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What is the WTO?
 The World Trade Organization (WTO) is
an international organization designed by its
founders 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 1947.

What is the WTO?
 The World Trade Organization (WTO) is the
global international organization dealing with
the rules of trade between nations.
 At its heart are the WTO agreements,
negotiated and signed by the bulk of the
world’s trading nations and ratified in their

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.
Important Functions of WTO
 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
 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

A comparable international institution for trade, named
the International Trade Organization was successfully
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 United
States and a few other signatories and never went into
In the absence of an international organization for
trade, the GATT would over the years "transform
itself" into a de facto international organization.

The GATT was the only multilateral instrument
governing international trade from 1948 until the
WTO was established in 1995.

GATT rounds of negotiations
 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.
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.
 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 WTO’s overriding objective is to help trade flow
smoothly, freely, fairly and predictably.
 It does this by:
 Administering trade agreements
 Acting as a forum for trade negotiations
 Settling trade disputes
 Reviewing national trade policies
 Assisting developing countries in trade policy issues, through
technical assistance and training programmes
 Cooperating with other international organizations

The WTO has 153 members, accounting for over 97% of world trade.

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 WTO’s agreements have been ratified in all members’ parliaments.

The WTO’s top level decision-making body is the Ministerial Conference
which meets at least once every two years.

Below this is the General Council (normally ambassadors and heads of
delegation in Geneva, but sometimes officials sent from members’ capitals)
which meets several times a year in the Geneva headquarters.
The General Council also meets as the Trade Policy Review Body and the
Dispute Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual
Property (TRIPS) Council report to the General Council.

Numerous specialized committees, working groups and working parties
deal with the individual agreements and other areas such as the environment,
development, membership applications and regional trade agreements.
 The WTO Secretariat, based in Geneva, has
around 625 staff and is headed by a director-
 Its annual budget is roughly 189 million Swiss
 It does not have branch offices outside Geneva.
 Since decisions are taken by the members
themselves, the Secretariat does not have the
decision-making role that other international
bureaucracies are given.
 The Secretariat’s main duties are to supply
technical support for the various councils and
committees and the ministerial conferences,
to provide technical assistance for developing
countries, to analyze world trade, and to
explain WTO affairs to the public and media.
 The Secretariat also provides some forms of
legal assistance in the dispute settlement
process and advises governments wishing to
become members of the WTO.

Principles of the trading
 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.
 The MFN rule requires that a WTO member must apply the
same conditions on all trade with 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 the market)
and was introduced to tackle non-tariff barriers to trade
(e.g. technical standards, security standards et al.
discriminating against imported goods).

Principles of the trading
 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.

 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.
Principles of the trading
 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.

 Safety valves. In specific circumstances,
governments are able to restrict trade.