INTERNATIONAL ECONOMIC LAW EPSDA :

MONOPOLY OF DEVELOPED COUNTRIES

OVER WTO

Submitted By:
NAME-ISHA SHARMA
ENROLLMENT NO.- 04551103817
CLASS- BA. LLB
Submitted To:
SECTION-B , BATCH- 2017-2022
Ms. SOUMA BRAHMA SARKAR
YEAR- 5TH
(Assistant Professor, DME Law School )
MOBILE NO.-8800138558
TH
DATE OF PRESENTATION- 10 OCTOBER’21
 MONOPOLY OF DEVELOPED COUNTRIES OVER THE WORLD
TRADE ORGANISATION

AN INTRODUCTION TO THE WORLD TRADE ORGANISATION

The World Trade Organization (WTO) is the only global international organization dealing
with the rules of trade between nations. At its heart are the WTO agreements, negotiated and
signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is
to ensure that trade flows as smoothly, predictably and freely as possible.

The World Trade Organization (WTO) is an intergovernmental organization. Governments

use the organization to establish, revise, and enforce the rules that govern international trade 1.
It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh
Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had
been established in 1948. The WTO is the world's largest international economic
organization, with 164 member states representing over 96% of global trade and global GDP.

The WTO facilitates trade in goods, services and intellectual property among participating
countries by providing a framework for negotiating trade agreements, which usually aim to
reduce or eliminate tariffs, quotas, and other restrictions; these agreements are signed by
representatives of member governments and ratified by their legislatures. The WTO also
administers independent dispute resolution for enforcing participants' adherence to trade
agreements and resolving trade-related disputes. The organization prohibits discrimination
between trading partners, but provides exceptions for environmental protection, national
security, and other important goals.

The WTO is headquartered in Geneva, Switzerland. Ngozi Okonjo-Iweala is the seventh

Director-General of the WTO. She took office on 1 March 2021, becoming the first woman
and the first African to serve as Director-General. Her term of office will expire on 31 August
2025.

FUNCTIONING OF ITS DECISION MAKING BODY

Its top decision making body is the Ministerial Conference, which is composed of all member
states and usually convenes biannually, the consensus is emphasized in all decisions. Day-to-

1
International Political Economy; Sixth edition. Pp 51-52
day functions are handled by the General Council, made up of representatives from all
members.

A Secretariat of over 600 personnel, led by the Director-General and four deputies, provides
administrative, professional, and technical services. The WTO's annual budget is roughly 220
million USD, which is contributed by members based on their proportion of international
trade.

Studies show the WTO has boosted trade and reduced trade barriers. It has also influenced
trade agreement generally; a 2017 analysis found that the vast majority of preferential trade
agreements (PTAs) up to that point explicitly reference the WTO, with substantial portions of
text copied from WTO agreements. Goal 10 of the United Nations Sustainable Development
Goals also referenced WTO agreements as instruments of reducing inequality.

 However, through various observations it is suggested that the benefits of WTO-facilitated

free trade are not shared equally, citing the outcomes of negotiations and data showing a
continually widening gap between rich and poor nations.

DISPUTE SETTLEMENT BODY IN WORLD TRADE ORGANISATION

The WTO's dispute-settlement system "is the result of the evolution of rules, procedures and
practices developed over almost half a century under the GATT 1947". In 1994, the WTO
members agreed on the Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994. 

Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading
system, and as a "unique contribution to the stability of the global economy". The WTO’s
procedure underscores the rule of law, and it makes the trading system more secure and
predictable. The system is based on clearly-defined rules, with timetables for completing a
case. First rulings are made by a panel and endorsed (or rejected) by the WTO’s full
membership. Appeals based on points of law are possible.

However, the point is not to pass judgement. The priority is to settle disputes, through
consultations if possible. By January 2008, only about 136 of the nearly 369 cases had
reached the full panel process. Most of the rest have either been notified as settled “out of
court” or remain in a prolonged consultation phase — some since 1995.
WTO members have agreed that, if they believe fellow-members are violating trade rules,
they will use the multilateral system of settling disputes instead of taking action unilaterally2.

The operation of the WTO dispute settlement process involves case-specific panels appointed
by the Dispute Settlement Body (DSB), the Appellate Body, The Director-General and the
WTO Secretariat, arbitrators, and advisory experts.

The priority is to settle disputes, preferably through a mutually agreed solution, and provision
has been made for the process to be conducted in an efficient and timely manner so that "If a
case is adjudicated, it should normally take no more than one year for a panel ruling and no
more than 16 months if the case is appealed... If the complainant deems the case urgent,
consideration of the case should take even less time. WTO member nations are obliged to
accept the process as exclusive and compulsory.

According to a 2018 study in the Journal of Politics, states are less likely and slower to
enforce WTO violations when the violations affect states in a diffuse manner. This is because
states face collective action problems with pursuing litigation: they all expect other states to
carry the costs of litigation.

A 2016 study in International Studies Quarterly challenges that the WTO dispute settlement
system leads to greater increases in trade.

However, the dispute settlement system cannot be used to resolve trade disputes that arise
from political disagreements. When Qatar requested the establishment of a dispute panel
concerning measures imposed by the UAE, other GCC countries and the US were quick to
dismiss its request as a political matter, stating that national security issues were political and
not appropriate for the WTO dispute system.

PRINCIPLES OF THE WORLD TRADE ORGANISATION

The WTO follows certain principles which are as follows;

 Non-discrimination.
 Reciprocity.
 Binding and enforceable commitments.
 Transparency.
2
Settling disputes: a Unique Contribution Archived 14 March 2007 at the Wayback Machine, WTO Official
site.
  Safety values.

Disputes in the WTO are essentially about broken promises. WTO members have agreed that
if they believe fellow-members are violating trade rules, they will use the multilateral system
of settling disputes instead of taking action unilaterally. That means abiding by the agreed
procedures, and respecting judgements.

A dispute arises when one country adopts a trade policy measure or takes some action that
one or more fellow-WTO members considers to be breaking the WTO agreements, or to be a
failure to live up to obligations. A third group of countries can declare that they have an
interest in the case and enjoy some rights.

A procedure for settling disputes existed under the old GATT, but it had no fixed timetables,
rulings were easier to block, and many cases dragged on for a long time inconclusively. The
Uruguay Round agreement introduced a more structured process with more clearly defined
stages in the procedure. It introduced greater discipline for the length of time a case should
take to be settled, with flexible deadlines set in various stages of the procedure. The
agreement emphasizes that prompt settlement is essential if the WTO is to function
effectively

The Uruguay Round agreement also made it impossible for the country losing a case to block
the adoption of the ruling. Under the previous GATT procedure, rulings could only be
adopted by consensus, meaning that a single objection could block the ruling. Now, rulings
are automatically adopted unless there is a consensus to reject a ruling — any country
wanting to block a ruling has to persuade all other WTO members (including its adversary in
the case) to share its view.

Although much of the procedure does resemble a court or tribunal, the preferred solution is
for the countries concerned to discuss their problems and settle the dispute by themselves.
The first stage is therefore consultations between the governments concerned, and even when
the case has progressed to other stages, consultation and mediation are still always possible.

Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in
another guise), which consists of all WTO members. The Dispute Settlement Body has the
sole authority to establish “panels” of experts to consider the case, and to accept or reject the
panels’ findings or the results of an appeal. It monitors the implementation of the rulings and
recommendations, and has the power to authorize retaliation when a country does not comply
with a ruling.

But even after having a systematic platform for dispute resolution in the WTO the monopoly
of the developed countries strike in creating biasness towards the developing countries.

DECISION MAKING IN WORLD TRADE ORGANISATION

It is observed that the WTO describes itself as "a rules-based, member-driven organization-all
decisions are made by the member governments, and the rules are the outcome of
negotiations among members". The WTO Agreement foresees votes where consensus cannot
be reached, but the practice of consensus dominates the process of decision-making.

Richard Harold Steinberg (2002) has also argued that although the WTO's consensus
governance model provides law-based initial bargaining, trading rounds close through power-
based bargaining favouring Europe and the U.S., and may not lead to Pareto improvement.

DISADVANTAGES FACED BY DEVELOPING COUNTRIES IN THE WORLD

TRADE ORGANISATION

 However, the WTO has often been criticised for trade rules which are still
unfavourable towards developing countries. Many developed countries went through a period
of tariff protection; this enabled them to protect new, emerging domestic industries. Ha Joon
Chang argues WTO trade rules are like 'pulling away the ladder they used themselves to
climb up' (Kicking away the ladder at Amazon)

 Free trade may prevent developing economies develop their infant industries. For
example, if a developing economy was trying to diversify their economy to develop a new
manufacturing industry, they may be unable to do it without some tariff protection.

 WTO is being overshadowed by new TIPP trade deals. These deals are negotiated
away from WTO and focuses mainly on US and EU. It excludes China, Russia, India, Brazil
and South Africa. It threatens to diminish the global importance of WTO

 Difficulty of making progress. WTO trade deals have been quite difficult to form
consensus. Various rounds have taken many years to slowly progress. It results in countries
seeking alternatives such as TIPP or local bilateral deals.
 WTO trade deals still encompass a lot of protectionism in areas like agriculture.
Protectionist tariffs which primarily benefit richer nations, such as the EU and US.

 WTO has implemented strong defence of TRIPs ‘Trade Related Intellectual Property’
rights These allow firms to implement patents and copyrights. In areas, such as life-saving
drugs, it has raised the price and made it less affordable for developing countries.

 WTO has rules which favour multinationals. For example, 'most favoured nation'
principle means countries should trade without discrimination. This has advantages but can
mean developing countries cannot give preference to local contractors, but may have to
choose foreign multinationals - whatever their history in repatriation of profit, investment in
area.

The WTO derives most of the income for its annual budget from contributions by its
Members. These are established according to a formula based on their share of international
trade. The top 5 among the various members are The United States of America , China,
Germany, Japan and The United Kingdom. It is observed that due consideration is given to
these countries while coming to a decision and specially to the US and European Countries.

Since its creation in 1995, the World Trade Organization (WTO) has worked to maintain and
develop international trade. As one of the largest international economic organizations
(alongside the International Monetary Fund (IMF) and the World Bank), it has strong
influence over trading rules and agreements, and thus has the ability to affect a country's
economy profoundly. WTO's policies aim to balance tariffs and other forms of economic
protection with a trade liberalization policy, and to "ensure that trade flows as smoothly,
predictably and freely as possible". Indeed, the WTO claims that its actions "cut living costs
and raise standards, stimulate economic growth and development, help countries develop, and
give the weak a stronger voice." Statistically speaking, global trade has consistently grown
between one and six percent per annum over the past decade, and US$38.8 billion were
allocated to Aid for Trade in 2016.

Yet several criticisms of the WTO have arisen over time from a range of fields, including
economists such as Dani Rodrik and Ha Joon Chang, and anthropologists such as Marc
Edelman, who have argued that the institution "only serves the interests of multinational
corporations, undermines local development, penalizes poor countries, and is increasing
inequality", and have argued that some agreements about agriculture and pharmaceutical
goods have led to restricted access to food and healthcare, thus causing large numbers of
deaths. Several factors are alleged to contribute to these conditions, including but not limited
to: the most favoured nation rule (MFN), national treatment policies, and failure to regard
the infant industry argument. Critics argue that the policies that support these principles fail
to protect developing nations, and in some cases take advantage of them.

CONCLUSION

1. The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations.

2. Its top decision making body is the Ministerial Conference, which is composed of all
member states and usually convenes biannually, the consensus is emphasized in all
decisions. Day-to-day functions are handled by the General Council, made up of
representatives from all members.

3. Disputes in the WTO are essentially about broken promises. WTO members have
agreed that if they believe fellow-members are violating trade rules, they will use the
multilateral system of settling disputes instead of taking action unilaterally. That
means abiding by the agreed procedures, and respecting judgements.

4. The developing countries face various disadvantages even after being a member of the
WTO who in reality promises to remove the inequalities.

5. The decisions of the developed countries while making decisions are considered of
utmost importance.

6. Therefore, there is a monopoly of the developed countries over the WTO leading to
biasness towards the developing countries.