World Trade Organization

World Trade Organization (English)
Organisation mondiale du commerce (French)
Organización Mundial del Comercio (Spanish)

Official logo of WTO
Members   Members, dually represented by the EU   Observers   Non-members
Abbreviation	WTO
Formation	1 January 1995 (1995-01-01)
Type	International trade organization
Purpose	Liberalize international trade
Headquarters	Centre William Rappard, Geneva, Switzerland
Coordinates
Region served	Worldwide
Membership	160 member states[1]
Official language	English, French, Spanish[2]
Director-General	Roberto Azevêdo
Budget	196 million Swiss francs (approx. 209 million US$) in 2011.[3]
Staff	640[4]
Website	.org.wtowww

The World Trade Organization (WTO) is an

International trade Terminology Absolute advantage Balance of payments Balance of trade Capital account Comparative advantage Current account Export-oriented industrialization Fair trade Foreign exchange reserves Globalization Import substitution industrialization Net capital outflow Outsourcing Trade justice Trading nation Organizations and policies International Monetary Fund (IMF) United Nations Conference on Trade and Development World Bank Group World Trade Organization (WTO) International Trade Centre Bilateral investment treaty Economic integration Free trade zone Special economic zone Trade agreement Trade barrier Trade bloc Schools of thought Economic nationalism Free trade Mercantilism Protectionism Regional organizations ACU ASEAN CACM CAN CARICOM CEMAC CUBKR EAC EAEC EU GCC Mercosur RCEP SACU WAEMU Trading partners Argentina Canada China European Union Germany India Japan Netherlands Pakistan Russia United States South Korea Category

• Gatt.org — Parody of official WTO page by The Yes Men
• Public Citizen
• Transnational Institute: Beyond the WTO

Non-governmental organization pages on the WTO

• World Trade Organization
• BBC News — Profile: WTO
• Guardian Unlimited — Special Report: The World Trade Organisation ongoing coverage

Media pages on the WTO

• European Union position on the WTO

Government pages on the WTO

• Official WTO homepage
  • WTO 10th Anniversary PDF (1.40 MB) — Highlights of the first decade, Annual Report 2005 pages 116–166
  • Glossary of terms—a guide to 'WTO-speak'
• International Trade Centre — joint UN/WTO agency

Official pages

External links

Notes and references

See also

• Peter Sutherland, 1993–1995
• Arthur Dunkel, 1980–1993
• Olivier Long, 1968–1980
• Eric Wyndham White, 1948–1968

(Heads of the precursor organization, GATT):

• Roberto Azevedo, 2013–
• Pascal Lamy, 2005–2013
• Supachai Panitchpakdi, 2002–2005
• Mike Moore, 1999–2002
• Renato Ruggiero, 1995–1999
• Peter Sutherland, 1995

Source: Official website^[82]

List of directors-general

The procedures for the appointment of the WTO director-general were published in January 2003.^[80] Additionally, there are four deputy directors-general. As of 1 October 2013, under director-general Roberto Azevêdo, the four deputy directors-general are Yi Xiaozhun of China, Karl-Ernst Brauner of Germany, Yonov Frederick Agah of Nigeria and David Shark of the United States.^[81]

The headquarters of the World Trade Organization, in Geneva, Switzerland.

Office of director-general

In December 2013, the biggest agreement within the WTO was signed and known as the Bali Package.^[79]

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".^[78] 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.

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.^[76] 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 property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.^[77]

Agreements

have no official affiliation with the WTO. UN member states 14 [75] ^[72] As of 2007, WTO member states represented 96.4% of global trade and 96.7% of global GDP.

The WTO has 160 members and 24 observer governments.^[69] In addition to states, the European Union is a member. WTO members do not have to be full sovereign nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations. Thus Hong Kong has been a member since 1995 (as "Hong Kong, China" since 1997) predating the People's Republic of China, which joined in 2001 after 15 years of negotiations. 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.^[70] 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.^[71]

Members and observers

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.^[67] Some countries may have faced tougher and a much longer accession process due to challenges during negotiations with other WTO members, such as Vietnam, whose negotiations took more than 11 years before it became official member in January 2007.^[68]

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 WTO members under normal non-discrimination rules, even though they are negotiated bilaterally.^[65]

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.^[61]

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.^[65] The application is submitted to the WTO in a memorandum which is examined by a working party open to all interested WTO Members.^[66]

Accession process

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.^[61] 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 22 August 2012.^[62] 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 Vanuatu's 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.^[63] An offer of accession is only given once consensus is reached among interested parties.^[64]

Accession and membership

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.^[60] Bodies involved in the dispute settlement process, World Trade Organization.

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.^[57] 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".^[58] 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.^[59]

Dispute settlement

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.^[56]

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".^[54] The WTO Agreement foresees votes where consensus cannot be reached, but the practice of consensus dominates the process of decision-making.^[55]

Decision-making

The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments.^[49] The council has several different committees, working groups, and working parties.^[53] 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.

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.^[52]

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.^[51]

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.^[50]

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.^[49]

The General Council has the following subsidiary bodies which oversee committees in different areas:

Organizational structure

• 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.^[48]
• provisions permitting intervention in trade for economic reasons.^[47]

Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.^[6]:fol.93

There are three types of provision in this direction:

1. 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.^[45] "Grant someone a special favour and you have to do the same for all other WTO members."^[29] 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).^[45]
2. 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.^[46]
3. 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.^[29][46]
4. 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).^[47] 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.^[29]
5. Safety valves. In specific circumstances, governments are able to [48]

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.^[45] Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

Principles of the trading system

^[40] Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.[44] The above five listings are the additional functions of the World Trade Organization. As globalization proceeds in today's society, the necessity of an

(v) With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies. ^[43]

(iv) The WTO shall administer Trade Policy Review Mechanism.

(iii) The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes.

(ii) The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement.

(i) The WTO shall facilitate the implementation, administration and operation and further the objec­tives of this Agreement and of the Multilateral Trade Agreements, and shall also provide the frame work for the implementation, administration and operation of the multilateral Trade Agreements.

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.^[39][41] 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.^[42]

• It oversees the implementation, administration and operation of the covered agreements.^[38][39]
• It provides a forum for negotiations and for settling disputes.^[40][41]

Among the various functions of the WTO, these are regarded by analysts as the most important:

Functions

The negotiations have been highly contentious. Disagreements still continue over several key areas including agriculture subsidies, which emerged as critical in July 2006.^[34] 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."^[35] 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."^[33] An impasse remains and, as of August 2013, agreement has not been reached, despite intense negotiations at several ministerial conferences and at other sessions. On 27 March 2013, the chairman of agriculture talks announced "a proposal to loosen price support disciplines for developing countries’ public stocks and domestic food aid." He added: “...we are not yet close to agreement—in fact, the substantive discussion of the proposal is only beginning.”^[36]

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.^[32] The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries.^[33]

The Doha Development Round started in 2001 is at an impasse.

Doha Round (Doha Agenda)

The 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"^[31]

The highest decision-making body of the WTO is the southern states, the G20 developing nations (led by India, China,^[30] 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 Palace of Nations (Geneva, Switzerland).

Ministerial conferences

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.^[29]

• 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)^[28]

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).^[25] 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:

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.^[26] The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement.^[27]

Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing world economy.^[25][26] 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.^[25]

During the Doha Round, the US government blamed Brazil and India for being inflexible and the EU for impeding agricultural imports.^[23] The then-President of Brazil, Luiz Inácio Lula da Silva (above right), responded to the criticisms by arguing that progress would only be achieved if the richest countries (especially the US and countries in the EU) made deeper cuts in agricultural subsidies and further opened their markets for agricultural goods.^[24]

Uruguay Round

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, bovine meat, civil aircraft and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.^[21]

From Geneva to Tokyo

The GATT was the only multilateral instrument governing international trade from 1946 until the WTO was established on 1 January 1995.^[21] 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.^[22]

GATT rounds of negotiations

In the absence of an international organization for trade, the GATT would over the years "transform itself" into a de facto international organization.^[20]

^[19][18][17] The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after

The economists ITO (for international economic cooperation).^[16]

History

^[15][14] WTO's current Director-General is

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 remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete.^[8] The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector (requested by developed countries) and the substantiation of the international liberalization of fair trade on agricultural products (requested by developing countries) remain the major obstacles. These points of contention have hindered any progress to launch new WTO negotiations beyond the Doha Development Round. As a result of this impasse, there has been an increasing number of bilateral free trade agreements signed.^[9] As of July 2012, there were various negotiation groups in the WTO system for the current agricultural trade negotiation which is in the condition of stalemate.^[10]

(1986–1994). Uruguay Round Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the ^[7] and ratified by their parliaments.^:fol.9–10[6]