Unit 7 World Trade Organisation: International Business and Strategy 1 - MGT 4102

International Business and Strategy 1 – MGT 4102
UNIT 7 WORLD TRADE ORGANISATION
Unit Structure
7.0 Overview
7.1 Learning Objectives
7.2 Article I – The MFN
7.3 What is WTO?
7.3.1 History
7.3.2 Brief of Different Rounds
7.3.4.1 Uruguay Round
7.3.4.2 The Post-Uruguay Round Built-in Agenda
7.3.4.3 Brief of Eventual Rounds
7.3.3 The Six WTO Ministerial Conferences
7.4 Expected Benefits of the WTO
7.4.1 Success or Failure: Depends if you are Rich or Poor?
7.4.2 To what extent is the WTO biased towards developed countries?
7.5 How is WTO different from GATT?
7.5.1 Conclusion
7.6 Activities
7.7 Summary
7.8 References
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7.0 OVERVIEW
The World Trade Organisation (WTO) is an international body whose purpose is to promote free
trade by persuading countries to abolish import tariffs and other barriers. As such it has become
closely associated with globalisation since it is the only agency overseeing the rules of
international trade.
The WTO came into existence in January 1 st 1995 as a result of the final round of the General
Agreement on Tariff and Trade (GATT) negotiations, called the Uruguay round which had taken
71/2 years, ending in 1994. It is an international organisation of 148 members that deals with the
rules of trade between nations, with China being the last to enter. WTO has much broader scope
than GATT. In fact, WTO has replaced GATT. Whereas GATT regulated trade in merchandise
goods, the WTO also covers trade in services such as telecommunication and banking.
However, in November 1999, the World Trade Organisation's (WTO) Third Ministerial Meeting
in Seattle collapsed in spectacular fashion, in the face of unprecedented protest from people and
governments around the world.
It was argued that the WTO and GATT Uruguay Round Agreements have functioned principally
to pry open markets for the benefit of transnational corporations at the expense of national and
local economies; workers, farmers, indigenous peoples, women and other social groups; health
and safety; the environment; and animal welfare. In addition, the WTO system, rules and
procedures are undemocratic, un-transparent and non-accountable and have operated to
marginalize the majority of the world's people.
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7.1 LEARNING OBJECTIVES
By the end of this Unit, you should be able to do the following:
1. Discuss the functions and objectives of the WTO;

2. Discuss the history leading to the establishment of the WTO;
3. Analyse the current situation prevailing at the WTO;
4. Assess whether the WTO has achieved its set objectives;
5. Understand how the WTO is different from GATT.
7.2 ARTICLE I – THE MFN
General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments for
imports or exports, and with respect to the method of levying such duties and charges,
and with respect to all rules and formalities in connection with importation and
exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article
III,* any advantage, favour, privilege or immunity granted by any contracting party to
any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like product originating in or destined for the
territories of all other contracting parties.
2. The provisions of paragraph 1 of this Article shall not require the elimination of any
preferences in respect of import duties or charges which do not exceed the levels
provided for in paragraph 4 of this Article and which fall with the following descriptions:
a) Preferences in force exclusively between two or more of the territories

listed in Annex A, subject to the conditions set forth therein;
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b) Preferences in force exclusively between two or more territories which

on July 1, 1939, were connected by common sovereignty or relations of protection
or suzerainty and which are listed in Annexes B, C and D, subject to the conditions
set forth therein;
c) Preferences in force exclusively between the United States of America

and the Republic of Cuba;
d) Preferences in force exclusively between neighbouring countries listed

in Annexes E and F.
3. The provisions of paragraph 1 shall not apply to preferences between the countries
formerly a part of the Ottoman Empire and detached from it on July 24, 1923, provided
such preferences are approved under paragraph 5 of Article XXV, which shall be applied
in this respect in the light of paragraph 1 of Article XXIX.
4. The margin of preference on any product in respect of which a preference is permitted

under paragraph 2 of this Article but is not specifically set forth as a maximum margin of
preference in the appropriate Schedule annexed to this Agreement shall not exceed:
a) in respect of duties or charges on any product described in such

Schedule, the difference between the most-favoured-nation and preferential rates
provided for therein; if no preferential rate is provided for, the preferential rate shall
for the purposes of this paragraph be taken to be that in force on April 10, 1947,
and, if no most-favoured-nation rate is provided for, the margin shall not exceed the
difference between the most-favoured-nation and preferential rates existing on April
10, 1947;
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7.3 WHAT IS WTO?
The World Trade Organisation (WTO) is an international body whose purpose is to promote free
trade by persuading countries to abolish import tariffs and other barriers. As such, it has become
closely associated with globalisation.
The WTO is the only international agency overseeing the rules of international trade. It polices
free trade agreements, settles trade disputes between governments and organises trade
negotiations. All WTO members may participate in all councils, committees, etc, except
Appellate Body, Dispute Settlement panels, Textiles Monitoring Body, and plurilateral
committees.
(http://www.bbc.co.uk,Thursday, 24 November 2005, “Profile: World Trade Organisation”)
 The WTO Agreements cover goods, services and intellectual property. They spell out the
principles of liberalisation, and the permitted exceptions.
 They include individual countries’ commitments to lower customs tariffs and other trade
barriers, and to open and keep open services markets.
 They set procedures for settling disputes.
 They prescribe special treatment for developing countries.
 They require governments to make their trade policies transparent by notifying the WTO
about laws in force and measures adopted, and through regular reports by the secretariat
on
 Countries’ trade policies. These agreements are often called the WTO’s trade rules, and
the
 WTO is often described as “rules-based”. But it’s important to remember that the rules
are actually agreements that governments negotiated.
A Set of Rules
At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading
nations. They are essentially contracts, binding governments to keep their trade policies within
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agreed limits. The goal is to help producers of goods and services, exporters, and importers
conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible. That partly means
removing obstacles. It also means ensuring that individuals, companies and governments know
what the trade rules are around the world, and giving them the confidence that there will be no
sudden changes of policy.
Settling Disputes
Trade relations often involve conflicting interests. Agreements, including those painstakingly
negotiated in the WTO system, often need interpreting. The most harmonious way to settle these
differences is through some neutral procedure based on an agreed legal foundation. That is the
purpose behind the dispute settlement process written into the WTO agreements.
The Principles
The trading system should be without discrimination. A country should not discriminate between
its trading partners (giving them equally ‘most-favoured-nation’ or MFN status); and it should
not discriminate between its own and foreign products, services or nationals (giving them
‘national treatment’);
Predictable - foreign companies, investors and governments should be confident that trade
barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and
market-opening commitments are ‘bound’ in the WTO;
More competitive – discouraging unfair practices such as export subsidies and dumping
products at below cost to gain market share;
More beneficial for less developed countries, giving them more time to adjust, greater
flexibility, and special privileges.
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The functions of WTO are;
 Administering WTO trade agreements
 Forum for trade negotiations
 Handling trade disputes
 Monitoring national trade policies
 Technical assistance
 Training for developing countries
 Cooperation with other international organisation
The WTO is ‘member-driven’, with decisions taken by consensus among all member
governments.
The WTO is run by its member governments. All negotiated, including the possibility of trade
sanctions. But those sanctions are imposed by member countries, and authorised by the
membership as a whole. This is quite different from other agencies whose bureaucracies can, for
example, influence a country’s policy by threatening to withhold credit.
Reaching decisions by consensus among some 150 members can be difficult. Its main advantage
is that decisions made this way are more acceptable to all members. And despite the difficulty,
some remarkable agreements have been reached. Nevertheless, proposals for the creation of a
smaller executive body — perhaps like a board of directors each representing different groups of
countries — are heard periodically. But for now, the WTO is a member-driven, consensus-based
organisation.
So, the WTO belongs to its members. The countries make their decisions through various
councils and committees, whose membership consists of all WTO members. Topmost is the
ministerial conference, which has to meet at least once every two years. The Ministerial
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Conference can take decisions on all matters under any of the multilateral trade agreements.
Major decisions are made by the membership as a whole, either by ministers (who meet at least
once every two years) or by their ambassadors or delegates (who meet regularly in Geneva).
Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international organisations such as the
World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of
directors or the organisation’s head.
When WTO rules impose disciplines on countries’ policies that is the outcome of negotiations
among WTO members. The rules are enforced by the members themselves under agreed
procedures that they
The General Council also meets as the Trade Policy Review Body and Dispute Settlement Body.
The negotiations mandated by the Doha Declaration take place in the Trade Negotiations
Committee and its subsidiaries. This now includes the negotiations on agriculture and services
begun in early 2000. The TNC operates under the authority of the General Council.
Each year new chairpersons for the major WTO bodies are approved by the General Council.
The WTO’s main functions are to do with trade negotiations and the enforcement of negotiated
multilateral trade rules (including dispute settlement). Special focus is given to four particular
policies supporting these functions:
Assisting Developing and Transition Economies
Developing countries make up about three quarters of the total WTO membership. Together with
countries currently in the process of “transition” to market-based economies, they play an
increasingly important role in the WTO.
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Therefore, much attention is paid to the special needs and problems of developing and transition
economies. The WTO Secretariat’s Training and Technical Cooperation Institute organizes a
number of programmes to explain how the system works and to help train government officials
and negotiators. Some of the events are in Geneva, others are held in the countries concerned. A
number of the programmes are organised jointly with other international organisations. Some
take the form of training courses. In other cases individual assistance might be offered.
The subjects can be anything from help in dealing with negotiations to join the WTO and
implementing WTO commitments to guidance in participating effectively in multilateral
negotiations. Developing countries, especially the least-developed among them, are helped with
trade and tariff data relating to their own export interests and to their participation in WTO
bodies.

Specialised help for exporting: the International Trade Centre
The International Trade Centre was established by GATT in 1964 at the request of the
developing countries to help them promote their exports. It is jointly operated by the WTO and
the United Nations, the latter acting through UNCTAD (the UN Conference on Trade and
Development).
The centre responds to requests from developing countries for assistance in formulating and
implementing export promotion programmes as well as import operations and techniques. It
provides information and advice on export markets and marketing techniques. It assists in
establishing export promotion and marketing services, and in training personnel required for
these services. The centre’s help is freely available to the least-developed countries.
The WTO in Global Economic Policy-Making
An important aspect of the WTO’s mandate is to cooperate with the International Monetary
Fund, the World Bank and other multilateral institutions to achieve greater coherence in global
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economic policy-making. A separate Ministerial Declaration was adopted at the Marrakesh

Ministerial Meeting in April 1994 to underscore this objective.
The declaration envisages an increased contribution by the WTO to achieving greater coherence
in global economic policy-making. It recognises that different aspects of economic policy are
linked, and it calls on the WTO to develop its cooperation with the international organisations
responsible for monetary and financial matters — the World Bank and the International
Monetary Fund.
The declaration also recognizes the contribution that trade liberalisation makes to the growth and
development of national economies. It says this is an increasingly important component in the
success of the economic adjustment programmes which many WTO members are undertaking,
even though it may often involve significant social costs during the transition.
Least-Developed Countries
The WTO agreements include numerous provisions giving developing and least-developed
countries special rights or extra leniency — “special and differential treatment”. Among these
are provisions that allow developed countries to treat developing countries more favourably than
other WTO members.
The General Agreement on Tariffs and Trade (GATT, which deals with trade in goods) has a
special section on Trade and Development which includes provisions on the concept of non-
reciprocity in trade negotiations between developed and developing countries — when
developed countries grant trade concessions to developing countries they should not expect the
developing countries to make matching offers in return.
Both GATT and the General Agreement on Trade in Services (GATS) allow developing
countries some preferential treatment.
Other measures concerning developing countries in the WTO agreements include:
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 extra time for developing countries to fulfil their commitments (in many of the WTO
agreements)
 provisions designed to increase developing countries’ trading opportunities through
greater market access (e.g. in textiles, services, technical barriers to trade)
 provisions requiring WTO members to safeguard the interests of developing countries
when adopting some domestic or international measures (e.g. in anti-dumping,
safeguards, technical barriers to trade)
 provisions for various means of helping developing countries (e.g. to deal with
commitments on animal and plant health standards, technical standards, and in
strengthening their domestic telecommunications sectors).
The WTO Secretariat has special legal advisers for assisting developing countries in any WTO
dispute and for giving them legal counsel. The service is offered by the WTO’s Training and
Technical Cooperation Institute. Developing countries regularly make use of it.
Furthermore, in 2001, 32 WTO governments set up an Advisory Centre on WTO law. Its
members consist of countries contributing to the funding, and those receiving legal advice. All
least-developed countries are automatically eligible for advice. Other developing countries and
transition economies have to be fee-paying members in order to receive advice.
The least-developed countries receive extra attention in the WTO. All the WTO agreements
recognize that they must benefit from the greatest possible flexibility, and better-off members
must make extra efforts to lower import barriers on least-developed countries’ exports.
Since the Uruguay Round agreements were signed in 1994, several decisions in favour of least-
developed countries have been taken.
Meeting in Singapore in 1996, WTO ministers agreed on a “Plan of Action for Least-Developed
Countries”. This included technical assistance to enable them to participate better in the
multilateral system and a pledge from developed countries to improved market access for least-
developed countries’ products.
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A year later, in October 1997, six international organisations — the International Monetary
Fund, the International Trade Centre, the United Nations Conference for Trade and
Development, the United Nations Development Programme, the World Bank and the WTO —
launched the “Integrated Framework”, a joint technical assistance programme exclusively for
least-developed countries.
In 2002, the WTO adopted a work programme for least-developed countries. It contains several
broad elements: improved market access; more technical assistance; support for agencies
working on the diversification of least-developed countries’ economies; help in following the
work of the WTO; and a speedier membership process for least-developed countries negotiating
to join the WTO.
At the same time, more and more member governments have unilaterally scrapped import duties
and import quotas on all exports from least-developed countries.
7.3.1 History
The WTO’s origins are more than half a century old. They lie in the economic and social disaster
of the Great Depression of the 1930's. At this time in history, countries turned inwards, and
provoked a descending spiral of declining output and trade. The reaction in terms of trade policy
was to resort to extreme protectionism. This meant raising tariffs and other trade barriers to such
a level that imports were drastically reduced. Discriminatory arrangements that favoured some
countries and excluded others became the name of the game.
However, there were significant improvements in the conduct of world trade in the post war
period. This was largely due to two key insights on the part of those responsible for trade policy.
1. First, there was a realisation that the road to post war economic recovery lays in progress
towards open markets and liberalised trade.
2. The second was that trade would not grow unless traders themselves could count on a
degree of stability and predictability in the system. Thus, the need for a mutually agreed
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set of rules, binding on all members and enforceable through dispute settlement. Trade
would be conducted according to rules - not the power of individual nations.
The original intention was to create a third institution to handle the trade side of international
economic co-operation, joining the two Bretton Woods institutions, the World Bank and the
International Monetary Fund. Over 50 countries participated in negotiations to create an
International Trade Organisation (ITO) as a specialised agency of the United Nations. The draft
ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on
employment, commodity agreements, restrictive business practices, international investment, and
services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce
and bind customs tariffs.
In October 1947, 23 countries signed the General Agreement on Tariffs and Trade (Gatt) in
Geneva, Switzerland, to try to give an early boost to trade liberalisation.
November 1947 - Delegates from 56 countries meet in Havana, Cuba, to start negotiating the
charter of a proposed InternationalTrade Organisation.
On 1 January 1948 - Gatt agreement comes into force, while the ITO Charter was still being
negotiated. The 23 became the founding GATT members (officially, ‘contracting parties’)
Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in
Havana in March 1948, ratification in some national legislatures proved impossible. The most
serious opposition was in the US Congress, even though the US government had been one of the
driving forces. In 1950, the United States government announced that it would not seek
Congressional ratification of the Havana Charter, and the ITO was effectively dead, leaving Gatt
as the only international instrument governing world trade.
The World Trade Organisation came into being in 1995. One of the youngest of the international
organisations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT)
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established in the wake of the Second World War. So while the WTO is still young, the
multilateral trading system that was originally set up under GATT is well over 50 years old.
The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on
average by 6% annually. Total trade in 1997 was 14-times the level of 1950. GATT and the
WTO have helped to create a song and prosperous trading system contributing to unprecedented
growth.
The system was developed through a series of trade negotiations, or rounds, held under GATT.
The first rounds dealt mainly with tariff reductions but later negotiations included other areas
such as anti-dumping and non-tariff measures.
The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities namely agriculture, textiles and clothing amongst others but fundamental
principles run throughout all of these documents. These are the foundation of the multilateral
trading system:
 Trade Without Discrimination
Most-Favoured-Nation (MFN): Treating Other People Equally
This is a provision in a commercial treaty binding the signatories to extend trading benefits equal
to those accorded and third state. The clause ensures equal commercial opportunities, especially
concerning import duties and freedom of investment. Generally reciprocal, in the late 19 th and
early 20th century unilateral MFN clauses were imposed on Asian nations by the more powerful
Western countries maintenance in a certain territory of equal commercial and industrial rights for
the nationals of all countries. As a specific policy, it was first advanced by the United States, but
it was rooted in the typical most-favored-nation clause of the treaties concluded with China after
the Opium War (1939-42).
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In the late 20th century Tariff and trade agreements were negotiated simultaneously by all
interested parties through the General Agreement on Tariffs and Trade (GATT).
GATT members recognised in principle that the MFN rule should be relaxed to accommodate
the needs of developing countries, and the UN Conference on Trade and Development (est.
1964) has sought to extend preferential treatment to the exports of the developing countries.
National Treatment : Treating Foreigners and Locals Equally
Imported and locally-produced goods should be treated equally – at least after the foreign goods
have entered the market. This principle of ‘national treatment’ is also found in all the three main
WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS).
 Freer Trade Gradually through Negotiation
Lowering trade barriers is one of the most obvious means of encouraging trade. The Barriers
concerned include customs duties (or tariffs) and measures such as import Bans or quotas that
restrict quantities selectively.
As a result of the negotiations, by the mid-1990s industrial countries’ tariff rates on industrial
goods had fallen steadily to less than 4%. But by the 1980s, the negotiations had expanded to
cover non-tariff barriers on goods, and to the new areas such as services and intellectual
property.
The WTO agreements allow countries to introduce changes gradually, through “progressive
liberalisation’. Developing countries are usually given longer to fulfill their obligations.
 Predictability : Through Binding and Transparency
Sometimes, promising not to raise a trade barrier can be as important as lowering one, because
the promise gives businesses a clearer view of their future opportunities. With stability and
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predictability, investment is encouraged, jobs are created and consumers can fully enjoy the
benefits of competition – choice and lower prices. The multilateral trading system is an attempt
by governments to make the business environment stable and predictable.
 Promoting Fair Competition
Many of the other WTO agreements aim to support fair competition: in agriculture, intellectual
property, services. The rules on non-discrimination – MFN and national treatment – are designed
to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain
market share) and subsidies. The issues are complex, and the rules try to establish what is fair or
unfair, and how governments can respond, in particular by charging additional import duties
calculated to compensate for damage caused by unfair trade.
 Encouraging Development and Economic Reform
The WTO system contributes to development. Over three quarters of WTO members are
developing countries and countries in transition to market economies. During the seven and a
half years of the Uruguay Round, over 60 of these countries implemented trade liberalisation
programmes autonomously. At the same time, developing countries and transition economies
were much more active and influential in the Uruguay Round negotiations than in any previous
round, and they are even more so in the current Doha Development Agenda.
More recently, developed countries have started to allow duty-free and quota-free imports for
almost all products from least-developed countries. On all of this, the WTO and its members are
still going through a learning process. The current Doha Development Agenda includes
developing countries’ concerns about the difficulties they face in implementing the Uruguay
Round agreements.
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7.3.2 Brief of Different Rounds
A brief history of past trade rounds
(http://www.wto.org)
Because tariff was widely used as a tool to protect domestic industries and generate revenue, the
early trade rounds of GATT mainly focused on tariff issues. Main trade rounds include:
The First Round at Geneva, Switzerland, from April to October 1947, where the participants
completed 123 negotiations and established 20 schedules containing the tariff reductions and
bindings that became an integral part of GATT. This first round of negotiations resulted in
45,000 tariff concessions affecting $10 billion of trade, about one fifth of the world’s total. The
23 also agreed that they should accept some of the trade rules of the draft ITO Charter. This, they
believed, should be done swiftly and provisionally in order to protect the value of the tariff
concessions they had negotiated.
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The Second Round at Annecy, France, from April to August 1949, which led to 5,000 tariff
concession and the accession of ten more countries.
The Third Round at Torquay, England from September 1950 to April 1951, which lead to 8,700
tariff concessions and accession of four more countries, cutting the 1948 tariff levels by 25%.
The Fourth Round at Geneva in May 1956, which led to some $2.5 billion worth of tariff
reductions;
The Dillon Round (named in honour of US Under Secretary of State Douglas Dillon who
proposed the negotiations) lasted from September 1960 to July 1962, which led to about 4,400
tariff concessions covering $4.9 billion of trade.
The Kennedy Round, (named in honour of the late US president) from May 1964 to June 1967,
led to concessions covering an estimated total value of trade of about $40 billion.
The Tokyo Round (102 countries participating) from September 1973 to November 1979 was a
transitional period, covering both tariff and non-tariff matters. In tariff issues, it talked about
tariff reduction and bindings that covered more than $300 billion of trade in almost 5 years. It
also resulted in a number of agreements in such non-tariff issues as subsidy, dumping,
government procurement, technical barriers to trade, customs valuation, and import licensing,
civil aircraft, dairy and bovine meat.
The Uruguay Round from September 20, 1986 to April 15, 1994, further included tariffs and
non-tariffs measures, rules, services, intellectual property, dispute settlement, textiles, and
agriculture. At the conclusion of the Uruguay Round on April 15, 1994, GATT members signed
the Marrakesh Agreement Establishing the WTO in Marrakesh, Morocco. This Agreement
defines the scope, functions and structure of the World Trade Organisation (WTO).
In 1994, Trade ministers meet for the final time under GATT auspices at Marrakesh, Morocco to
establish the World Trade Organisation (WTO) and complete the Uruguay Round.
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7.3.2.1 Uruguay Round
(http://www.wto.org)
Negotiations and the Environment
The Uruguay Round was the most comprehensive and complex round of trade negotiations ever
undertaken. Its aims were to advance trade liberalisation in the traditional areas of trade in goods
and to achieve wide-ranging agreement in areas not previously covered by the General
Agreement on Tariffs and Trade (GATT). Overall, it sought to make the world trading system
more open, more fair and more transparent.
Agreement to Establish the WTO
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The Agreement Establishing the World Trade Organisation brings responsibility for all
previously existing GATT and all new Uruguay Round agreements into one comprehensive
intergovernmental organisation. The preamble to the Agreement also recognizes the important
relationship between trade and economic and sustainable development objectives.
The creation of the WTO will not have any environmental impact per se. However, the WTO is
required to “make appropriate arrangements for effective co-operation with other
intergovernmental organisations".
Agriculture
Clear rules for the international trade of agricultural products have been established through the
Uruguay Round of Multilateral Trade Negotiations. The Agreement on Agriculture has three key
sets of provisions:
i) Improved market access through elimination of all non-tariff barriers to trade and gradual
tariff reductions;
ii) Increased export competition through gradual reductions in export subsidies; and
iii) Reductions in certain domestic support programs that are trade-distorting and that do not
limit production.
Subsidies with no, or minimal, effects on trade are exempt and free from countervail. These
“green box” programs include funding for environmental initiatives, direct payments to
producers and government participation in income assurance and safety net programs.
Overall, the implications of the Uruguay Round for environmental policy in the agricultural and
agri-frood sector are expected to be positive and small.
Application of Sanitary snd Phytosanitary Measures
The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), negotiated for
the first time during the Uruguay Round, defines the rights and obligations of members with
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respect to the development or application of sanitary and phytosanitary measures. The primary
aims of these measures are to control the spread or importation of plant- or animal-borne pests or
diseases, and the presence of additives, contaminants, toxins or disease-causing organisms in
foods, beverages or feedstuffs.
Technical Barriers to Trade
The Agreement on Technical Barriers to Trade (TBT) defines members' rights and obligations
regarding the development or application of standards-related measures that affect trade. These
measures, which play a very prominent role in the pursuit of environmental objectives, include
mandatory technical regulations, voluntary standards, and conformity assessment procedures that
determine whether a product meets the requirements of a particular regulation or standard.
Trade-Related Investment Measures
The new Agreement on Trade-Related Investment Measures (TRIMs) makes GATT coverage of
these measures more explicit without initiating a broad framework of rules on foreign
investment. The Agreement prohibits trade-related investment measures that restrict and distort
trade and confirms obligations in the GATT that require national treatment (treating imports no
less favourably than domestic products) and that prohibit quantitative restrictions.
Subsidies and Countervailing Measures
The Uruguay Round negotiations resulted in several substantial changes to the agreement on
subsidies and countervailing duties. In addition, three categories of subsidies have been
established: prohibited, actionable and non-actionable. The Agreement also provides an
enforcement mechanism.
An enhanced level of control on all subsidies should result in a more efficient allocation of
resources and, therefore, less waste. In addition, the new rules on dispute-settlement procedures
have been strengthened and streamlined, providing greater certainty in the application of new
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disciplines. As such, the new subsidies agreement, together with the improved dispute-settlement
rules, should have a positive environmental impact.
[cuts in import duties on tropical products, which are mainly exported by developing
countries]
Trade in Services
The General Agreement on Trade in Services (GATS) is the first comprehensive multilateral
agreement governing trade in services. It provides a framework of general obligations and sets
out some additional provisions in annexes covering regulated service sectors, such as
telecommunications and financial services.
A working party will be established to study the relationship between trade in services and the
environment, including the issue of sustainable development. It will also examine the relevance
of intergovernmental agreements on the environment and their relationship to the GATS.
Trade and Intellectual Property Rights
The Agreement on Trade-Related Aspects of Intellectual Property Rights, Including Trade in

Counterfeit Goods (TRIPs) strengthens the protection and enforcement of intellectual property-
rights holders outside their home country.
The Agreement may have environmental implications in two areas--the transfer of environmental
technologies and the protection of biodiversity. First, by requiring high minimum standards for
the protection of the rights of foreign intellectual property holders, the Agreement on TRIPs
encourages the development of environmental technologies.
Dispute Settlement
The new Uruguay Round Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) will strengthen the dispute-resolution system of the GATT by giving a
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substantial degree of automaticity to the adoption of the findings of the dispute-resolution panels
and the new Appellate Body. Moreover, the DSU will establish an integrated system permitting
WTO members to base their claims on any of the trade agreements included in the new WTO
system.
1986 – 1994 – The Uruguay Round (Punta del Este, Uruguay)
World Trade Organisation (WTO), international organisation established in 1995 as a result of

the final round of the General Agreement on Tariffs and Trade (GATT) negotiations, called the
Uruguay Round.
Goals of the Round
The main aims of the Uruguay round of negotiations was to reduce agricultural subsidies, put
restrictions on foreign investment, and put a barrier on trade in services like banking and
insurance. They also wanted to draft a code to deal with copyright violation and other forms of
intellectual property rights.
Criticism of the Round
Groups such as Oxfam have criticised the Uruguay Round for paying insufficient attention to the
special needs of developing countries. One aspect of this criticism is that figures very close to
rich country industries — such as former Cargill executive Dan Amstutz — had a major role in
the drafting of Uruguay Round language on agriculture and other matters. As with the WTO in
general, NGOs such as Health Gap and Global Trade Watch also criticize what was negotiated in
the Round on intellectual property and industrial tariffs as setting up too many constraints on
policy-making and human needs.
The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting of
GATT members in Geneva. Although the ministers intended to launch a major new negotiation,
the conference stalled on agriculture and was widely regarded as a failure. In fact, the work
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programme that the ministers agreed formed the basis for what was to become the Uruguay
Round negotiating agenda.
Nevertheless, it took four more years of exploring, clarifying issues and painstaking consensus
building, before ministers agreed to launch the new round. They did so in September 1986, in
Punta del Este, Uruguay. They eventually accepted a negotiating agenda that covered virtually
every outstanding trade policy issue. 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. It
was the biggest negotiating mandate on trade ever agreed, and the ministers gave themselves
four years to complete it.
Two years later, in December 1988, ministers met again in Montreal, Canada, for what was
supposed to be an assessment of progress at the round’s half-way point. The purpose was to
clarify the agenda for the remaining two years, but the talks ended in a deadlock that was not
resolved until officials met more quietly in Geneva the following April.
Despite the difficulty, during the Montreal meeting, ministers did agree a package of early
results. These included some concessions on market access for tropical products — aimed at
assisting developing countries — as well as a streamlined dispute settlement system, and the
Trade Policy Review Mechanism which provided for the first comprehensive, systematic and
regular reviews of national trade policies and practices of GATT members. The round was
supposed to end when ministers met once more in Brussels, in December 1990. But they
disagreed on how to reform agricultural trade and decided to extend the talks. The Uruguay
Round entered its bleakest period.
Despite the poor political outlook, a considerable amount of technical work continued, leading to
the first draft of a final legal agreement. The then GATT director-general, Arthur Dunkel, who
chaired the negotiations at officials’ level, compiled this draft “Final Act”. It was put on the table
in Geneva in December 1991. The text fulfilled every part of the Punta del Este mandate, with
one exception — it did not contain the participating countries’ lists of commitments for cutting
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import duties and opening their services markets. The draft became the basis for the final
agreement.
Over the following two years, the negotiations lurched between impending failures, to
predictions of imminent success. Several deadlines came and went. New points of major conflict
emerged to join agriculture: services, market access, anti-dumping rules, and the proposed
creation of a new institution. Differences between the United States and European Union became
central to hopes for a final, successful conclusion.
In November 1992, the EU and US settled most of their differences on agriculture in a deal
known informally as the “Blair House accord”. By July 1993 the “Quad” (US, EU, Japan and
Canada) announced significant progress in negotiations on tariffs and related subjects (“market
access”). It took until 15 December 1993 for every issue to be finally resolved and for
negotiations on market access for goods and services to be concluded (although some final
touches were completed in talks on market access a few weeks later). On 15 April 1994, the deal
was signed by ministers from most of the 123 participating governments at a meeting in
Marrakesh, Morocco.
The delay had some merits. It allowed some negotiations to progress further than would have
been possible in 1990: for example some aspects of services and intellectual property, and the
creation of the WTO itself. But the task had been immense, and negotiation-fatigue was felt in
trade bureaucracies around the world. The difficulty of reaching agreement on a complete
package containing almost the entire range of current trade issues led some to conclude that a
negotiation on this scale would never again be possible. Yet, the Uruguay Round agreements
contain timetables for new negotiations on a number of topics. And by 1996, some countries
were openly calling for a new round early in the next century. The response was mixed; but the
Marrakesh agreement did already include commitments to reopen negotiations on agriculture and
services at the turn of the century. These began in early 2000 and were incorporated into the
Doha Development Agenda in late 2001.
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7.3.2.2 The Post-Uruguay Round built-in Agenda
Many of the Uruguay Round agreements set timetables for future work. Part of this ‘built-in
agenda’ started almost immediately. In some areas, it included new or further negotiations. In
other areas, it included assessments or reviews of the situation at specified times. Some
negotiations were quickly completed, notably in basic telecommunications, financial services.
(Member governments also swiftly agreed a deal for freer trade in information technology
products, an issue outside the ‘built-in agenda’.)
7.3.2.3 Brief of Eventual Rounds
1995 The World Trade Organisation is created in Geneva.
1999 At least 30,000 protesters disrupt WTO summit in Seattle, US; New
Zealander Mike Moore becomes WTO director-general.
2001 November WTO members meeting in Doha, Qatar, agree on the Doha Development
Agenda, the ninth trade round which is intended to open negotiations on
opening markets to agricultural, manufactured goods, and services.
2001 December China formally joins the WTO. Taiwan is admitted weeks later.
2002 August WTO rules in favour of the EU in its row with Washington over tax breaks
for US exporters. The EU gets the go-ahead to impose $4bn in sanctions
against the US, the highest damages ever awarded by the WTO.
2002 September Former Thai deputy Prime Minister Supachai Panitchpakdi begins a three-
year term as director-general. He is the first WTO head to come from a
developing nation.
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2003 September WTO announces deal aimed at giving developing countries access to
cheap medicines, hailing it as historic. Aid agencies express
disappointment at the deal.
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2003 September World trade talks in Cancun, Mexico collapse after four days of wrangling
over farm subsidies, access to markets. Rich countries abandon plans to
include so-called "Singapore issues" of investment, competition policy
and public procurement in trade talks.
2003 December WTO rules that duties imposed by the US on imported steel are illegal. US
President Bush repeals the tariffs to avoid a trade war with the EU.
2004 April WTO rules that US subsidies to its cotton farmers are unfair.
2004 August Geneva talks achieve framework agreement on opening up global trade.
US and EU will reduce agricultural subsidies, while developing nations
will cut tariffs on manufactured goods.
2005 March Upholding a complaint from Brazil, WTO rules that US subsidies to its
cotton farmers are illegal.
2005 May WTO agrees to start membership talks with Iran.
2005 September Frenchman Pascal Lamy takes over as WTO director-general. He was
formerly the EU's trade commissioner.
2005 October US offers to make big cuts in agricultural subsidies if other countries,
notably EU do the same. EU responds, but France opposes more
concessions.
2005 November WTO approves membership for Saudi Arabia.
2005 December World trade talks in Hong Kong begin amid widespread belief that they
will not succeed in making a breakthrough.
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2007 July US "fast track" authority expires in Congress. Under this provision
Congress waives the right to amend any trade deals negotiated by the US
President. Many experts believe Congress will not renew this provision,
setting a deadline for reaching a trade deal.
Many cotton producing nations have lobbied the WTO to eliminate subsidies
7.3.3 The Six WTO Ministerial conferences
1. The First WTO Ministerial Conference
The First WTO Ministerial Conference was held in Singapore between 9 and
13 December 1996.
2. The Second WTO Ministerial Conference
The Second WTO Ministerial Conference was held in Geneva, Switzerland between 18
and 20 May 1998.
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3. The Third WTO Ministerial Conference
The Third WTO Ministerial Conference was held in Seattle, Washington State, US
between 30 November and 3 December 1999.
At the end of November 1999, Seattle saw major governments meet at a WTO ministerial
meeting to discuss various trading rules. Seattle also saw free speech cracked down on in
the name of free trade. Enormous public protests ensued. There were many differences in
the perspectives of developing and industrialised nations on the current reality of free
trade and how it affected them. It resulted in a WTO failure to agree on many issues,
without adopting any resolutions. Developing countries were sidelined and one delegate
even physically barred from a meeting, according to the previous link.
4 The Fourth WTO Ministerial Conference
The Fourth WTO Ministerial Conference was held in Doha, Qatar from
9 to 14 November 2001.
The 4th WTO Ministerial Conference in Doha, Qatar was held in November 2001. It was
to launch a new round of trade talks prioritizing the development of poor countries and
was dubbed the “development” round. But it was marred with controversy. Qatar was
selected as the venue due to its repressive laws about the right to protest. Furthermore,
both in the lead up to the meetings, and in the outcomes, developing countries on the
whole had actually been marginalised and ignored, once again. Last updated Sunday,
December 22, 2002.
The Doha “Development” Round, as it has been known, was nicknamed that way to show
that this round of trade negotiations were to favor poor countries’ ability to develop and
prosper from global trade, while acknowledging the unequal nature of global trade,
dominated by industrialised countries, at the direct expense of the developing world.
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India’s commerce minister, Kamal Nath noted similar things:
“This is a Development Round, completing it is extremely important but equally

important is the content of the Round. The content has to demonstrate new opportunities
for developing countries, primarily market access of developing countries into markets of
developed countries.”
However the failure was not just a sudden one. The history of the Doha round has been
filled with double-talk, with rich countries often demanding poor countries concede
ground in unfair ways, with poor countries occasionally taking a strong stance against
these demands, and the EU and US in particular driving for more open markets in poorer
countries, sometimes even blaming the poorer countries for failed talks, or calling deals
criticised as bad for the poor, as good for the poor.
5. The Fifth WTO Ministerial Conference
The Fifth WTO Ministerial Conference was held in Cancún, Mexico from
10 to 14 September 2003. The main task was to take stock of progress in negotiations and
other work under the Doha Development Agenda.
The Fifth WTO Ministerial Conference was held in Cancún, Mexico from
10 to 14 September 2003. The main task was to take stock of progress in negotiations and
other work under the Doha Development Agenda. The conference, following the
previous meeting in Doha, Qatar, in 2001, becomes crucial as developing countries find
themselves under pressure -- if not threatened -- by the proposal for a new round,
particularly in agriculture, industrial tariffs, services (or GATS -- General Agreements on
Trade in Services) and what is called the Singapore Issues (investment, competition
policy, transparency, government procurement). The developed, or "rich", countries
badly need a new round as their economies have been hit hard by recession. They are
looking for markets and thus propose that developing countries open up all sectors of
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their economies, regardless of the suffering, poverty or reductions in quality of life that
this may cause.
Cotton Proposal
On the first day of the conference, “facilitators” were designated to help the Mexican president
with negotiations on various subjects such as agriculture, non- agricultural market access
(NAMA), development issues, Singapore issues and Other issues this includes the TRIPS
registry for geographical indications for wines and spirits, and other topics). The cotton proposal
involving African countries was debated. Benin, Burkina Faso, Chad and Mali brought forward
the issue. It describes the damage that the four believe has been caused to them by cotton
subsidies in richer countries, calls for the subsidies to be eliminated, and for compensation to be
paid to the four while the subsidies are being paid out to cover economic losses caused by the
subsidies. The proposal seeks a decision in this Cancún Ministerial Conference. The four
countries described how cotton is important to their economies, and how in some years total
subsidies in rich countries amount to almost as much as the value of world trade in cotton. They
are competitive, they argued, but find it difficult to compete with the subsidies. They described
their proposal as a solution that would allow them to participate more in the international trading
system and to use trade in order to lift themselves out of poverty. By making the proposal in this
way, they are demonstrating their faith in the trading system and its equitable rules, they said.
The proposal received support from Canada, Australia, Argentina, Cameroon, Guinea, South
Africa, Bangladesh (for least-developed countries), Senegal and India — either for the whole
proposal or key parts such as phasing out subsidies. Several countries said that other products
also face that dilemma of not being apt to compete at full level with ‘rich’ countries. A meeting
was held with the countries that had expressed an interest on this. They agreed that the problem
needs to be solved, but some argued that a narrow focus on cotton subsidies alone would not
necessarily lead to a medium or long-term development of the cotton industry in West Africa.
Instead, an integrated approach covering all measures affecting cotton producers would offer a
more satisfactory solution. On the question of providing transition financing, some countries said
that they were studying the idea but it should be considered only after the trade-related elements
of any initiative were resolved.
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According to the US point of view, “distortions in cotton are not only caused by subsidies in the
sector, for example industrial policies that support production for synthetic fibres, high tariffs on
finished products and good harvests caused by favourable weather are also important reasons for
falling cotton”. The US proposed discussing how to deal with distortions throughout the
production chain, including subsidies, tariff barriers and non-tariff barriers on cotton, synthetic
fibres and products made from these.
The EU said that its production and exports are too small to have an impact on world cotton
prices, and that it is changing its programme for cotton producers. The EU said it supports
commercial elements of the proposal and pledged to contribute to reaching agreement on a
solution.
“Singapore Issue”
The next day of the conference witnessed the membership of two new participant countries
namely Cambodia and Nepal. Cambodia and Nepal are set to become the WTO’s 147th and
148th members, and first least-developed countries to join the WTO through a full working party
negotiation. They still have to ratify their agreements and inform the WTO, and 30 days after
that they will become WTO members.
The job of “facilitators” is to assist the chairperson in trying to reach a consensus on their
subjects and to chair “open-ended” (i.e. open to all members) working group meetings on each
subject. However, Chairperson Derbez stressed that decisions will only be taken by the full
membership and that the working groups will not detract from the heads of delegation.
Consultations with individual delegations started up. Negotiations concerning “Singapore” issue
then took place. These are: trade and investment, trade and competition policy, transparency in
government procurement and trade facilitation. A number of developing countries said that it is
evident there is no clear consensus to start negotiations as required by the Doha Declaration, and
thus the issues have to be sent back to Geneva. They said there is need to clarify the impact of
WTO rules in these new areas. They added that ministers should not allow this dossier to bog
Unit 7 33
down progress in other areas, and appealed to the demandeurs to decouple these issues with other
issues. They said that ministers must focus on areas where there is hope for results.
A number of developed and developing countries said that the Singapore issues are integral
elements of the Doha Round like agriculture and non-agricultural market access, and that there
would be “backsliding” from the Doha Declaration if no negotiations take place. They said that
seven years of discussions have clarified the issues, and that delay in negotiations would lead to
loss of potential expansion of growth for developing countries. They said business people
demand and need these new rules, and that the WTO must cope with the reality of the modern
age.
A smaller group of developing countries said that each Singapore issue should be considered on
its own merits. They supported negotiations on two issues — trade facilitation and transparency
in government procurement — that it said are more ripe for negotiations in comparison with
investment and competition policy. Some declared that there is need for progress in other areas
of negotiations.
After deep consultations, a substantial number of countries said that there was no explicit
consensus on any of the four issues and that they should be referred back to the Working Groups
in Geneva. A second group wants to launch negotiations on all four issues in Cancún. Some in
this group say that the Doha Declaration already mandates the launch of negotiations here in
Cancún. A number of countries are prepared to explore possible solutions between these two
options. Several countries, including both developed and developing, supported launching
negotiations on trade facilitation and transparency in government procurement, and referring
back to Geneva the issues on investment and on competition policy.
“Development Issue”
Late in the afternoon on the same day, “Development” issue was debated. This group covers:
special and differential treatment (S&D); implementation; technical assistance; least-developed
countries; commodity issues; small economies; trade, debt and finance; and trade and technology
Unit 7 34
transfer. Facilitator Mukhisa Kituyi (Kenya) highlighted two issues, which require further work:
special and differential treatment and implementation. A number of developing countries
believed that there is little, if any, economic value in the current package. Other developing
countries think that there is some value but that more should be achieved. On implementation, a
group of developing countries presented new language end August. This text calls for: the
negotiating groups to address as a matter of priority implementation issues dealt by them; a
negotiating group to address all the remaining outstanding implementation issues; decisions to be
adopted by March 2004. Some developed countries delegations said that they were not ready to
establish a negotiating group on implementation. One delegation insisted on giving priority to the
issue of the extension of the higher level of protection of geographical indications beyond wines
and spirits. There remains disagreement on whether to treat this issue as an implementation one.
Facilitator Clement Rohee reported that his open-ended meeting focused largely on environment
(including eco-labelling) and intellectual property (TRIPS), particularly the register for wines
and spirits geographical indications, but also the question of non-violation. Facilitator Mukhisa
Kituyi reported on the previous day’s meeting. On one key implementation issue — proposals to
extend the higher level of protection for geographical indications beyond wines and spirits —
delegations are “religiously” sticking to their opposing positions. It is important to avoid this
issue dominating the discussion and blocking other issues. While consensus seems to be
emerging on wording on issues concerning least-developed countries, small economies and
commodities, differences remain on the group of subjects under the heading of implementation.
A wide gap still exists between those countries who want negotiations on the extension of the
higher level of protection for geographical indications beyond wines and spirits and those who
do not believe it is an implementation issue. Several countries, both developed and developing,
favour a new negotiating group on implementation issues but it remains unclear if that would
include also the issue of geographical indications. On special and differential treatment, many
countries favour “harvesting” the 24 agreed provisions while continuing to try to improve that
package. In general, members want ministers to give guidance on the way forward. Some
countries would like a new deadline, possibly March 2004.
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“Other issues” were also put on the table. The meeting discussed trade and environment,
geographical indications. Some countries wanted additional wording encouraging an acceleration
of work and inviting the multilateral environmental agencies to participate as observers in the
negotiations. Some countries were also concerned about the absence of any reference to eco-
labelling, and wanted additional wording calling for dedicated sessions on this subject next year.
Some countries added to the “other issues” a desire to see in the current draft a reference to
issues in the Doha Declaration, namely the relationship between the intellectual property
agreement (TRIPS) and the Convention on Biological Diversity, protection of traditional
knowledge, etc. The group did not have time to discuss “non-violation” cases in TRIPS or any
other issue. More difficult are: the geographical indications register for wines and spirits
(positions are largely unchanged, and therefore the simplest solution would be to set a date for
completing the negotiations, perhaps the same as for modalities in agriculture and non-
agricultural market access); eco-labelling; and some services issues (dates for revised offers, and
modalities for least-developed countries’ participation in the negotiations).
Another group meeting was held for the “Agriculture” purpose. The facilitator from Singapore
said there was some indication of flexibility, but delegations were still mainly keeping their cards
close to their chests. He hoped that members would be able to help close the gaps. Failing that,
he will submit a text later tomorrow. The text will be a hybrid — members will be able to
identify parts that come from Geneva, he said. However speakers largely focused on established
points of concern. The main new item was a new “consolidated” position paper from the African
Union, the ACP group (African, Caribbean and Pacific, i.e. former European colonies enjoying
preferences on the EU market), and the least-developed countries. They call for a framework
(and subsequent modalities) that is “balanced” between the three pillars, in general including
special treatment for developing countries — such as self-selection for “special products”, use of
a special safeguard mechanism for developing countries, and the preservation of preferences. On
market access, the paper calls for a formula that tackles high tariffs, tariff peaks, and tariff
escalation. The blended approach would fail to tackle these because it would allow developed
countries to put products with high tariffs in the flexible “import sensitive” category, this group
say. Therefore developed countries’ tariff reductions and other market access commitments
should be considerably more substantial than for developing countries. Similar proposals are
Unit 7 36
made in domestic support and export subsidies. Facilitator George Yeo (Singapore) said that in
consultations he has seen substantial flexibility, giving him greater confidence that his draft text
will be more acceptable. This meeting will be the last opportunity for members to offer guidance
on bridging gaps, he repeated. Tonight he will submit a text to conference chairperson Luis
Ernesto Derbez, and he understands that the chair will submit a new text tomorrow that will
include agriculture. A number of ACP banana producers called for this sector to be addressed
specifically in the agriculture negotiations. Some Latin American producers warned against
raising this in the negotiations.
6. The Sixth WTO Ministerial Conference
The Sixth WTO Ministerial Conference was held in Hong Kong, China, 13–18 December 2005.
In general, ministerial conferences are the WTO’s highest decision-making body, meeting at
least once every two years and providing political direction for the organisation.
The Sixth WTO Ministerial Conference was held in Hong Kong, China, 13–18 December 2005.
In general, ministerial conferences are the WTO’s highest decision-making body, meeting at
least once every two years and providing political direction for the organisation. The aim of this
conference is for developing countries to seek easier access to foreign markets, especially those
in the EU and North America. Moreover, they are seeking a larger quota of export and free tax
for their products.
Agriculture
The agriculture negotiations are difficult because of the wide range of views and interests among
member governments, the large number of active participants, and the complexity of many
issues. The aim is to contribute to further liberalisation of agricultural trade, allowing countries
to compete on quality and price rather than on the size of their subsidies. That is particularly the
case for many developing countries whose economies depend on an increasingly diverse range of
primary and processed agricultural products, exported to an increasing variety of markets,
including to other developing countries.
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At the heart of the talks are the “three pillars”:
 market access: cutting tariffs, expanding tariff-quotas and various flexibilities for thes.
 exports subsidies (officially “export competition”): eliminating these and disciplining
export credit, food aid and state trading enterprises to eliminate hidden export subsidies.
 domestic support: cutting supports that distort trade (by stimulating over-production and
artificially raising or lowering prices) and disciplining forms of support that could distort
trade
The unofficial objective for agriculture at the Hong Kong Ministerial Conference was to
complete “modalities” (or to get as close as possible to that). This would allow the full package
of agreement in agriculture to be completed by the end of 2006 (also an unofficial target).
However, delays before the WTO’s 2005 summer break meant that, members left themselves an
immense amount of work in the three months before Hong Kong. In November, the objective for
Hong Kong was recalibrated. Members now hope to use the Ministerial Conference as a staging
post to achieving modalities early in 2006, without altering the level of ambition for the final
result of the negotiations, and sticking to unofficial final deadline of the end of 2006.
The modalities will describe how the final agreement will be shaped, spelling out numerical and
other targets for further reform of agricultural trade. They will feature in particular the formulas
and flexibilities to be used to reduce tariffs, expand quotas and cut domestic support. They will
include an end-date for eliminating export subsidies. They will also contain revised rules to
discipline agricultural trade policies. All of these will be designed to achieve the objectives set
out in the 2001 Doha Ministerial Declaration: “substantial improvements in market access;
reductions of, with a view to phasing out, all forms of export subsidies; and substantial
reductions in trade-distorting domestic support”.
After the “modalities” have been agreed, they will be used to calculate the tariff cuts each
country makes on thousands of products, and cuts on a range of subsidies and supports, with
some bargaining on these also likely before the negotiations are finally concluded. This phase
can take several months.
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Cotton Agreement
It was set up under the August 2004 framework at the 19 November 2004 meeting of the
agriculture negotiations. Its purpose is to focus on cotton as a specific issue in the agriculture
talks. (The cotton proposal, which also includes development issues, is discussed in the General
Council as well.) It normally meets close to the time of the “agriculture weeks” of negotiations.
The latest new or modified proposals were tabled in November 2005: from the four African
proponents (Benin, Burkina Faso, Chad and Mali) and from the EU. They include proposed
actions for ministers to take at the Hong Kong Ministerial Conference.
The four African proponents call for export subsidies on cotton to be eliminated totally by the
end of this year; 80% of trade distorting domestic support to be scrapped by the end of 2006 and
the remaining by 1 January 2009; disciplines to ensure only authorised domestic supports
remain; substantial improvements in market access, with duty-free and quota-free access for
cotton and cotton products from least-developed countries; an emergency fund to help deal with
depressed international prices; and technical and financial assistance for the cotton sector in
Africa.
The EU proposes ministers agree to larger or faster commitments for cotton than in agriculture as
a whole in all three pillars. In addition, the EU says it is willing to eliminate all duties, quotas
and other quantitative restrictions on imports from all countries, the most trade-distorting
domestic supports (AMS), and all export subsidies, from “day one” (the first day that the final
agreement is implemented), and to apply disciplines on Blue Box subsidies from “day one”.
Market Access, Non-Agricultural Products
The ministers agreed to launch tariff-cutting negotiations on all non-agricultural products. The
aim is “to reduce, or as appropriate eliminate tariffs, including the reduction or elimination of
tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers, in particular on
products of export interest to developing countries”. The product coverage shall be
comprehensive and without a priori exclusions.
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These negotiations shall take fully into account the special needs and interests of developing and
least-developed countries, and recognize that these countries do not need to match or reciprocate
in full tariff-reduction commitments by other participants.
At the start, participants had to reach agreement on how (“modalities”) to conduct the tariff-
cutting exercise. (In the Tokyo Round, the participants used an agreed mathematical formula to
cut tariffs across the board; in the Uruguay Round, participants negotiated tariff cuts using a
variety of methods). The agreed procedures would include studies and capacity-building
measures that would help least-developed countries participate effectively in the negotiations.
While eight GATT Rounds have sharply reduced customs duties, certain tariffs continue to
restrict trade, especially on exports of developing countries — for instance “tariff peaks”, which
are relatively high tariffs, usually on “sensitive” products, amidst generally low tariff levels.
Another example is “tariff escalation”, in which higher import duties are applied on semi-
processed products than on raw materials, and higher still on finished products. This practice
protects domestic processing industries and discourages the development of processing activity
in the countries where raw materials originate. The original aim of ministers was to conclude
NAMA negotiations by 2005. The Sixth Ministerial Conference in Hong Kong, December 2005,
will take stock of progress.
By September 2005 Members have submitted more than 60 papers as a contribution to the
debate. These proposals deal with the “modalities” for the negotiations, covering tariff
reductions, how to deal with non-tariff barriers, how to give developing countries special and
differential treatment, and the possible effects of the reduction in tariffs on the development
policies of some countries and on their fiscal revenues, etc. The “modalities” include the criteria
to be used to define environmental goods, since the Doha Declaration includes a mandate to
negotiate the reduction of tariffs in this particular sector of goods, a subject transferred from the
Trade and Environment Committee to this negotiating group.
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The Formula
In his latest assessment of the negotiations, the chairman said he believed that Members
supported the use of a Swiss Formula (that is, higher tariffs are submitted to deeper cuts) as the
central tariff cutting mechanism for the NAMA negotiations. However, he also said that under
this umbrella of a Swiss formula, he had identified two approaches. In general terms, one
approach envisages the use of a limited number of coefficients to be negotiated and the other
proposes a largely pre-determined coefficient for each Member using its tariff average as a
starting point. Members that have submitted proposals for a formula are Chile, Colombia and
Mexico (joint proposal); Norway; United States; European Communities; Argentina, Brazil and
India (joint proposal); Antigua and Barbuda, Barbados, Jamaica and Trinidad and Tobago (joint
proposal); and Pakistan.
Special and differential treatment for developing countries:
There have been extensive discussions on these provisions and their relationship with the
formula. Most of the points raised were about flexibility for developing countries — allowing
them longer implementation periods for tariff reductions; and allowing them to keep 5% of tariff
lines “unbound” (i.e. not legally committed in the WTO), provided that these do not exceed 5%
of imports. Least-developed country participants would not be required to undertake reduction
commitments. But as part of their contribution to this round of negotiations, they are expected to
substantially increase the number of products whose maximum tariff rates are legally bound in
the WTO. Furthermore, and as an exemption, participants with a binding coverage of non-
agricultural tariff lines of a percentage to be agreed during the negotiation, but proposed to be
35% by the chairman of the Negotiating Group, would be exempt from making tariff reductions
through the formula. Instead, members expect them to bind non-agricultural tariff lines at a
percentage, proposed to be 100% by the chairman, at an average level that does not exceed the
overall average of bound tariffs for all developing countries after full implementation of current
concessions.
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7.4 EXPECTED BENEFITS OF WTO
Benefits of WTO
1. The system helps promote peace

Peace is partly an outcome of two of the most fundamental principles of the trading
system: helping trade to flow smoothly, and providing countries with a constructive and
fair outlet for dealing with disputes over trade issues.
2. Rules make life easier for all

Decisions in the WTO are made by consensus. The WTO agreements were negotiated by
all members, were approved by consensus and were ratified in all members’ parliaments.
The agreements apply to everyone. Rich and poor countries alike have an equal right to
challenge each other in the WTO’s dispute settlement procedures.
3. Freer trade cuts the costs of living

Protectionism is expensive: it raises prices. The WTO’s global system lowers trade
barriers through negotiation and applies the principle of non-discrimination. The result is
reduced costs of production (because imports used in production are cheaper) and
reduced prices of finished goods and services, and ultimately a lower cost of living.
Food, clothes and services become cheaper. For instance, liberalisation in telephone
services is making phone calls cheaper – in the 1990s by 4% per year in developing
countries and 2% per year in industrial countries, taking inflation into account. In China,
competition from a second mobile phone company was at least part of the reason for a
30% cut in the price of a call. In Ghana the cut was 50%.
4. Trade stimulates economic growth

There are many instances where the facts show that the opportunity has been rasped –
where freer trade has been healthy for employment. The EU Commission calculates that
the creation of its Single Market means that there are somewhere in the range of 300,000
– 900,000 more jobs than there would be without the Single Market. Often, job prospects
Unit 7 42
are better in companies involved in trade. In the country a worker takes to find a new job
can be much longer in one country than for a similar worker in another country
experiencing similar conditions. In other words, some countries are better at making the
adjustments than others. This is partly because some countries have more effective
adjustment policies.
5. Governments are shielded from lobbying

One of the lessons of the protectionism that dominated the early decades of the 20 th
Century was the damage that can be caused if narrow sectoral interests gain an
unbalanced share of political influence. The result was increasingly restrictive policy
which turned into a trade war that no one won and everyone lost. Superficially, restricting
imports looks like an effective way of supporting an economic sector. But it biases the
economy against other sectors which shouldn’t be penalised – if you protect your
clothing industry, everyone else has to pay for more expensive clothes, which puts
pressure on wages in all sectors, for example. Protectionism can also escalate as other
countries retaliate by raising their own trade barriers. That’s exactly what happened in the
1920s and 30s with disastrous effects. Even the sectors demanding protection ended up
losing.
To what extent is the WTO biased towards Developed Countries?
The ‘sustainable development’ goal of the WTO embodied in its Preamble remains hollow as
many developing countries’ concerns are not reflected in negotiation agendas. Statistics today on
the gains of trade liberalisation under the WTO for developing countries in the last 10 years are
not encouraging. It is true that globalisation and liberalisation have spurred global trade, but the
benefits to the developing countries in terms of economic growth, environmental protection and
poverty alleviation on a long term basis are hardly commendable. The wealth generated by
global trade remains largely in the developed countries. As industrialised countries become
wealthier, the less developed ones are suffering greater misery and acute poverty.
Unit 7 43
Issues critical to the promotion of sustainable development in developing countries, such as

providing market access, removing environmentally harmful subsidies, and tackling
environmental measures that impede market access have remained contentious and largely
unaddressed.
One of the most common criticisms of the WTO is the non-transparent and undemocratic nature
of the WTO, the blatant manipulation of the organisation by the major powers and the refusal of
many developing countries to continue to be on the receiving end.
Agriculture – This is probably the most blatant violation of the WTO principles. WTO
Agreement on Agriculture commits governments ‘to improve market access and reduce trade-
distorting subsidies in agriculture. However a combination of pressure when the agreement was
written and manipulation since mean that the world market in agricultural commodities is not fair
at all but is actually heavily slanted in favour of the rich countries.
Mini-Fiber-Agreement (MFA) and the Agreement on Textiles and Clothing (ATC) – pre-WTO
and from 1974-1994 clothing quotas were negotiated bilaterally and governed by the MFA. As is
clear from the word quota the world of trade in clothing and textiles was most definitely not one
of free trade. Given that it is often developing countries that wish to export textiles they were
often the losers from this arrangement.
The main reason for developing countries signing the agreements was the fear of being left
behind, rather than truly being convinced of any benefit accruing to them from the agreements. It
is no exaggeration to say that developing countries are still grappling with problems of
implementation of the various agreements annexed to the WTO and striving to understand their
full ramifications on their economies.
Unit 7 44
7.4.1 Success or Failure? Depends if you are rich or poor
As with all the previous meetings, depending on your view point, the meeting was a success or a
failure. Typically, if you were from the rich bloc of countries, the meeting outcome was a
success, as European Union Trade Commissioner Peter Mandelson noted:
Today Europe has gone further in its existing commitment to eliminate its export subsidies by
setting a clear end date in 2013. I said we came to Hong Kong to do business and this shows we
meant it. We have demanded, and received, equivalent commitments from others for similar
subsidy reform. This is a genuine advance for the agriculture negotiation and for the
development goals of the Doha Round. Europe made it happen and we are pleased to have done
so.
He furher added, “We will continue to demand that others move with us, every step, and every
cut until all forms of export subsidy are ended.”
Statement by EU Trade Commissioner Peter Mandelson
But contrast this with a summary from the Third World Network:
[The] Ministerial Declaration … was imbalanced against the developing countries.

The developing countries gave in on the key market access issues of services and non-
agricultural market access. In return they did not receive any significant gain in cotton, market
access for LDCs, or “aid for trade”, the three main components of a so-called “development
package.”
As for the 2013 end-date for elimination of agricultural export subsidies, the most publicised
claim of benefit from Hong Kong, it was no victory. This greatest-distorting subsidy of all should
have been eliminated many years ago, and no price should have been asked for it.
Unit 7 45
Martin Khor, WTO Ministerial Outcome Imbalanced Against Developing Countries, Third
World Network, December 22, 2005
Why such diverging views? As has happened in the past, these views have often been so
divergent because of the audience to whom such statements are made, and for whom the deal is
beneficial. For the European Union, and other rich countries, it is in their interest to minimize
any concessions as they clearly benefit from the current international economic system. Small
gains for poor countries will thus be spun in as much of a positive light as possible, even if, as in
this WTO round, the concession for a 2013 target date to eliminate agricultural export subsidies
is a scandal given it should have been eliminated years ago. Thus a defeat can be presented as a
victory.
Martin Knor 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 states which have less negotiation power. Some examples of this bias are:
1) rich countries are able to maintain high import duties and quotas in certain products,
blocking imports from developing countries (e.g. clothing);
2) the increase in non-tariff barriers such as anti-dumping measures allowed against
developing countries;
3) the maintenance of high protection of agriculture in developed countries while
developing ones are pressed to open their markets;
4) many developing countries do not have the capacity to follow the negotiations and
participate actively in the Uruguay Round; and
5) the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement which
limits developing countries from utilizing some technology that originates from abroad in
their local systems (including medicines and agricultural products)
However, the World Trade Organisation (WTO) has been an important player in transforming
the world into a global village. But it still lags behind in his missions and visions, like we have
Unit 7 46
seen above. Another example is the Seattle Ministerial Conference the third one, which was
subject to various criticisms.
Pascal Lamy, the actual Director-General of WTO, aims to cut trade barriers, i.e cut subsidies
and reduce tariffs. We will have to wait and see whether he succeeds in this mission.
Concessions for developing countries are very weak and few in number
Martin Khor, quoted above, also went on to note: “That the EU should have held back till the last
minute before agreeing to this inferior alternative, so that it could extract even more from
developing countries, showed to what a low level the Ministerial, and the Doha negotiations
overall, have fallen in terms of development content.”
A senior Ambassador from a developing country was also quoted by Khor: “If it is so hard to get
so little from the developed countries, the negotiations will be very tough when they resume in
Geneva” giving a glimpse of the feeling of how little the developing countries gained from this
meeting.
The real prize that the major developed countries wanted out of Hong Kong was a change in the
negotiating modalities in services, so that they would have new instruments to pressurize
developing countries to open up their key services sub-sectors. Despite massive opposition from
a very large number of developing countries, including the G90, for five days, the developed
countries eventually got what they wanted
7.4.2 To what extent is the WTO biased towards developed countries?
The ‘sustainable development’ goal of the WTO embodied in its Preamble remains hollow as
many developing countries’ concerns are not reflected in negotiation agendas. Statistics today on
the gains of trade liberalisation under the WTO for developing countries in the last 10 years are
not encouraging. It is true that globalisation and liberalisation have spurred global trade, but the
benefits to the developing countries in terms of economic growth, environmental protection and
Unit 7 47
poverty alleviation on a long term basis are hardly commendable. The wealth generated by
global trade remains largely in the developed countries. As industrialised countries become
wealthier, the less developed ones are suffering greater misery and acute poverty.
Issues critical to the promotion of sustainable development in developing countries, such as

providing market access, removing environmentally harmful subsidies, and tackling
environmental measures that impede market access have remained contentious and largely
unaddressed.
One of the most common criticisms of the WTO is the non-transparent and undemocratic nature
of the WTO, the blatant manipulation of the organisation by the major powers and the refusal of
many developing countries to continue to be on the receiving end.
Agriculture – This is probably the most blatant violation of the WTO principles. WTO
Agreement on Agriculture commits governments ‘to improve market access and reduce trade-
distorting subsidies in agriculture. However a combination of pressure when the agreement was
written and manipulation since mean that the world market in agricultural commodities is not fair
at all but is actually heavily slanted in favour of the rich countries.
Mini-Fiber-Agreement (MFA) and the Agreement on Textiles and Clothing (ATC) – pre-WTO
and from 1974-1994 clothing quotas were negotiated bilaterally and governed by the MFA. As is
clear from the word quota the world of trade in clothing and textiles was most definitely not one
of free trade. Given that it is often developing countries that wish to export textiles they were
often the losers from this arrangement.
The main reason for developing countries signing the agreements was the fear of being left
behind, rather than truly being convinced of any benefit accruing to them from the agreements. It
is no exaggeration to say that developing countries are still grappling with problems of
implementation of the various agreements annexed to the WTO and striving to understand their
full ramifications on their economies.
Unit 7 48
Challenges faced by the WTO
Against this background, the WTO faces several daunting challenges. The first is to continue
bringing down tariffs on traded goods. Average penalties have fallen steadily since the GATT’s
formation but even the most open economies retain lofty barriers: for instance, America still
charges a tariff of 14.6% on imports of clothing, five times higher than its average levy.
Resistance to tariff cuts is strongest in agriculture. According to Tim Josling, a trade expert at
Stanford University, tariffs and other barriers on farm goods average a crippling 40% worldwide
and create distortions that “destroy huge amounts of value”. A new set of global farm talks is
planned to start in 1999. At the least, you might think, these could lock in impressive reforms in
Latin America and encourage further watering-down of the European Union’s Common
Agricultural Policy. But they will prove difficult: squabbles over agriculture almost sank the
Uruguay round.
The next challenge will be to assist trade in services, which is growing more quickly than trade
in goods. A fresh round of services talks is due to start in 2000. The aim will be to strengthen last
year’s agreements on telecoms, financial services and IT, as well as completing an accord on
accountancy services which is currently being negotiated. Rich countries want firm rules on
government procurement, to replace the vague existing code. Some countries, but not America,
are also keen to tackle other subjects that eluded agreement in earlier talks, such as shipping.
These will prove thorny, too, as any global talks will have to cope with a spaghetti bowl of
bilateral agreements dating back decades.
The WTO must also decide how closely to become involved in more esoteric issues, such as
antitrust rules, foreign-investment restrictions, workers’ rights and environmental protection.
These matters are conceptually complex and particularly contentious because they intrude on
what many governments consider to be domestic policy. The WTO must strike a balance
between attacking domestic policies that seriously distort trade and avoiding infringements of
national sovereignty.
Unit 7 49
Antitrust and trade overlap in all sorts of ways: when, say, a country’s regulations prevent
foreign companies from building factories or distributing their products through the same
channels as local firms; or when governments turn a blind eye to international cartels in, say, oil
or aluminium. So should the WTO be charged with drafting new rules that address this overlap?
It is well placed for the task, having addressed complex competition-related problems in its
telecoms-trade accord. If nothing else, it might hope to force the 60 or so WTO members that
have no competition law to draft one. Alas, the biggest members cannot agree on whether the
WTO should try to produce global competition rules. Europe is for, America against.
The members also disagree on whether the WTO should deal with the links between trade and
investment. The WTO has done little work on the subject and has few investment rules. Its
richest members decided to forge an investment agreement of their own at the Organisation for
Economic Co-operation and Development (OECD) in Paris. But their Multilateral Agreement on
Investment has fallen victim to squabbles over whether “strategic” industries such as
broadcasting should be included (America is keen, France bitterly opposed), and over criticism
from excluded developing countries and from environmental groups, which complain that the
agreement is biased towards multinationals. The MAI is worth salvaging, but within the WTO,
not at the OECD.
The trickiest and most emotive new issues, however, concern labour standards and the
environment. These, unlike investment rules and competition policy, are of intense interest to a
public worried about dolphins, rain forests, and maltreated workers. The WTO cannot afford to
ignore them. But developing workable international rules that do not end up as tools for
restricting trade will be difficult.
A first step in dealing with workers’ rights, offering support for a set of “core standards”,
including pronouncements on child labour, was taken at the WTO’s first summit, in 1996. The
standards, pushed by rich countries, were not made binding, in part because some developing
nations suspected that the real motive was to reduce their wage-cost advantage – and to give rich
countries an excuse to discriminate against poor-country exports – rather than to protect workers.
They have a point: if poorer countries were forced to bring labour laws up to rich-country
Unit 7 50
standards overnight, their exports would fall and their economics would be badly hurt. The WTO
seems happy to let the International Labour Organisation lead the debate until there is a broader
consensus about what sort of rules, if any, might be appropriate.
7.5 HOW IS THE WTO DIFFERENT FROM GATT?
The World Trade Organisation is not a simple extension of GATT; on the contrary, it completely
replaces its predecessor and has a very different character. Among the principal differences are
the following:
 The GATT was a set of rules, a multilateral agreement, with no institutional foundation,
only a small associated secretariat which had its origins in the attempt to establish an
International Trade Organisation in the 1940s. The WTO is a permanent institution with
its own secretariat.
 The GATT was applied on a "provisional basis" even if, after more than forty years,
governments chose to treat it as a permanent commitment. The WTO commitments are
full and permanent.
 The GATT rules applied to trade in merchandise goods. In addition to goods, the WTO
covers trade in services and trade-related aspects of intellectual property.
 While GATT was a multilateral instrument, by the 1980s many new agreements had been
added of a plurilateral, and therefore selective, nature. The agreements which constitute
the WTO are almost all multilateral and, thus, involve commitments for the entire
membership.
 The WTO dispute settlement system is faster, more automatic, and thus much less
susceptible to blockages, than the old GATT system. The implementation of WTO
dispute findings will also be more easily assured.
The "GATT 1947" will continue to exist until the end of 1995, thereby allowing all GATT
member countries to accede to the WTO and permitting an overlap of activity in areas like
dispute settlement. Moreover, GATT lives on as "GATT 1994", the amended and up-dated
Unit 7 51
version of GATT 1947, which is an integral part of the WTO Agreement and which continues to
provide the key disciplines affecting international trade in goods.
7.5.1 Conclusion
Any state or customs territory having full autonomy in the conduct of its trade policies is eligible
to accede to the WTO on terms agreed between it and WTO Members (Article XII of the WTO
Agreement).
The WTO’s Agreement on Textiles and Clothing does two things. Over a 10-year period, it
integrates the sector into GATT rules, and as part of that process it phases out quotas.
Developing countries complain that although 33 per cent of trade has been integrated as
committed, only a few quotas have actually been removed. They add that what little market
access has resulted from the implementation of the agreement has been cancelled out by
measures taken by the importing countries, such as transitional safeguards, anti-dumping actions
and discriminatory rules of origin.
The stated aim of the WTO is to promote free trade and stimulate economic growth. Many
people argue that free trade does not make ordinary people's lives more prosperous but only
results in the rich (both people and countries) becoming richer. WTO treaties have also been
accused of a partial and unfair bias toward multinational corporations and wealthy nations.
Critics contend that small countries in the WTO wield little influence, and despite the WTO aim
of helping the developing countries, the influential nations in the WTO focus on their own
commercial interests. They also claim that the issues of health, safety and environment are
steadfastly ignored.
Unit 7 52
7.6 ACTIVITIES
“it has been argued that the establishment of the WTO would reduce certain inequalities,
enabling smaller countries to enjoy more bargaining power and at the same time freeing the
major powers from the complexity of having to negotiate trade agreements with each of their
numerous trading partners”. Discuss.
7.7 SUMMARY
The World Trade Organisation was established in 1995. One of the youngest of the international
organisations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT)
established in the wake of the Second World War.
The WTO’s overriding objective is to help trade flow smoothly, freely, fairly and predictably. It
does this by:
 Assisting developing countries in trade policy issues, through technical assistance and
training programmes
 Cooperating with other international organizations
 Administering trade agreements
 Acting as a forum for trade negotiations
 Settling trade disputes
 Reviewing national trade policies
Unit 7 53
The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on
average by 6% annually. Total trade in 1997 was 14-times the level of 1950. GATT and the
WTO have helped to create a song and prosperous trading system contributing to unprecedented
growth.
The WTO was developed through a series of trade negotiations, or rounds, held under GATT.
The first rounds dealt mainly with tariff reductions but later negotiations included other areas
such as anti-dumping and non-tariff measures.
7.8 REFERENCES
Europe farm follies-Special Report on EU’s Agricultural Policy, The Economist, December
2005
Dumping without borders: How US agricultural policies are destroying the livelihoods of
Mexican Corn farmers, Oxfam Briefing Paper
A heated debate over the patenting of pigs / Main / “China-Threat” Challenges Intellectual
Property Rights, Intellectual Security
Web Sites:
The World Trade Organization Website, http://www.wto.org
Profile: World Trade Organisation, Thursday, 24 November 2005, http://www.bbc.co.uk
Unit 7 54

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International Business and Strategy 1 – MGT 4102

UNIT 7 WORLD TRADE ORGANISATION

7.1 LEARNING OBJECTIVES

By the end of this Unit, you should be able to do the following:

1. Discuss the functions and objectives of the WTO;

7.2 ARTICLE I – THE MFN

General Most-Favoured-Nation Treatment

a) Preferences in force exclusively between two or more of the territories

b) Preferences in force exclusively between two or more territories which

c) Preferences in force exclusively between the United States of America

d) Preferences in force exclusively between neighbouring countries listed

4. The margin of preference on any product in respect of which a preference is permitted

a) in respect of duties or charges on any product described in such

7.3 WHAT IS WTO?

(http://www.bbc.co.uk,Thursday, 24 November 2005, “Profile: World Trade Organisation”)

The functions of WTO are;

 Administering WTO trade agreements

 Forum for trade negotiations

 Handling trade disputes

 Monitoring national trade policies

 Training for developing countries

 Cooperation with other international organisation

Assisting Developing and Transition Economies

The WTO in Global Economic Policy-Making

economic policy-making. A separate Ministerial Declaration was adopted at the Marrakesh

Other measures concerning developing countries in the WTO agreements include:

 Trade Without Discrimination

Most-Favoured-Nation (MFN): Treating Other People Equally

National Treatment : Treating Foreigners and Locals Equally

 Freer Trade Gradually through Negotiation

 Predictability : Through Binding and Transparency

 Encouraging Development and Economic Reform

7.3.2 Brief of Different Rounds

A brief history of past trade rounds

7.3.2.1 Uruguay Round

Negotiations and the Environment

Agreement to Establish the WTO

Application of Sanitary snd Phytosanitary Measures

Trade-Related Investment Measures

Subsidies and Countervailing Measures

Trade and Intellectual Property Rights

The Agreement on Trade-Related Aspects of Intellectual Property Rights, Including Trade in

1986 – 1994 – The Uruguay Round (Punta del Este, Uruguay)

World Trade Organisation (WTO), international organisation established in 1995 as a result of

Goals of the Round

Criticism of the Round

7.3.2.2 The Post-Uruguay Round built-in Agenda

7.3.2.3 Brief of Eventual Rounds

1995 The World Trade Organisation is created in Geneva.

2005 May WTO agrees to start membership talks with Iran.

2005 November WTO approves membership for Saudi Arabia.

7.3.3 The Six WTO Ministerial conferences

1. The First WTO Ministerial Conference

2. The Second WTO Ministerial Conference

3. The Third WTO Ministerial Conference

4 The Fourth WTO Ministerial Conference

India’s commerce minister, Kamal Nath noted similar things:

“This is a Development Round, completing it is extremely important but equally