Basic Facts about the WTO

thefactZ Home
WTO Home
Contents:
1. History
2. Principles of WTO
3. What the WTO Does
4. Structure

History
The World Trade Organization (WTO) came into being on January 1st 1995. It was the outcome
of the lengthy (1986-1994) Uruguay round of GATT negotiations. The WTO was essentially an
extension of GATT. It extended GATT in two major ways. First GATT became only one of the
three major trade agreements that went into the WTO (the other two being the General
Agreement on Trade in Services (GATS) and the agreements on Trade Related Aspects of
Intellectual Property Rights (TRIPS)). Second the WTO was put on a much sounder institutional
footing than GATT. With GATT the support services that helped maintain the agreement had
come into being in an ad hoc manner as the need arose. The WTO by contrast is a fully fledged
institution (GATT also was, at least formally, only an agreement between contracting parties and
had no independent existence of its own while the WTO is a corporate body recognized under
international law).

Principles of the WTO

The basic principles of the WTO (according to the WTO):
1. Trade Without Discrimination
o No Most Favoured Nation (MFN) Treatment - no special deals to trading partners,
all members of WTO must be treated the same
o No National Special Treatement - locals and foreigners are treated equally
2. Freer Trade

3. Predictability through Binding - promising not to raise tariffs is called binding a tariff and
binding leads to greater certainty for businesses
4. Promoting Fair Competition
5. Encouraging Development and Economic Reform
Elaboration of all these points can be found on the WTO website here.

What the WTO Does

Perhaps the most important question to ask about the WTO, especially in light of recent
controversies is: What does the WTO do? The basic functions of the WTO are:
1. Administering WTO trade agreements
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 framework for the implementation, administration and operation of the
Plurilateral Trade Agreements.
2. Forum for trade negotiations
The WTO shall provide the forum for negotiations among its Members concerning their
multilateral trade relations in matters dealt with under the agreements in the Annexes to
this Agreement. The WTO may also provide a forum for further negotiations among its
Members concerning their multilateral trade relations, and a framework for the
implementation of the results of such negotiations, as may be decided by the Ministerial
Conference.
3. Handling trade disputes
The WTO shall administer the Understanding on Rules and Procedures Governing the
Settlement of Disputes (hereinafter referred to as the "Dispute Settlement Understanding"
or "DSU") in Annex 2 to this Agreement.
4. Monitoring national trade policies
The WTO shall administer the Trade Policy Review Mechanism (hereinafter referred to
as the "TPRM") provided for in Annex 3 to this Agreement.
5. Technical assistance and training for developing countries
6. Cooperation with other international organizations
With a view to achieving greater coherence in global economic policy-making, the WTO
shall cooperate, as appropriate, with the International Monetary Fund and with the
International Bank for Reconstruction and Development and its affiliated agencies.
NB. The descriptions are taken verbatim from: Article III: Functions of the WTO, p. 10 of
Agreement Establishing the WTO, part of Uruguay Round Final Act. To see original document

go to WTO documents page. It is interesting to note that in this document point 5 is not
mentioned. Point 5 is taken from the WTO website page: What is the WTO?

Structure
The WTO has (at the point of writing) 140 members who account for approx 90% of world trade.
Most agreements in the WTO are arrived at by consensus (i.e. everybody agrees - not one
member dissents). Majority votes are possible but none so far have occurred. It is also worth
noting that all the WTO's agreements have been ratified by the members states' parliaments
(where such exist) in contrast to the case for GATT. [Source: WTO website].
Here can be found an organization diagram that summarizes all the information. Below I list the
main elements.
1. Ministerial Conference
There shall be a Ministerial Conference composed of representatives of all the Members,
which shall meet at least once every two years. The Ministerial Conference shall carry
out the functions of the WTO and take actions necessary to this effect. The Ministerial
Conference shall have the authority to take decisions on all matters under any of the
Multilateral Trade Agreements, if so requested by a Member, in accordance with the
specific requirements for decision-making in this Agreement and in the relevant
Multilateral Trade Agreement.
2. General Council
There shall be a General Council composed of representatives of all the Members, which
shall meet as appropriate. In the intervals between meetings of the Ministerial
Conference, its functions shall be conducted by the General Council. The General
Council shall also carry out the functions assigned to it by this Agreement. The General
Council shall establish its rules of procedure and approve the rules of procedure for the
Committees provided for in paragraph 7.
3. Multitude of Committees, Bodies and Councils
For example: Dispute Settlement Body (DSU), Councils for Trade in Goods, Trade in
Services and for TRIPS etc.
NB Description in 1. and 2. taken from Agreement Establishing WTO pps. 10-11. See WTO
documents page.
n

Created: 14/11/2001
Last Updated: 03/12/2001
Copyright 2001 R Pollock
j