WORLD TRADE ORGANIZATION

SUBMITTED TO Respected mam Saima

SUBMITTED BY Aisha Ashraf Roll.no.44

Contents
Contents.............................................................................................2 WORLD TRADE ORGANIZATION.........................................................5 OBJECTIVES OF WTO..........................................................................7 FUNCTIONS OF WTO...........................................................................7 WTO STRUCTURE...............................................................................8 THE DOHA ROUND............................................................................. WTO AGREE!ENTS".........................................................................##

FROM GATT TO WTO The WTO came into existence on 1st January 1995. ut there is a lon! history attached to the esta"lishment of this or!anisation datin! "ac# to 1945. The ori!inal intention $as to create a third institution to handle the trade side of the international economic cooperation% &oinin! the t$o ' retton $oods( institutions% the )nternational *onetary +und and the World an#. O,er 5- countries participated in the ne!otiations to create an )nternational Trade Or!anisation .)TO/ as a specialised a!ency of the 01. The aim $as to create the )TO at a 01 2onference on Trade and 3mployment in 4a,ana% 2u"a in 1945. *ean$hile 15 countries had "e!un tal#s in 6ecem"er 1945 to reduce and "ind custom tariffs. With the Second World War &ust recently ended% the main aim $as to !i,e a "oost to international trade and rectify the harm caused "y the protectionist measures. The first round of ne!otiation $as a success and "y the time the 7eneral A!reement on Trade and Tariff or 7ATT 1945 came into effect on 8-th Octo"er 1945 throu!h a 'protocol of pro,isional application(% the !roup had expanded to 98.'contractin! parties(/. The 98 $ere also a part of the lar!er !roup ne!otiatin! the )TO 2harter. The 4a,ana conference "e!an on 91 1o,em"er 1945% less than a month after 7ATT $as si!ned. The )TO 2harter $as finally a!reed in 4a,ana in *arch 194:% "ut it ne,er came into existence as it $as ne,er passed "y the 0S 2on!ress e,en thou!h the 0S $as one of its ma&or dri,in! forces.. The main purpose of 7ATT 1945 $as to reduce tariffs internationally in order to facilitate free trade% the outcome of $hich is the ,arious tariff concessions schedules created under 7ATT. 7ATT e,ol,ed as a result of a series of multilateral trade ne!otiations #no$n as 'trade rounds(. : trade rounds too# place under 7ATT;s auspices. The earlier trade rounds concentrated on further reducin! tariffs. <ater on the Kennedy round "rou!ht a"out an a!reement on anti=dumpin!. The Tokyo rounds concentrated on reducin! non=tariff trade "arriers. This $as the first e,er attempt made to loo# into trade "arriers other than tariffs. )n the To#yo round ,arious issues $ere "rou!ht to the forefront% some successful% some not so successful. )n most cases% a relati,ely small num"er of 7ATT mem"ers su"scri"ed to such arran!ements. Since they $ere not accepted "y all mem"ers% they $ere informally called 'codes(. These a!reements and arran!ement $ere not multilateral% "ut a !ood start. <ater in the 0ru!uay round% many of these a!reements "ecame multilateral% accepted "y all mem"ers. Only four remained 'plurilateral(% later in 1995% the num"er reducin! to t$o $hich included 7o,ernment procurements and ci,il aircrafts. These plurilateral a!reements "ecame a part of WTO as $e $ill see $hen $e proceed further on the discussion of comin! into force of the a!reement that finally esta"lished the WTO. The final chapter of the trade ne!otiations under 7ATT $as the Uru uay round. All $as not !oin! $ell under the 7ATT and $ith the $orld trade "ecomin! more and more complex% 7ATT $as not a"le to deal $ith it. +or instance% in a!riculture% loopholes in the multilateral system $ere hea,ily exploited% and efforts at li"erali>in! a!ricultural trade met $ith little success. )n the textiles and clothin! sector% an exception to 7ATT;s normal disciplines $as ne!otiated in the 19?-s and early 195-s% leadin! to the *ultifi"re Arran!ement. 3,en 7ATT;s dispute settlement systems $ere causin! concern as $ill "e discussed later. The 0ru!uay round ne!otiations lasted for a"out se,en and a half years% t$ice the time ori!inally planned for. ut it

$as $orth the trou"le% "asically all issues related to trade $ere discussed in these ne!otiations% pre,ious 7ATT articles $ere re,ie$ed and most importantly the +inal Act concludin! the 0ru!uay Round and officially esta"lishin! the WTO re!ime $as si!ned durin! the April 1994 ministerial meetin! at *arra#esh% *orocco% and hence is #no$n as the Marrakes! A ree"ent. The *arra#esh a!reement $as the document that !a,e the le!al sanction to the esta"lishment of the World Trade Or!anisation on January 1% 1995. This a!reement consisted of a pream"le $hich laid do$n the "asic o"&ecti,es of this or!anisation% 1? articles $hich "asically put for$ard the structure% functions% decision ma#in! process% accession and ,arious other #ey aspects of the World trade or!anisation. 1o$ the main function of the WTO as mentioned in Article 8@1 of the a!reement is to administer the implementation of the multilateral trade a!reements $hich are a part of the *arra#esh a!reement in the form of annexes. Annex 1 consists of a!reements on trade in !oods% a!reements on trade in ser,ices and a!reements on trade related aspects of intellectual property ri!hts. There are other annexes relatin! to dispute settlement underta#in!% Trade policy re,ie$ mechanism and plurilateral a!reements. 1o$ an important Auestion that arises is $hat happened to 7ATT after the esta"lishment of the WTO. Well the ans$er to that is that 7ATT 1945 is a part of the *arra#esh a!reement as Annex 1A in the form of 7ATT 1994 $hich is mainly 7ATT 1945 plus the ,arious de,elopments decided on durin! the ,arious trade ne!otiations. The contractin! parties of 7ATT 1945 automatically "ecame the mem"ers of WTO .Article )B@ Ori!inal mem"ership/ and then the a!reement $as opened to "e accession "y other countries .Article B@ Accession/. The WTO frame$or# ensures a 'sin!le underta#in! approach( to the results of the 0ru!uay Round C thus% mem"ership in the WTO entails acceptin! all the results of the Round $ithout exception. The WTO replaced 7ATT as an international or!ani>ation% "ut the 7eneral A!reement still exists as the WTO;s um"rella treaty for trade in !oods% updated as a result of the 0ru!uay Round ne!otiations. Trade la$yers distin!uish "et$een 7ATT 1994% the updated parts of 7ATT% and 7ATT 1945% the ori!inal a!reement $hich is still the heart of 7ATT 1994.

WORLD TRADE ORGANIZATION The World Trade Or!ani>ation .WTO/ is an international or!ani>ation desi!ned "y its founders to super,ise and li"erali>e international trade. The or!ani>ation officially commenced on January 1% 1995 under the *arra#ech A!reement% replacin! the 7eneral A!reement on Tariffs and Trade .7ATT/% $hich commenced in 1945. The World Trade Or!ani>ation deals $ith re!ulation of trade "et$een participatin! countriesD it pro,ides a frame$or# for ne!otiatin! and formali>in! trade a!reements% and a dispute resolution process aimed at enforcin! participantsE adherence to WTO a!reements $hich are si!ned "y representati,es of mem"er !o,ernments and ratified "y their parliaments. *ost of the issues that the WTO focuses on deri,e from pre,ious trade ne!otiations% especially from the 0ru!uay Round .19:?=1994/. The or!ani>ation is currently endea,orin! to persist $ith a trade ne!otiation called the 6oha 6e,elopment A!enda .or 6oha Round/% $hich $as launched in 9--1 to enhance eAuita"le participation of poorer countries $hich represent a ma&ority of the $orldEs population. 4o$e,er% the ne!otiation has "een do!!ed "y Fdisa!reement "et$een exporters of a!ricultural "ul# commodities and countries $ith lar!e num"ers of su"sistence farmers on the precise terms of a Especial safe!uard measureE to protect farmers from sur!es in imports. At this time% the future of the 6oha Round is uncertain.F The WTO has 158 mem"ers% representin! more than 95G of total $orld trade and 8o"ser,ers% most see#in! mem"ership. The WTO is !o,erned "y a ministerial conference% meetin! e,ery t$o yearsD a !eneral council% $hich implements the conferenceEs policy decisions and is responsi"le for day=to=day administrationD and a director=!eneral% $ho is appointed "y the ministerial conference. The WTOEs headAuarters is at the 2entre William Rappard% 7ene,a% S$it>erland. The WTO esta"lishes a frame$or# for trade policiesD it does not define or specify outcomes. That is% it is concerned $ith settin! the rules of the trade policy !ames. +i,e principles are of particular importance in understandin! "oth the pre=1994 7ATT and the WTO@ 1/ Non#D$s%r$"$nat$on=)t has t$o ma&or components@ the most fa,oured nation .*+1/ rule% and the national treatment policy. oth are em"edded in the main WTO rules on !oods% ser,ices% and intellectual property% "ut their precise scope and nature differ across these areas. The *+1 rule reAuires that a WTO mem"er must apply the same conditions on all trade $ith other WTO mem"ers% i.e. a WTO mem"er has to !rant the most fa,ora"le conditions under $hich it allo$s trade in a certain product type to all other WTO mem"ers. F7rant someone a special fa,our and you ha,e to do the same for all other WTO mem"ers.F 1ational treatment means that imported !oods should "e treated no less fa,ora"ly than domestically=produced !oods .at least after the forei!n !oods ha,e entered the mar#et/ and $as introduced to tac#le non= tariff "arriers to trade .e.!. technical standards% security standards et al. discriminatin! a!ainst imported !oods/. 9/ Re%$&ro%$ty= )t reflects "oth a desire to limit the scope of free=ridin! that may arise "ecause of the *+1 rule% and a desire to o"tain "etter access to forei!n mar#ets. A related point is that for a nation to ne!otiate% it is necessary that the 5

!ain from doin! so "e !reater than the !ain a,aila"le from unilateral li"erali>ationD reciprocal concessions intend to ensure that such !ains $ill materiali>e 8/ B$nd$n and en'or%ea()e %o""$t"ents= The tariff commitments made "y WTO mem"ers in a multilateral trade ne!otiation and on accession are enumerated in a schedule .list/ of concessions. These schedules esta"lish Fceilin! "indin!sF@ a country can chan!e its "indin!s% "ut only after ne!otiatin! $ith its tradin! partners% $hich could mean compensatin! them for loss of trade. )f satisfaction is not o"tained% the complainin! country may in,o#e the WTO dispute settlement procedures. Trans&aren%y= The WTO mem"ers are reAuired to pu"lish their trade re!ulations% to maintain institutions allo$in! for the re,ie$ of administrati,e decisions affectin! trade% to respond to reAuests for information "y other mem"ers% and to notify chan!es in trade policies to the WTO. These internal transparency reAuirements are supplemented and facilitated "y periodic country=specific reports .trade policy re,ie$s/ throu!h the Trade Holicy Re,ie$ *echanism .THR*/. The WTO system tries also to impro,e predicta"ility and sta"ility% discoura!in! the use of Auotas and other measures used to set limits on Auantities of imports.

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5& Sa'ety *a)*es= )n specific circumstances% !o,ernments are a"le to restrict trade. There are three types of pro,isions in this direction@ articles allo$in! for the use of trade measures to attain noneconomic o"&ecti,esD articles aimed at ensurin! Ffair competitionFD and pro,isions permittin! inter,ention in trade for economic reasons. 3xceptions to the *+1 principle also allo$ for preferential treatment of de,elopin! countries% re!ional free trade areas and customs unions.

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OB+E,TI-ES OF WTO The pream"le to the WTO A!reement descri"es its o"&ecti,es as includin!@ raisin! standards of li,in! ensurin! full employment reali>in! these aims consistently $ith sustaina"le de,elopment and en,ironmental protection ensurin! that de,elopin! countries% especially the least de,eloped countries .<62s/% secure a proper share in the !ro$th of international trade. 4o$e,er% since its creation the WTO;s emphasis has slipped from concentratin! on these pu"lic interest !oals to seein! itself primarily as Ian or!ani>ation for li"erali>in! trade%; and declarin! that Ithe system;s o,erridin! purpose is to help trade flo$ as freely as possi"le.; This has "een the source of one of the fundamental tensions surroundin! the mandate and acti,ities of the or!ani>ation. Some .such as de,elopin! countries and non= !o,ernmental or!ani>ations/ $ould li#e to see added emphasis on the pu"lic interest !oals% $hilst others .pri,ate companies and some industriali>ed countries% for instance/ fa,our faster remo,al of o"stacles to free trade. Today% an increasin! num"er of ,oices are "ein! raised to underline that free trade should not "e an end in itself% "ut rather a tool to achie,e eAuita"le de,elopment and a "etter $orld. That the WTO;s pu"lic interest o"&ecti,es remain out of reach of many has dra$n criticism that the or!ani>ation is dominated "y rich countries% functions in a secreti,e manner% and helps feed the !reed of the rich in the name of trade li"erali>ation.

FUN,TIONS OF WTO Some of the ma&or functions of WTO are@ Administerin! and )mplementin! the multilateral and plurilateral trade a!reements. Actin! as a forum for multilateral trade ne!otiations . See#in! to resol,e trade disputes. O,erseein! national trade policies. 2ooperatin! $ith other international institutions. *aintainin! trade related data"ase. Actin! as a $atchdo! of international trade. Technical assistance and trainin! for de,elopin! countries.

WTO STRU,TURE The structure of the WTO is dominated "y its hi!hest authority% the *inisterial 2onference% composed of representati,es of all WTO mem"ers% $hich is reAuired to meet at least e,ery t$o years and $hich can ta#e decisions on all matters under any of the multilateral trade a!reements. The day=to=day $or# of the WTO% ho$e,er% falls to a num"er of su"sidiary "odiesD principally the Genera) ,oun%$)% also composed of all WTO mem"ers% $hich is reAuired to report to the M$n$ster$a) ,on'eren%e. As $ell as conductin! its re!ular $or# on "ehalf of the *inisterial 2onference% the 7eneral 2ouncil con,enes in t$o particular forms = as the D$s&ute Sett)e"ent Body% to o,ersee the dispute settlement procedures and as the Trade Holicy Re,ie$ ody to conduct re!ular re,ie$s of the trade policies of indi,idual WTO mem"ers. The 7eneral 2ouncil dele!ates responsi"ility to three other ma&or "odies = namely the ,oun%$)s 'or Trade $n Goods. Trade $n Ser*$%es and Trade#Re)ated As&e%ts o' Inte))e%tua) /ro&erty. The 2ouncil for 7oods o,ersees the implementation and functionin! of all the a!reements .Annex 1A of the WTO A!reement/ co,erin! trade in !oods% thou!h many such a!reements ha,e their o$n specific o,erseein! "odies. The latter t$o 2ouncils ha,e responsi"ility for their respecti,e WTO a!reements .Annexes 1 and 12/ and may esta"lish their o$n su"sidiary "odies as necessary.Three other "odies are esta"lished "y the *inisterial 2onference and report to the 7eneral 2ouncil. The 2ommittee on Trade and 6e,elopment is concerned $ith issues relatin! to the de,elopin! countries and% especially% to the Fleast=de,elopedF amon! them. The 2ommittee on alance of Hayments is responsi"le for consultations "et$een WTO mem"ers and countries $hich ta#e trade=restricti,e measures% under Articles B)) and BJ))) of 7ATT% in order to cope $ith "alance=of=payments difficulties. +inally% issues relatin! to WTOEs financin! and "ud!et are dealt $ith "y a 2ommittee on ud!et.3ach of the four plurilateral a!reements of the WTO = those on ci,il aircraft% !o,ernment procurement% dairy products and "o,ine meat = esta"lish their o$n mana!ement "odies $hich are reAuired to report to the 7eneral 2ouncil.

T0E DO0A ROUND

The WTO launched the current round of ne!otiations% the 6oha 6e,elopment A!enda .66A/ or 6oha Round% at the fourth ministerial conference in 6oha% Katar in 1o,em"er 9--1. The 6oha round $as to "e an am"itious effort to ma#e !lo"ali>ation more inclusi,e and help the $orldEs poor% particularly "y slashin! "arriers and su"sidies in farmin!. The initial a!enda comprised "oth further trade li"erali>ation and ne$ rule=ma#in!% underpinned "y commitments to stren!then su"stantial assistance to de,elopin! countries. The ne!otiations ha,e "een hi!hly contentious and a!reement has not "een reached% despite the intense ne!otiations at se,eral ministerial conferences and at other sessions. 6isa!reements still continue o,er se,eral #ey areas includin! a!riculture su"sidies. The 6oha 6e,elopment Round or 6oha 6e,elopment A!enda .66A/ is the current trade=ne!otiation round of the World Trade Or!ani>ation .WTO/ $hich commenced in 1o,em"er 9--1. )ts o"&ecti,e is to lo$er trade "arriers around the $orld% $hich allo$s countries to increase trade !lo"ally. As of 9--:% tal#s ha,e stalled o,er a di,ide on ma&or issues% such as a!riculture% industrial tariffs and non=tariff "arriers% ser,ices% and trade remedies. The most si!nificant differences are "et$een de,eloped nations led "y the 3uropean 0nion .30/% the 0nited States .0SA/% and Japan and the ma&or de,elopin! countries led and represented mainly "y )ndia% ra>il% 2hina% and South Africa. There is also considera"le contention a!ainst and "et$een the 30 and the 0.S. o,er their maintenance of a!ricultural su"sidiesCseen to operate effecti,ely as trade "arriers. The 6oha Round "e!an $ith a ministerial=le,el meetin! in 6oha% Katar in 9--1. Su"seAuent ministerial meetin!s too# place in 2ancLn% *exico .9--8/% and 4on! Mon! .9--5/. Related ne!otiations too# place in 7ene,a% S$it>erland .9--4% 9--?% 9--:/D Haris% +rance .9--5/D and Hotsdam% 7ermany .9--5/. The most recent round of ne!otiations% July 98=99 9--:% "ro#e do$n after failin! to reach a compromise on a!ricultural import rules. After the "rea#do$n% ma&or ne!otiations $ere not expected to resume until 9--9. 1e,ertheless% intense ne!otiations% mostly "et$een the 0SA% 2hina% and )ndia% $ere held in the end of 9--: in order to a!ree on ne!otiation modalities. 4o$e,er% these ne!otiations did not result in any pro!ress. Se,eral countries ha,e called for ne!otiations to start a!ain. ra>il and Hascal <amy ha,e led this process. <ui> )nNcio <ula da Sil,a% president of ra>il% called se,eral countries leaders to ur!e them to rene$ ne!otiations. <amy ,isited )ndia to discuss possi"le solutions to the impasse. The declaration at the end of the 79- summit of $orld leaders in <ondon in 9--9 included a pled!e to complete the 6oha round. Althou!h a WTO ministerial conference scheduled in 1o,em"er 9--9 $ould not "e a ne!otiatin! session% there $ould "e se,eral opportunities o,er the year 9--9 to discuss the pro!ress. )n early 9-1-% ra>il and <amy ha,e focused on the role of the 0nited States in o,ercomin! the deadloc#. <ula has ur!ed arac# O"ama to end the trade dispute

"et$een ra>il and the 0S o,er cotton su"sidies follo$in! his increase in tariffs on o,er 1-- 0S !oods.. <amy has hi!hli!hted the difficulty of o"tainin! a!reement from the 0S $ithout the Hresidential fast trac# authority and "iennial elections.. One of the conseAuences of the economic crisis of 9--: = 9--9 is the desire of political leaders to shelter their constituents from the increasin!ly competiti,e mar#et experienced durin! mar#et contractions. <amy hopes that the drop in trade of 19G in 9--9% Auoted as the lar!est annual drop since the Second World War% could "e countered "y successful conclusion of the 6oha round. All countries participatin! in the ne!otiations "elie,e that there is some economic "enefit in adoptin! the a!reementD ho$e,er% there is considera"le disa!reement of ho$ much "enefit the a!reement $ould actually produce. A study "y the 0ni,ersity of *ichi!an found that if all trade "arriers in a!riculture% ser,ices% and manufactures $ere reduced "y 88G as a result of the 6oha 6e,elopment A!enda% there $ould "e an increase in !lo"al $elfare of O554.- "illion. A 9--: study "y World an# <ead 3conomist Mym Anderson found that !lo"al income could increase "y more than O8--- "illion per year% O95-- "illion of $hich $ould !o to the de,elopin! $orld.P4?Q Others had "een predictin! more modest outcomes% e.!. $orld net $elfare !ains ran!in! from O:4 "illion to O9:5 "illion "y the year 9-15. Hascal <amy has conser,ati,ely estimated that the deal $ith "rin! an increase of O18- "illion.. Se,eral thin# tan#s and pu"lic or!ani>ations assess that the conclusion of the trade round $ill result in a net !ain. 4o$e,er% the restructurin! and ad&ustment costs reAuired to pre,ent the collapse of local industries% particularly in de,elopin! countries% is a !lo"al concern. +or example% a late 9--9 study "y the 2arne!ie 3ndo$ment for )nternational Heace% the 0nited 1ations 3conomic 2ommission for Africa .0132A/% the 0nited 1ations 6e,elopment Hro!ramme and the Menyan )nstitute for Research and Holicy Analysis found that Menya $ould see !ains in its exports of flo$ers% tea% coffee and oil seeds. )t $ould concurrently lose in the to"acco and !rains mar#ets% as $ell as manufacturin! of textiles and foot$ear% machinery and eAuipment. The 2openha!en 2onsensus% $hich e,aluates solutions for !lo"al pro"lems re!ardin! the cost="enefit ratio% in 9--: ran#ed the 66A as the second="est in,estment for !lo"al $elfare% after the pro,ision of ,itamin supplements to the $orldEs 14- million malnourished children.

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WTO AGREEMENTS1 These a!reements are often called the WTO;s trade rules and "ecause of them% the WTO is called the rule="ased or!ani>ation. These rules are actually a!reements that the WTO=mem"er=!o,ernments ne!otiated. The WTO a!reements co,er trade in !oods% ser,ices and intellectual property. They spell out the principles of li"erali>ation $ith permitted exceptions. They include indi,idual countries; commitments to lo$er customs tariffs and other trade "arriers% and to open and #eep open ser,ices mar#ets. They set procedures for settlin! disputes. They prescri"e special treatment for de,elopin! countries. They reAuire !o,ernments to ma#e their trade policies transparent "y notifyin! the WTO a"out la$s in force and measures adopted% and throu!h re!ular reports "y the secretariat on countries; trade policies. The purpose of the a!reements is to help producers of !oods and ser,ices% exporters and importers conduct their "usiness in a free and predicta"le manner. 0ru!uay round a!reements are the "asis of the present WTO system. 1e$ ne!otiations are and ha,e "een launched at other *inisterial 2onferences% especially at the 6oha *inisterial conference% 9--1.

TRADE AND EN-IRONMENT1

Sustaina"le de,elopment% protection and preser,ation of the en,ironment are fundamental !oals of the WTO. WTO;s o"&ecti,e is to reduce trade "arriers and eliminate discriminatory treatment in international trade relations. While under WTO rules% mem"ers can adopt trade=related measures aimed at protectin! the en,ironment pro,ided a num"er of conditions to a,oid the misuse of such measures for protectionist ends are fulfilled. The WTO contri"utes to protection and preser,ation of the en,ironment throu!h its o"&ecti,e of trade openness% throu!h its rules and enforcement mechanism% throu!h $or# in different WTO "odies. The 6oha A!enda includes specific ne!otiations on trade and en,ironment and some tas#s assi!ned to the re!ular Trade and 3n,ironment 2ommittee.

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Re'eren%es1 1. 9. 8. 4. 5. http@RR$$$.$to.or!R http@RRecon9.econ.iastate.eduRclassesRecon855R2hoiR$to$or#s.htm http@RR$$$.le!alser,iceindia.comRarticleRl85:=+rom=7ATT=to=WTO.html http@RR$$$.$to.or!Ren!lishRthe$toSeR$hatisSeRtifSeRfact8Se.htm ' usiness 3n,ironment( "y Shai#h Saleem% 9nd edition% Hearson 3du.

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