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The World Trade Organization deals with the rules of trade between nations at a near-
global level; it is responsible for negotiating and implementing new trade agreements,
and is in charge of policing member countries' adherence to all the WTO agreements,
signed by the majority of the world's trading nations and ratified in their parliaments.[4][5]
Most of the issues that the WTO focuses on derive from previous trade negotiations,
especially from the Uruguay Round. The organization is currently working with its
members on a new trade negotiation called the Doha Development Agenda (Doha round),
launched in 2001.[4][3]
The WTO has 153 members, which represents more than 95% of total world trade.[6] The
WTO is governed by a Ministerial Conference, which meets every two years; a General
Council, which implements the conference's policy decisions and is responsible for day-
to-day administration; and a director-general, who is appointed by the Ministerial
Conference. The WTO's headquarters is in Geneva, Switzerland.
Contents
[hide]
• 1 History
o 1.1 ITO and GATT 1947
o 1.2 GATT rounds of negotiations
1.2.1 From Geneva to Tokyo
1.2.2 Uruguay Round
o 1.3 Ministerial conferences
1.3.1 First ministerial conference
1.3.2 Second ministerial conference
1.3.3 Third ministerial conference
1.3.4 Fourth ministerial conference
1.3.5 Fifth ministerial conference
1.3.6 Sixth ministerial conference
o 1.4 Doha Round
• 2 Mission, functions and principles
o 2.1 Functions
o 2.2 Principles of the trading system
• 3 Formal structure
o 3.1 Ministerial Conference
o 3.2 General Council
3.2.1 Councils for Trade
3.2.1.1 Council for Trade in Goods
3.2.1.2 Council for Trade-Related Aspects of Intellectual
Property Rights
3.2.1.3 Council for Trade in Services
3.2.2 Other committees
o 3.3 Trade Negotiations Committee
o 3.4 Voting system
• 4 Dispute settlement
• 5 Accession and membership
o 5.1 Accession process
o 5.2 Members and observers
• 6 Agreements
o 6.1 Agreement on Agriculture (AoA)
o 6.2 General Agreement on Trade in Services (GATS)
o 6.3 Trade-Related Aspects of Intellectual Property Rights
Agreement(TRIPs)
o 6.4 Sanitary and Phyto-Sanitary (SPS) Agreement
o 6.5 Agreement on Technical Barriers to Trade (TBT)
• 7 Criticism
• 8 See also
• 9 References and notes
• 10 Further reading
o 10.1 Printed sources
o 10.2 Online sources
o 10.3 Books and reports on the WTO
o 10.4 Articles on the WTO
• 11 External links
o 11.1 Official WTO Pages
o 11.2 Government Pages on the WTO
o 11.3 Media Pages on the WTO
[edit] History
See also: Chronology of WTO's key events
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. 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. But the ITO treaty
was not approved by the United States and a few other signatories and never went into
effect. [8][9] [10]
In the absence of an international organization for trade, the GATT would over the years
"transform itself" into a de facto international organization.[11]
The GATT was the only multilateral instrument governing international trade from 1948
until the WTO was established in 1995.[12] 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.[13]
During the Doha Round, the US government blamed Brazil and India for being
inflexible, and the EU for impeding agricultural imports.[14] The President of Brazil, Luiz
Inácio Lula da Silva, responded to the criticisms by arguing that progress would only be
achieved if the richest countries (especially the US and countries in the EU) make deeper
cuts in their agricultural subsidies, and further open their markets for agricultural
goods.[15]
For more details on this topic, see Uruguay Round.
Well before GATT's 40th anniversary, its members concluded that the GATT system was
straining to adapt to a new globalizing world economy.[16][17] 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.[16] 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.[17] The Final
Act concluding the Uruguay Round and officially establishing the WTO regime was
signed during the April 1994 ministerial meeting at Marrakesh, Morroco, and hence is
known as the Marrakesh Agreement.[18]
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).[16] 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:
Was held in Doha In Persian Gulf nation of Qatar. The Doha Development Round was
launched at the conference. The conference also approved the joining of China, which
became the 143rd member to join.
The ministerial conference was held in Cancún, Mexico, aiming at forging agreement on
the Doha round. An alliance of 22 southern states, the G20 (led by India, China[20] and
Brazil), 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.
For more details on this topic, see WTO Ministerial Conference of 2005.
The sixth WTO Conference Ministerial was held in Hong Kong from 13 December – 18
December 2005. It was considered vital if the four-year-old Doha Development Agenda
negotiations were to move forward sufficiently to conclude the round in 2006. In this
meeting, countries agreed to phase out all their agricultural export subsidies by the end of
2013, and terminate any cotton export subsidies by the end of 2006. Further concessions
to developing countries included an agreement to introduce duty free, tariff free access
for goods from the Least Developed Countries, following the Everything But Arms
initiative of the European Union — but with up to 3% of tariff lines exempted. Other
major issues were left for further negotiation to be completed by the end of 2006.
The WTO launched the current round of negotiations, the Doha Development Agenda
(DDA) or Doha Round, at the Fourth Ministerial Conference in Doha, Qatar in
November 2001. The Doha round was to be an ambitious effort to make globalisation
more inclusive and help the world's poor, particularly by slashing barriers and subsidies
in farming.[21] The initial agenda comprised both further trade liberalization and new rule-
making, underpinned by commitments to strengthen substantial assistance to developing
countries.[22]
The negotiations have been highly contentious and agreement has not been reached,
despite the intense negotiations at several Ministerial Conferences and at other sessions.
Disagreements still continue over several key areas including agriculture subsidies.[23]
[edit] Functions
Among the various functions of the WTO, these are regarded by analysts as the most
important:
Additionally, it is the WTO's duty to review the national trade policies, and to ensure the
coherence and transparency of trade policies through surveillance in global economic
policy-making.[30][28] 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.[31] 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.[32]
Finally, the WTO cooperates closely with the two other components of the Bretton
Woods system, the IMF and the World Bank.[29]
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.[33] Five
principles are of particular importance in understanding both the pre-1994 GATT and the
WTO:
The topmost decision-making body of the WTO is the Ministerial Conference, which
tends to meet every two years. There have been six conferences, with the last one being
in December 2005. The conferences are attended by all members of the WTO. The
Ministerial Conference can make decisions on all matters under any of the multilateral
trade agreements [37]. The first meeting of the Ministerial Conference was held in
Singapore on 9 December-13, 1996.
The daily work of the ministerial conference is handled by three groups: the General
Council, the Dispute Settlement Body, and the Trade Policy Review Body. All three
consist of the same membership — representatives of all WTO members — but each
meets under different rules and chairpersons. [38] The General Council has several other
councils and committees that work underneath the Council. [39]
The General Council, the WTO’s highest-level decision-making body in Geneva, meets
regularly to run the WTO. The council has authority to act on behalf of the ministerial
conference. The current chairman is Bruce Gosper of Australia.[40]
The Dispute Settlement Body is charged with setting trade disputes between members.
The current chairperson is Mario Matus of Chile.[40]
The Trade Policy Review Body (TPRB) is tasked with trade policy reviews of Members
under the Trade Policy Review Mechanism (TPRM). All members are reviewed
periodically. The time in between reviews are subject to the member's total shares of
world trade. The largest four, currently the European Communities, the United States,
Japan and China, are reviewed every two years. The next 16 are reviewed every four
years. All other members are reviewed every six years. In some cases, the least-developed
nations are allowed longer periods between reviews.[41] The current chairperson is Yonov
Frederick Agah of Nigeria.[40]
The Councils for Trade work under the General Council. ; Council for Trade in Goods,
Council for Trade-Related Aspects of Intellectual Property Rights, and Council for Trade
in Services — each council works in different fields. Apart from these three councils, six
other bodies report to the General Council reporting on issues such as trade and
development, environmentalism, regional trading arrangements and administrative
issues.[42]
The workings of the General Agreement on Tariffs and Trade (GATT) which covers
international trade in goods, are the responsibility of the Council for Trade in Goods.It is
made up of representatives from all WTO member countries. The current chairperson, as
of 2007-02-13, is Yonov Frederick Agah (Nigeria).[43]
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 ten members. The body also has
several groups relating to textiles. [44]
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.[45]
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.[46]
The Service Council has three subsidiary bodies: financial services, domestic regulations,
GATS rules and specific commitments. [44]
The General council has several different committees, working groups, and working
parties. [39]
Committees on
Working parties on
• Accession
Working groups on
The WTO operates on a one country, one vote system, but actual votes have never been
taken. Decisionmaking is generally by consensus, and relative market size is the primary
source of bargaining power. The advantage of consensus decision-making is that it
encourages efforts to find the most widely acceptable decision. Main disadvantages
include large time requirements and many rounds of negotiation to develop a consensus
decision, and the tendency for final agreements to use ambiguous language on
contentious points that makes future interpretation of treaties difficult.[citation needed]
In reality, WTO negotiations proceed not by consensus of all members, but by a process
of informal negotiations between small groups of countries. Such negotiations are often
called "Green Room" negotiations (after the colour of the WTO Director-General's Office
in Geneva), or "Mini-Ministerials", when they occur in other countries. These processes
have been regularly criticized by many of the WTO's developing country members which
are often totally excluded from the negotiations.[citation needed]
Richard 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 United States, and may not lead to Pareto
improvement.[48]
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.[49] 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".[50] 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.[51]
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.[52]
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.[56] The application is submitted to the WTO in a memorandum which is
examined by a working party open to all interested WTO Members.[57] 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.[53] 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.[56]
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.[58]
[edit] Members and observers
The WTO has 153 members (almost all of the 123 nations participating in the Uruguay
Round signed on at its foundation, and the rest had to get membership).[59] The 27 states
of the European Union are represented also as the European Communities. 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 (as "Hong Kong, China" since 1997) became a GATT
contracting party, and the Republic of China (commonly known as 'Taiwan', whose
sovereignty has been disputed by the People's Republic of China) acceded to the WTO in
2002 under the name of "Separate Customs Territory of Taiwan, Penghu, Kinmen and
Matsu" (Chinese Taipei).[60] A number of non-members have been observers (28) at the
WTO and are currently negotiating their membership. While an observer, Russia is not a
member. With the exception of the Holy See, observers must start accession negotiations
within five years of becoming observers. Some international intergovernmental
organizations are also granted observer status to WTO bodies.[61] 14 states and 2
territories so far have no official interaction with the WTO.
[edit] Agreements
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. A
list of WTO agreements can be found here 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 the General Agreement on Tariffs and
Trade (GATT) provides such a system for merchandise trade. The Agreement entered into
force in January 1995
The Agreement on the Application of Sanitary and Phytosanitary Measures - also known
as the SPS Agreement was negotiated during the Uruguay Round of the General
Agreement on Tariffs and Trade, and entered into force with the establishment of the
WTO at the beginning of 1995.
Under the SPS agreement, the WTO sets constraints on members' policies relating to food
safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and
plant health (imported pests and diseases).
The object of the TBT Agreement is to "to ensure that technical negotiations and
standards, as well as testing and certification procedures, do not create unnecessary
obstacles to trade".[62]
[edit] Criticism
Main article: Criticism of the World Trade Organization
Protestors clashing with Hong Kong police in Wan Chai (area of Waterfront) during the
WTO Ministerial Conference of 2005.
The stated aim of the WTO is to promote free trade and stimulate economic growth.
Some people argue that free trade leads to a divergence instead of convergence of income
levels within rich and poor countries (the rich get richer and the poor get poorer).[63]
Martin Khor, Director of the Third World Network, argues that the WTO does not
manage the global economy impartially, but in its operation has a systematic bias toward
rich countries and multinational corporations, harming smaller countries which have less
negotiation power. He argues that developing countries have not benefited from the WTO
Agreements of the Uruguay Round, because (among other reasons): market access in
industry has not improved; these countries have had no gains yet from the phasing out of
textiles quotas; non-tariff barriers such as anti-dumping measures have increased; and
domestic support and export subsidies for agricultural products in the rich countries
remain high.[64] Jagdish Bhagwati asserts however that there is greater tariff protection on
manufacturers in the poor countries, which are also overtaking the rich nations in the
number of anti-dumping filings.[65]
Other critics claim that the issues of labor relations and environment are steadfastly
ignored. Steve Charnovitz, former Director of the Global Environment and Trade Study
(GETS), believes that the WTO "should begin to address the link between trade and labor
and environmental concerns."[66] Further, labor unions condemn the labor rights record of
developing countries, arguing that to the extent the WTO succeeds at promoting
globalization, then in equal measure do the environment and labor rights suffer.[67] On the
other side, Khor responds that "if environment and labor were to enter the WTO system
[...] it would be conceptually difficult to argue why other social and cultural issues should
also not enter."[68] Bhagwati is also critical towards "rich-country lobbies seeking on
imposing their unrelated agendas on trade agreements."[69] Therefore, both Bhagwati and
Arvind Panagariya. Professor at Columbia University, have criticized the introduction of
TRIPs into the WTO framework, fearing that such non-trade agendas might overwhelm
the organization's function.[70]
Other critics have characterized the decision making in the WTO as complicated,
ineffective, unrepresentative and non-inclusive, and they have proposed the establishment
of a small, informal steering committee (a "consultative board") that can be delegated
responsibility for developing consensus on trade issues among the member countries.[71]
The Third World Network has called the WTO "the most non-transparent of international
organisations", because "the vast majority of developing countries have very little real
say in the WTO system"; the Network stresses that "civil society groups and institutions
must be given genuine opportunities to express their views and to influence the outcome
of policies and decisions."[72] Certain non-governmental organizations, such as the World
Federalist Movement, argue that democratic participation in the WTO could be enhanced
through the creation of a parliamentary assembly, although other analysts have
characterized this proposal as ineffective.[73]
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Supranationalism and World government topics
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