WTO

What Is the WTO?

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. WTO agreements are negotiated and signed by the trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct and grow their business.

The Goal
To improve the welfare of the peoples of the member countries.

A brief history of multilateral trade negotiations

International Trade Organisation proposed at the Bretton Woods Conference in 1944, but eventually vetoed by the United States. The General Agreement on Tariffs and Trade (GATT) was first signed in 1947. The agreement was designed to provide an international forum that encouraged free trade between member states by regulating and reducing tariffs on traded goods and by providing a common mechanism for resolving trade disputes. The World Trade Organisation was established on 1 January 1995 at the conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade. The Uruguay Round, launched in 1986, was the eighth GATT round of negotiations. The agreements of that Round constitute the core of the WTO, establishing for the first time a formal structure to house all existing agreements and manage negotiations.

The main agreements in the WTO

1. General Agreement on Tariffs and Trade (GATT) covering trade in goods such as agriculture, textiles, and industrial products General Agreement on Trade in Services (GATS) covering services from finance to water Trade Related aspects of Intellectual Property Rights (TRIPS) In addition, there are agreements on:
establishing the WTO dispute settlements review of government trade policies

2. 3.

Objectives of the WTO

The preamble to the Marrakesh Agreement establishing the WTO calls for trade negotiations to be conducted:
with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, 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 economic development.

Further, it calls for a trade regime to ensure that:

developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development.

Guiding principles of the WTO

Most favoured nation: A commitment that a country will extend to another country the lowest tariff rates it applies to any other country. Also called non-discrimination. National treatment: commitment to treat foreign producers and sellers the same as domestic firms. Single undertaking: provision that requires countries to accept all the agreements reached during the Uruguay Round negotiations as a single package, rather than on a case by case basis. This same rule applies to the Doha Round. Disputes Settlement Body: The General Council of the WTO, composed of representatives of all member countries, convenes as the Dispute Settlement Body to administer rules and procedures established in various agreements. It has the authority to establish panels, oversee implementation of rulings and recommendations and authorise suspension of concessions or other obligations under various agreements.

Formal structure and decision-making

148 members 20 observers, most are in accession process (including Vietnam and Russia) Director General appointed by the members Secretariat of about 550 staff General Council Negotiating committees which meet in sessions, often in parallel Working groups established by the General Council One country one vote but operates on the basis of consensus

Informal decision making

The green room: Informal decision making is the norm in the WTO. The so-called green room process is when a limited number of (often self-selected) countries work out an agreement amongst themselves. This process is named after the colour of the room of the GATT director where many such meetings took place during the Uruguay round. In the WTO era the green room process continues, and is a key element during the negotiations leading up to and during WTO ministerials. The countries excluded from the exclusive meetings complain but nothing has been done to make the negotiating process more inclusive.

Informal decision making

Country/interest groups: There are many formal and informal country groups in the WTO, including the quad (the US, the EU, Japan and Canada), ASEAN, the G20, the G33 (calling for certain products to be excluded from further liberalisation under the AOA), the G90 (larger grouping of developing countries, including many least develop countries from Africa), etc. Membership of the groupings can be quite fluid. The EU and the US are the most powerful members of the EU and traditionally if the EU and the US find agreement, the rest of the membership will find it difficult to resist. However, this pattern may be changing. The outcome of the Doha round will test the durability of some of the new developing country formations. (Source: UNDP, Making Global Trade World for the Poor, Earthscan, UK and US, 2003.)

General Agreement on Trade in Services (GATS)

WTO members commit to progressively open up their service sectors to international market competition Definition of services is incredibly broad: Restricts Government provision and regulation of everything from education and health care to tourism and telecommunications Pushed by powerful US and EU corporate service industry lobby

Agreement on Agriculture (AOA)

Agriculture was not included in the GATT. Inclusion of agriculture was pushed by the Cairns group of agricultural exporting countries during the Uruguay Round. The AOA commits members to improve market access and reduce trade distorting domestic support payments and export subsidies in agriculture. At the moment, agriculture is the most contentious negotiations in the WTO.

Brief History of the WTO ministerials

1996 Singapore Singapore issues The four issues on which it was agreed at the 1996 WTO ministerial in Singapore to form working groups: trade and investment, competition policy, transparency in government procurement and trade facilitation. The Singapore issues have been contested ever since and three of the four (except trade facilitation) have been sidelined from the WTO agenda for the time being. However, all the four Singapore issues reappear in the EU Economic Partnership Agreements and in the US free trade agreements. 1997 Geneva Nothing happened 1999 Seattle Breakdown of talks, mass demonstrations 2001 Doha The Doha Development Agenda was agreed but with many reservations and little commitment. Most agreed that the EU and the USC were able to push through the agreement by exploiting post-9/11 sentiments.

2003 Cancun Breakdown in talks, with many interpretations of who did what. The most significant development was the emergence of the G20 which includes Thailand, India, China, Brazil, South Africa, Argentina pushing a common position for elimination of export subsidies and improved market access. The G20 position on agriculture liberalisation is not supported by the international peasants federation Via Campesina, nonetheless many felt that the G20 played an important role in countering the power blocks of the EU and the US. Again the ministerial was accompanied by mass demonstrations, marked by the tragic and symbolic political suicide of Korean farmer Lee Kyung Hae. 2004 Geneva Geneva framework negotiated at the July General Council meeting established a framework for negotiations in agriculture, non-agricultural market access (NAMA), industrial tariffs. 2005 Hong Kong ?

Brief history of the WTO ministerials