on which trade relations among countries evolve through collective debate, negotiation and adjudication.

v The Preamble of the Agreement Establishing the WTO states that members should conduct their trade and economic relations with a view to

v "raising standards of living, v ensuring full employment and v a large and steadily growing volume of real income and v effective demand, and v expanding the production of and trade in goods and services,

v while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development,

v seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of development.

v 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

v The GATT was the only multilateral instrument governing international trade from 1945 until the WTO was established in 1995.

v 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


v The WTO facilitates the implementation, administration and operation, and furthers the objectives, of this Agreement and the Multilateral Trade Agreements, and also provide framework for the implementation, administration and operation of the Plurilateral Trade Agreements.

v The WTO provides the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreements and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference.

v The WTO administers the Understandings on Rules and Procedures governing the Settlement of Disputes.

v The WTO administers the Trade Policy Review Mechanism (TPRM).

v With a view to achieving greater coherence in global economic policy-making, the WTO cooperates as appropriate, with the International Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (World Bank) and its affiliate agencies.

v WTO Members have agreed to enter into "reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations."

The fundamental principles of the

  • v multilateral trading system

Trade without discrimination. Under the most

favoured nation (MFN) clause, members are bound to grant to the products of other members no less favourable treatment than that accorded to the products of any other country. The provision on national treatment requires that once goods have entered a market, they must be treated no less favourably than the equivalent domestically-produced good.

v Predictable and growing access to markets.

v Promoting fair competition. The WTO extends and clarifies previous GATT rules that laid down the basis on which governments could impose compensating duties on two forms of "unfair" competition: dumping and subsidies. The WTO Agreement on agriculture is designed to provide increased fairness in farm trade. That on intellectual property will improve conditions of competition where ideas and inventions are involved, and another will do the same thing for trade in services

v Encouraging development and economic reform. GATT provisions intended to favour developing countries are maintained in the WTO, in particular those encouraging industrial countries to assist trade of developing nations. Developing countries are given transition periods to adjust to the more difficult WTO provisions. Least-developed countries are given even more flexibility and benefit from accelerated implementation of market access concessions for their goods.

Summing up main functions

v The essential functions of the WTO are:

v - administering and implementing the multilateral and multilateral trade agreements which together make up the WTO; v - acting as a forum for multilateral trade negotiations v - seeking to resolve trade disputes v - overseeing national trade policies v - cooperating with other international institutions involved in global economic policy-making

Structure of WTO

v The highest WTO authority is the Ministerial Conference which meets every two years

v The day-to-day work of the WTO, however, falls to a number of subsidiary bodies, principally the General Council, which also convenes as the Dispute Settlement Body and as the Trade Policy Review Body

v The General Council delegates responsibility to three other major bodies - namely the Councils for Trade in Goods, Trade in Services and Trade-Related Aspects of Intellectual Property Rights.

v Three other bodies are established by the Ministerial Conference and report to the General Council: the Committee on Trade and Development, the Committee on Balance of Payments and the Committee on Budget, Finance and Administration

v The General Council formally established, in early 1995, a Committee on Trade and Environment

v Pascal Lamy is the fifth Director-General of the WTO. His appointment took effect on 1 September 2005 for a four-year term. In April 2009 WTO members reappointed Mr Lamy for a second four-year term, starting on 1 September 2009.

v The WTO Secretariat is located in Geneva

v It has around 450 staff and is headed by its Director- General

v four Deputy Directors-General

v responsibilities include the servicing of WTO delegate bodies with respect to negotiations and the implementation of agreements.

v It has a particular responsibility to provide technical support to developing countries, and especially the least-developed countries.


v WTO economists and statisticians provide trade performance and trade policy analyses

v its legal staff assist in the resolution of trade disputes involving the interpretation of WTO rules and precedents.

v Other Secretariat work is concerned with accession negotiations for new members and providing advice to governments considering membership.

The Uruguay Round

v 123 countries took part. It covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments. It was quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history.

v The Uruguay Round brought about the biggest reform of the world’s trading system since GATT was created at the end of the Second World War.

v The main objectives of the Uruguay Round were:

v to reduce agricultural subsidies v to put restrictions on foreign investment, and

v to begin the process of opening trade in services like banking and insurance

v They also wanted to draft a code to deal with copyright violation and other forms of intellectual property rights

v 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