World Trade Organization

World Trade Organization

Overview
The World Trade Organization (WTO) is an organization that intends to supervise and liberalize
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

 international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...

. The organization officially commenced on January 1, 1995 under the Marrakech Agreement
Marrakech Agreement
The Marrakech Agreement was an agreement signed in Marrakech, Morocco, in 1994. The agreement established the World Trade Organization, which came into being upon its entry into force on January 1, 1995....

, replacing the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

 (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliament
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...

s.
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Encyclopedia
The World Trade Organization (WTO) is an organization that intends to supervise and liberalize
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

 international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...

. The organization officially commenced on January 1, 1995 under the Marrakech Agreement
Marrakech Agreement
The Marrakech Agreement was an agreement signed in Marrakech, Morocco, in 1994. The agreement established the World Trade Organization, which came into being upon its entry into force on January 1, 1995....

, replacing the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

 (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliament
Parliament
A parliament is a legislature, especially in those countries whose system of government is based on the Westminster system modeled after that of the United Kingdom. The name is derived from the French , the action of parler : a parlement is a discussion. The term came to mean a meeting at which...

s. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...

 (1986–1994).

The organization is currently endeavoring to persist with a trade negotiation called the Doha Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable participation of poorer countries which represent a majority of the world's population. However, the negotiation has been dogged by "disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard
Safeguard
In the technical language of the World Trade Organization system, a safeguard is used to restrain international trade in order to protect a certain home industry from foreign competition. A member may take a “safeguard” action In the technical language of the World Trade Organization (WTO)...

 measure' to protect farmers from surges in imports. At this time, the future of the Doha Round is uncertain."

The WTO has 153 members, representing more than 97% of the world's population, and 30 observers, most seeking membership. The WTO is governed by a ministerial conference, meeting 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 at the Centre William Rappard
Centre William Rappard
The Centre William Rappard at Rue de Lausanne 154, Geneva, Switzerland, was built between 1923 and 1926 to house the International Labour Office . It was the first building in Geneva designed to house an international organization...

, Geneva
Geneva
Geneva In the national languages of Switzerland the city is known as Genf , Ginevra and Genevra is the second-most-populous city in Switzerland and is the most populous city of Romandie, the French-speaking part of Switzerland...

, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

.

History


The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

 in the wake of other new multilateral institutions dedicated to international economic cooperation — notably the Bretton Woods institutions
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid 20th century...

 known as the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

 and the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

. A comparable international institution for trade, named the International Trade Organization
International Trade Organization
The Bretton Woods Conference of 1944 recognized the need for a comparable international institution for trade to complement the International Monetary Fund and the World Bank...

 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 U.S. and a few other signatories and never went into effect.

In the absence of an international organization for trade, the GATT would over the years "transform itself" into a de facto
De facto
De facto is a Latin expression that means "concerning fact." In law, it often means "in practice but not necessarily ordained by law" or "in practice or actuality, but not officially established." It is commonly used in contrast to de jure when referring to matters of law, governance, or...

international organization.

GATT rounds of negotiations


The GATT was the only multilateral
Multilateralism
Multilateralism is a term in international relations that refers to multiple countries working in concert on a given issue.International organizations, such as the United Nations and the World Trade Organization are multilateral in nature...

 instrument governing international trade from 1945 until the WTO was established in 1995. 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.

From Geneva to Tokyo


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
Dumping (pricing policy)
In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market...

 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 agreement
Plurilateral agreement
A plurilateral agreement is an agreement between more than two countries, but not a great many, which would be multilateral agreement.-Use of the term in the World Trade Organization:...

s 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.

Uruguay Round



Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

 world economy. 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
Punta del Este
Punta del Este is a resort town on the Atlantic Coast in the Maldonado Department of southeastern Uruguay. It is located on the intersection of Route 10 with Route 39, directly southeast of the department capital Maldonado and about east of Montevideo...

, Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...

.

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 Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed April 15, 1994, during the ministerial meeting at Marrakesh, Morocco
Morocco
Morocco , officially the Kingdom of Morocco , is a country located in North Africa. It has a population of more than 32 million and an area of 710,850 km², and also primarily administers the disputed region of the Western Sahara...

, and hence is known as the Marrakesh Agreement.

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). 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:
  • The Agreement Establishing the WTO
  • Goods and investment
    Investment
    Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

     — the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures
    Trade Related Investment Measures
    The Agreement on Trade Related Investment Measures are rules that apply to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. The agreement was agreed upon by all members of the World Trade Organization. The Agreement on Trade Related Investment...

  • Services — the General Agreement on Trade in Services
    General Agreement on Trade in Services
    The General Agreement on Trade in Services is a treaty of the World Trade Organization that entered into force in January 1995 as a result of the Uruguay Round negotiations...

  • Intellectual property
    Intellectual property
    Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...

     — the Agreement on Trade-Related Aspects of Intellectual Property Rights
    Agreement on Trade-Related Aspects of Intellectual Property Rights
    The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...

     (TRIPS)
  • Dispute settlement (DSU)
  • Reviews of governments' trade policies (TPRM)

Ministerial conferences


The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. The inaugural ministerial conference
WTO Ministerial Conference of 1996
The World Trade Organisation's Ministerial Conference of 1996 was held in Singapore on December 9 - December 13, 1996. The inaugural meeting for the organisation since its formation...

 was held in Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

 in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues
Singapore issues
The "Singapore issues" refers to four working groups set up during the World Trade Organization Ministerial Conference of 1996 in Singapore. These groups are tasked with these issues: transparency in government procurement, trade facilitation , trade and investment, and trade and competition...

". The second ministerial conference was held in Geneva
Geneva
Geneva In the national languages of Switzerland the city is known as Genf , Ginevra and Genevra is the second-most-populous city in Switzerland and is the most populous city of Romandie, the French-speaking part of Switzerland...

 in Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

. The third conference
WTO Ministerial Conference of 1999
The WTO Ministerial Conference of 1999 was a meeting of the World Trade Organization, convened at the Washington State Convention and Trade Center in Seattle, Washington, USA, over the course of three days, beginning November 30, 1999. A week before the meeting, delegates admitted failure to agree...

 in Seattle, Washington
Seattle, Washington
Seattle is the county seat of King County, Washington. With 608,660 residents as of the 2010 Census, Seattle is the largest city in the Northwestern United States. The Seattle metropolitan area of about 3.4 million inhabitants is the 15th largest metropolitan area in the country...

 ended in failure, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention. The fourth ministerial conference
WTO Ministerial Conference of 2001
The Fourth Ministerial Conference of the World Trade Organization, also known as the WTO Fourth Ministerial Conference, was held at the Sheraton Doha Hotel and Resort, Doha, Qatar from November 9-13, 2001...

 was held in Doha
Doha
Doha is the capital city of the state of Qatar. Located on the Persian Gulf, it had a population of 998,651 in 2008, and is also one of the municipalities of Qatar...

 in the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...

 nation of Qatar
Qatar
Qatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...

. 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 fifth ministerial conference
WTO Ministerial Conference of 2003
The Fifth Ministerial Conference of the World Trade Organization, also known as the WTO Fifth Ministerial Conference and abbreviated as MC5, was held at the Cancún Centro de Convenciones, Cancún, Mexico from September 10 to September 14, 2003....

 was held in Cancún
Cancún
Cancún is a city of international tourism development certified by the UNWTO . Located on the northeast coast of Quintana Roo in southern Mexico, more than 1,700 km from Mexico City, the Project began operations in 1974 as Integrally Planned Center, a pioneer of FONATUR Cancún is a city of...

, Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...

, aiming at forging agreement on the Doha round. An alliance of 22 southern
North-South divide
The north–south divide is a socio-economic and political division that exists between the wealthy developed countries, known collectively as "the north", and the poorer developing countries , or "the south." Although most nations comprising the "North" are in fact located in the Northern Hemisphere ,...

 states, the G20 developing nations
G20 developing nations
The G20 is a bloc of developing nations established on 20 August 2003. Distinct and separate from the G-20 major economies, the group emerged at the 5th Ministerial WTO conference, held in Cancún, Mexico, from 10 September to 14 September 2003...

 (led by India, China, Brazil, ASEAN led by the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...

), resisted demands from the North for agreements on the so-called "Singapore issues
Singapore issues
The "Singapore issues" refers to four working groups set up during the World Trade Organization Ministerial Conference of 1996 in Singapore. These groups are tasked with these issues: transparency in government procurement, trade facilitation , trade and investment, and trade and competition...

" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.

The sixth WTO ministerial conference
WTO Ministerial Conference of 2005
The Sixth Ministerial Conference of the World Trade Organization, also known as the WTO Hong Kong Ministerial Conference and abbreviated as MC6, was held at the Hong Kong Convention and Exhibition Centre, Wan Chai, Hong Kong from 13 to 18 December 2005...

 was held in Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

 from 13–18 December 2005. It was considered vital if the four-year-old Doha Development Agenda
Doha round
The Doha Development Round or Doha Development Agenda is the current trade-negotiation round of the World Trade Organization which commenced in November 2001. Its objective is to lower trade barriers around the world, which will help facilitate the increase of global trade...

 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
Everything but Arms
Everything but Arms is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty free and quota free, with the exception of armaments. EBA entered into force on 5 March 2001. There are transitional arrangements for bananas, sugar and rice...

 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 2010. The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November-3 December 2009
World Trade Organization Ministerial Conference of 2009
The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November - 3 December 2009. A statement by chairman Amb...

. 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"

Doha Round



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 globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries.

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.

Functions


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

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 Bank.

Principles of the trading system


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. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:
  1. Non-Discrimination. It has two major components: the most favoured nation
    Most favoured nation
    In international economic relations and international politics, most favoured nation is a status or level of treatment accorded by one state to another in international trade. The term means the country which is the recipient of this treatment must, nominally, receive equal trade advantages as the...

     (MFN) rule, and the national treatment
    National treatment
    National treatment is a principle in international law vital to many treaty regimes. It essentially means treating foreigners and locals equally. Under national treatment, if a state grants a particular right, benefit or privilege to its own citizens, it must also grant those advantages to the...

     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. "Grant someone a special favour and you have to do the same for all 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
    Non-tariff barriers to trade
    Non-tariff barriers to trade are trade barriers that restrict imports but are not in the usual form of a tariff. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are...

     (e.g. technical standards, security standards et al. discriminating against imported goods).
  2. Reciprocity. It reflects both a desire to limit the scope of free-riding
    Free rider problem
    In economics, collective bargaining, psychology, and political science, a free rider is someone who consumes a resource without paying for it, or pays less than the full cost. The free rider problem is the question of how to limit 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
    Unilateralism
    Unilateralism is any doctrine or agenda that supports one-sided action. Such action may be in disregard for other parties, or as an expression of a commitment toward a direction which other parties may find agreeable...

     liberalization; reciprocal concessions intend to ensure that such gains will materialise.
  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.
  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). The WTO system tries also to improve predictability and stability, discouraging the use of quotas
    Import quota
    An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time....

     and other measures used to set limits on quantities of imports.
  5. Safety valves. In specific circumstances, governments are able to restrict trade
    Trade restriction
    A trade restriction is an artificial restriction on the trade of goods between two countries. It is the result of protectionism. However, the term is not uncontroversial since what one part may see as a trade restriction another may see as a way to protect consumers from inferior, harmful or...

    . There are three types of provisions in this direction: articles allowing for the use of trade measures to attain noneconomic objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons. Exceptions to the MFN principle also allow for preferential treatment of developed countries
    Developed country
    A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...

    , regional free trade area
    Free trade area
    A free trade area is a trade bloc whose member countries have signed a free trade agreement , which eliminates tariffs, import quotas, and preferences on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be...

    s and customs union
    Customs union
    A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas...

    s.

Organizational structure


The General Council has multiple bodies which oversee committees in different areas, re the following:

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.

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.

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
General Agreement on Trade in Services
The General Agreement on Trade in Services is a treaty of the World Trade Organization that entered into force in January 1995 as a result of the Uruguay Round negotiations...

 (GATS). It is open to all WTO members, and can create subsidiary bodies as required.

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. The committee is currently tasked with the Doha Development Round.

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

Decision-making


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

Richard Harold Steinberg
Richard Harold Steinberg
Richard Harold Steinberg , is currently Professor of Law at UCLA School of Law, Director of the Sanela Diana Jenkins Human Rights Project, and Editor-in-Chief of the .  He is a member of the Council on Foreign Relations, and the editorial boards of the American Journal of International Law and...

 (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favouring Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

 and the U.S., and may not lead to Pareto improvement
Pareto efficiency
Pareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering and social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution.Given an initial allocation of...

.

Dispute settlement


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. 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". 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.

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. Bodies involved in the dispute settlement process, World Trade Organization.

Accession and membership


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. 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. As is typical of WTO procedures, an offer of accession is only given once consensus is reached among interested parties.

Accession process


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. The application is submitted to the WTO in a memorandum
Memorandum
A memorandum is from the Latin verbal phrase memorandum est, the gerundive form of the verb memoro, "to mention, call to mind, recount, relate", which means "It must be remembered ..."...

 which is examined by a working party open to all interested WTO Members.

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.

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.

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.

Members and observers


The WTO has 153 members and 31 observers. In addition to states, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

 is also a member. WTO members do not have to be full sovereign
Sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...

 nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations. Thus Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

 (as "Hong Kong, China" since 1997) became a GATT contracting party, and the Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...

 (Taiwan) acceded to the WTO in 2002 as "Separate Customs Territory of Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...

, Penghu, Kinmen
Kinmen
Kinmen , also known as Quemoy , is a small archipelago of several islands administered by the Republic of China : Greater Kinmen, Lesser Kinmen, and some islets. Administratively, it is Kinmen County of Fujian Province, ROC. The county is claimed by the People's Republic of China as part of its...

 and Matsu
Matsu Islands
The Matsu Islands are a minor archipelago of 19 islands and islets in the Taiwan Strait administered as Lienchiang County , Fujian Province of the Republic of China . Only a small area of what is historically Lienchiang County is under the control of the ROC...

" (Chinese Taipei
Chinese Taipei
Chinese Taipei is the designated name used by the Republic of China , commonly known as Taiwan, to participate in some international organizations and almost all sporting events, such as the Olympics, Paralympics, Asian Games and Asian Para Games...

) despite its disputed status
Legal status of Taiwan
The legal status of Republic of China is a controversial issue which stems from the complex post-Second World War history of Taiwan. Various claims have been made by the People's Republic of China , the Republic of China , and supporters of Taiwan independence over this question, with a variety of...

. 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.

Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...

 is the biggest economy outside WTO and after the completion of Russia's accession, Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

 would be the biggest economy outside the WTO. With the exception of the Holy See
Holy See
The Holy See is the episcopal jurisdiction of the Catholic Church in Rome, in which its Bishop is commonly known as the Pope. It is the preeminent episcopal see of the Catholic Church, forming the central government of the Church. As such, diplomatically, and in other spheres the Holy See acts and...

, observers must start accession negotiations within five years of becoming observers. Some international intergovernmental organizations are also granted observer status to WTO bodies. 14 states and 2 territories so far have no official interaction with the WTO.

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 discussion of some of the most important agreements follows. The Agreement on Agriculture
Agreement on Agriculture
The Agreement on Agriculture is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995....

 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
Market access
Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...

 and export subsidies. The General Agreement on Trade in Services
General Agreement on Trade in Services
The General Agreement on Trade in Services is a treaty of the World Trade Organization that entered into force in January 1995 as a result of the Uruguay Round negotiations...

 was created to extend the multilateral trading system to service sector
Tertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...

, in the same way the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

 (GATT) provides such a system for merchandise trade. The Agreement entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...

 sets down minimum standards for many forms of intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...

 (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

The Agreement on the Application of Sanitary and Phytosanitary Measures
Agreement on the Application of Sanitary and Phytosanitary Measures
The Agreement on the Application of Sanitary and Phytosanitary Measures - also known as the SPS Agreement is an international treaty of the World Trade Organization...

 — also known as the SPS Agreement was negotiated during the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...

 of the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

, 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 Agreement on Technical Barriers to Trade
Agreement on Technical Barriers to Trade
The Agreement on Technical Barriers to Trade--- commonly referred to as the TBT Agreement --- is an international treaty administered by the World Trade Organization...

 is an international treaty
Treaty
A treaty is an express agreement under international law entered into by actors in international law, namely sovereign states and international organizations. A treaty may also be known as an agreement, protocol, covenant, convention or exchange of letters, among other terms...

 of the World Trade Organization. It was negotiated during the Uruguay Round
Uruguay Round
The Uruguay Round was the 8th round of Multilateral trade negotiations conducted within the framework of the General Agreement on Tariffs and Trade , spanning from 1986-1994 and embracing 123 countries as “contracting parties”. The Round transformed the GATT into the World Trade Organization...

 of the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

, 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". 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.

Directors-General


The Directors-General of the WTO have been:
  • Pascal Lamy
    Pascal Lamy
    Pascal Lamy is the Director-General of the World Trade Organization, a French political advisor, a businessman, and a former European Commissioner for Trade...

    , 2005–
  • Supachai Panitchpakdi
    Supachai Panitchpakdi
    Supachai Panitchpakdi is the Secretary-General of the UN Conference on Trade and Development . Prior to this, he was the Director-General of the World Trade Organization from September 1, 2002 to September 1, 2005...

    , 2002–2005
  • Mike Moore, 1999–2002
  • Renato Ruggiero
    Renato Ruggiero
    Renato Ruggiero is an Italian politician. He has been director-general of the World Trade Organisation and was briefly the Italian Foreign Minister in 2001.-Biography:...

    , 1995–1999
  • Peter Sutherland
    Peter Sutherland
    Peter Denis Sutherland, KCMG is an Irish international businessman and former Attorney General of Ireland, associated with the Fine Gael party . He is a barrister by profession, and is also Senior Counsel at the Irish Bar...

    , 1995


The Directors-General of the precursor organization, GATT, were:
  • Peter Sutherland, 1993–1995
  • Arthur Dunkel
    Arthur Dunkel
    Arthur Dunkel was a Swiss administrator. He served as director-general of General Agreement on Tariffs and Trade between 1980 and 1993. Dunkel was educated at the Graduate Institute of International Studies, in Geneva.Arthur Dunkel took an active part in the Uruguay Round Negotiations of the GATT...

    , 1980–1993
  • Olivier Long
    Olivier Long
    Olivier Long was a Swiss Ambassador and the director-general of the General Agreement on Tariffs and Trade from May 6, 1968 to October 1, 1980.Long was born in Petit-Veyrier, Geneva...

    , 1968–1980
  • Eric Wyndham White
    Eric Wyndham White
    Sir Eric Wyndham White KCMG was a British administrator and economist. He was founder and first executive secretary of the General Agreement on Tariffs and Trade between 1948 and 1965...

    , 1948–1968

See also



External links


Official pages
} — Highlights of the first decade, Annual Report 2005 pages 116–166

Government pages on the WTO

Media pages on the WTO

Non-governmental organization pages on the WTO
  • Gatt.org — Parody of official WTO page by The Yes Men
    The Yes Men
    The Yes Men are a culture jamming activist duo and network of supporters created by Jacques Servin and Igor Vamos. Through actions of tactical media, The Yes Men primarily aim to raise awareness about what they consider problematic social issues. To date, the duo has produced two films: The Yes Men...

  • Public Citizen
  • Transnational Institute: Beyond the WTO