World Trade Organisation

What is the WTO?

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization deals with :
regulation of trade between participating countries it provides a framework for negotiating and formalizing trade agreements

It has a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments

 The WTO was born out of negotiations, and everything the WTO does is the result of negotiations.

The bulk of the WTOs current work comes from the 198694 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).
The WTO is currently the host to new negotiations, under the Doha Development Agenda launched in 2001.

History
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation known as the World Bank and the International Monetary Fund. The ITO was to be a United Nations specialized agency . But the ITO treaty was not approved by the U.S. and a few other signatories and never went into effect.

Functions
Oversees the implementation, administration and operation of the covered agreements Provides a forum for negotiations and for settling disputes It is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making

 The assistance of developing, least-developed and lowincome countries in transition to adjust to WTO rules and disciplines through technical cooperation and training Centre of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization Cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank

Organizational structure
Council for Trade in Goods
There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees.

Council for Trade-Related Aspects of Intellectual Property Rights

Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field.

Council for Trade in Services

The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required

Trade Negotiations Committee

The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's directorgeneral. As of June 2012 the committee was tasked with the Doha Development Round.

The Service Council has three subsidiary bodies:

Financial services
Domestic regulations

GATS rules and specific commitments

The General council has several different committees, working groups, and working parties. There are committees on the following Committees: Trade and Environment Trade and Development Regional Trade Agreements Balance of Payments Restrictions; and Budget Finance and Administration Working parties: Accession Working Groups: Trade Debt and finance Trade and technology transfer

Benefits of the WTO trading system

1. The system helps to keep the 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. It is also an outcome of the international confidence and cooperation that the system creates and reinforces.

2. The system allows disputes to be handled Constructively There could be a down side to trade liberalization and expansion. More trade means more opportunities for disputes to arise. Left to themselves, those disputes could lead to serious conflict. But in reality, a lot of international trade tension is reduced because countries can turn to organizations, in particular the WTO, to settle their trade disputes.

3. A system based on rules rather than power makes 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. Rich and poor countries alike have an equal right to challenge each other in the WTOs dispute settlement
4. Free trade cuts the cost of living Protectionism is expensive: it raises prices. The WTOs global system lowers trade barriers through negotiation and applies the principle of non-discrimination. The result is reduced costs of production and reduced prices of finished goods and services, and ultimately a lower cost of living.

5. It gives consumers more choice, and a broader range of qualities to choose from Think also of the things people in other countries can have because they buy exports from us and elsewhere. Look around and consider all the things that would disappear if all our imports were taken away from us. Imports allow us more choiceboth more goods and services to choose from, and a wider range of qualities. Even the quality of locally-produced goods can improve because of the competition from imports.
6. Trade raises incomes The WTOs own estimates for the impact of the 1994 Uruguay Round trade deal were between $109 billion and $510 billion added to world income.

7. The basic principles make the system economically more efficient, and they cut costs Trade allows a division of labour between countries. It allows resources to be used more appropriately and effectively for production. But the WTOs trading system offers more than that. It helps to increase efficiency and to cut costs even more because of important principles enshrined in the system. 8. The system encourages good government The rules include commitments not to backslide into unwise policies. Protectionism in general is unwise because of the damage it causes domestically and internationally, as we have already seen.

Developing Countries
About two thirds of the WTOs around 150 members are developing countries. They play an increasingly important and active role in the WTO because of their numbers, because they are becoming more important in the global economy, and because they increasingly look to trade as a vital tool in their development efforts.

The WTO deals with the special needs of developing countries in three ways: the WTO agreements contain special provisions on developing countries the Committee on Trade and Development is the main body focusing on work in this area in the WTO, with some others dealing with specific topics such as trade and debt, and technology transfer

the WTO Secretariat provides technical assistance (mainly training of various kinds) for developing 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 has a special section (Part 4) 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:

Extra time for developing countries to fulfill their commitments. 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).
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).

Least-developed countries
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 leastdeveloped countries products. A year later, in October 1997, six international organizations including the WTO launched the Integrated Framework, a joint technical assistance programme exclusively for leastdeveloped countries. In 2002, the WTO adopted a work programme for leastdeveloped countries. It contains several broad elements including-improved market access; more technical assistance; support for agencies working on the diversification of leastdeveloped countries economies

On the flip side

Is this business of lowering trade tariffs good or bad?

The way the rules are working now, its good for rich countries, and bad for poor countries, because the former control the WTO and use this forum to further their interests. By means of the WTO, rich countries force poor countries to lower trade tariffs and barriers, so that their products can be sold without restrictions, but there is no correspondence in the opposite direction, rich countries dont always let poor countries products in. Since its inception, the WTO has established rules that restrict national sovereignty. With the WTO rules, a company can, through its government, sue another country for an environmental law that it might disagree with, alleging that it is an impediment to trade.

 The suit is reviewed by an internal WTO committee and the trial takes place in secret. In a word, the entire process is hidden from public view. But if the verdict is against the country brought to trial, then it has practically no choice: it must change its laws. Domestic legislation thus struck down might have been enacted to protect citizens, and whats worse is that laws are invalidated in a process that is totally undemocratic.

But arent the poor countries the majority within the WTO?
The poor countries have a very difficult time defending themselves within the WTO. The WTOs internal rules say that each country has one vote, and that a vote from a rich country is equal to a vote from a poor country.
But decisions are not commonly taken through a voting process in the WTO, but rather supposedly by consensus, in other words no deal is struck if all countries are not in agreement.

 What happens, then, is that the rich countries gather together and make the rules, without taking into consideration poor countries demands. Generally the trade representative of the USA, Canada, the majority of the Europeans, Australia, in all some 20 rich countries, who then invite some developing countries, whose governments are enthusiastic supporters of free trade. It is in these restricted meetings that deals are struck, and then immense pressure is brought to bear on the other hundred and some-odd countries. A poor country that protests, that doesnt accept the rich countries rules, is threatened by harsh economic sanctions.

Why dont the poor countries leave the WTO if its not in their best interests?
They dont leave because they would face threats from the rich countries.
Lets see a pertinent example from a poor country. Imagine the case of Mexico if, for example, it left the WTO and the United States stopped buying its goods. Of everything Mexico sells abroad, almost all of it (90%) is sold to the USA. The same the other way around. Almost everything (90%) Mexico buys abroad comes from the USA. If the United States staged a boycott of Mexican goods, the country would suffer serious economic problems.

 It is for the same reason that poor countries join the WTO even though things go so wrong for them once they are members.

Functional Processes

Decision-making
The WTO describes itself as "a rules-based, memberdriven 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.

Dispute settlement
In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994. Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as a "unique contribution to the stability of the global economy".

 The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgments by specially appointed independent experts are based on interpretations of the agreements and individual countries commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards. The WTO organizes hundreds of technical cooperation missions to developing countries annually. It also holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help developing countries develop the skills and infrastructure needed to expand their trade.

Outreach
The WTO maintains regular dialogue with nongovernmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.