World Trade Organisation

The World Trade Organization (WTO) is an international organization designed to

supervise and liberalize international trade. The WTO came into being on January 1, 1995,
and is the successor to the General Agreement on Tariffs and Trade (GATT), which was
created in 1947, and continued to operate for almost five decades as a de facto international
organization.
The World Trade Organization deals with the rules of trade between nations at a near-global
level; it is responsible for negotiating and implementing new trade agreements, and is in
charge of policing member countries' adherence to all the WTO agreements, signed by the
bulk of the world's trading nations and ratified in their parliaments. Most of the WTO's current
work comes from the 1986-94 negotiations called the Uruguay Round, and earlier negotiations
under the GATT. The organization is currently the host to new negotiations, under the Doha
Development Agenda (DDA) launched in 2001.
The WTO is governed by a Ministerial Conference, which meets in every two years; a General
Council, which implements the conference's policy decisions and is responsible for day-to-day
administration; and a director-general, who is appointed by the Ministerial Conference. The
WTO's headquarters are in Geneva, Switzerland.

MISSION, FUNCTIONS AND PRINCIPLES

The WTO's stated goal is to improve the welfare of the peoples of its member countries,
specifically by lowering trade barriers and providing a platform for negotiation of trade.
Its main mission is "to ensure that trade flows as smoothly, predictably and freely as possible".
This main mission is further specified in certain core functions serving and safeguarding five
fundamental principles, which are the foundation of the multilateral trading system.

FUNCTIONS
Among the various functions of the WTO, these are regarded by analysts as the most
important:
• It oversees the implementation, administration and operation of the covered agreements.
• It provides a forum for negotiations and for settling disputes.
• Additionally, it is the WTO's duty to review the national trade policies, and to ensure
the coherence and transparency of trade policies through surveillance in global
economic policy-making.
• Another priority of the WTO is the assistance of developing, least-developed and low-
income countries in transition to adjust to WTO rules and disciplines through technical
cooperation and training.
• The WTO is also a center of economic research and analysis: regular assessments of the
global trade picture in its annual publications and research reports on specific topics are
produced by the organization.
• Finally, the WTO cooperates closely with the two other components of the Bretton
Woods system, the IMF and the World Bank.

PRINCIPLES OF THE TRADING SYSTEM

The WTO establishes a framework for trade policies; it does not define or specify outcomes.
That is, it is concerned with setting the rules of the trade policy games. Five principles are of
particular importance in understanding both the pre-1994 GATT and the WTO:

• Nondiscrimination. It has two major components: the most favoured nation (MFN)
rule, and the national treatment policy. Both are embedded in the main WTO rules on
goods, services, and intellectual property, but their precise scope and nature differ
across these areas. The MFN rule requires that a WTO member must apply the same
conditions on all trade with other WTO members; i.e. a WTO member has to grant the
most favorable conditions under which it allows trade in a certain product type to all
other WTO members. "Grant someone a special favour and you have to do the same for
all other WTO members." National treatment means that imported and locally-produced
goods should be treated equally (at least after the foreign goods have entered the
market) and was introduced to tackle non-tariff barriers to trade (e. g. technical
standards, security standards et al. discriminating against imported goods).
• Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise
because of the MFN rule, and a desire to obtain better access to foreign markets. A
related point is that for a nation to negotiate, it is necessary that the gain from doing so
be greater than the gain available from unilateral liberalization; reciprocal concessions
intend to ensure that such gains will materialize.

• Binding and enforceable commitments. The tariff commitments made by WTO

members in a multilateral trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules establish "ceiling bindings": a country
can change its bindings, but only after negotiating with its trading partners, which could
mean compensating them for loss of trade. If satisfaction is not obtained, the
complaining country may invoke the WTO dispute settlement procedures.

• Transparency. The WTO members are required to publish their trade regulations, to
maintain institutions allowing for the review of administrative decisions affecting trade,
to respond to requests for information by other members, and to notify changes in trade
policies to the WTO. These internal transparency requirements are supplemented and
facilitated by periodic country-specific reports (trade policy reviews) through the Trade
Policy Review Mechanism (TPRM). The WTO system tries also to improve
predictability and stability, discouraging the use of quotas and other measures used to
set limits on quantities of imports.

• Safety valves. In specific circumstances, governments are able to restrict trade. There
are three types of provisions in this direction: articles allowing for the use of trade
measures to attain noneconomical objectives; articles aimed at ensuring "fair
competition"; and provisions permitting intervention in trade for economic reasons.[37]
FORMAL STRUCTURE
According to WTO rules, all WTO members may participate in all councils, committees, etc., except
Appellate Body, Dispute Settlement panels, and plurilateral committees.

Highest level: Ministerial Conference

The topmost decision-making body of the WTO is the Ministerial Conference, which has to meet at least
every two years. It brings together all members of the WTO, all of which are countries or separate customs
territories. The Ministerial Conference can make decisions on all matters under any of the multilateral trade
agreements.
Second level: General Council
The daily work of the ministerial conference is handled by three groups: the General Council, the Dispute
Settlement Body, and the Trade Policy Review Body. All three consist of the same membership -
representatives of all WTO members - but each meets under different rules.
1. The General Council, the WTO’s highest-level decision-making body in Geneva, meets regularly to carry
out the functions of the WTO. It has representatives (usually ambassadors or equivalent) from all member
governments and has the authority to act on behalf of the ministerial conference which only meets about every
two years. The council acts on behalf on the Ministerial Council on the entire WTO affairs. The current
chairman is Amb. Muhamad Noor Yacob (Malaysia).
2. The Dispute Settlement Body is made up of all member governments, usually represented by ambassadors
or equivalent. The current chairperson is H.E. Mr. Mr. Bruce Gosper (Australia).
3. The WTO General Council meets as the Trade Policy Review Body (TPRB) to undertake trade policy
reviews of Members under the TRPM. The TPRB is thus open to all WTO Members. The current chairperson
is H.E. Ms. Claudia Uribe (Colombia).

Third level: Councils for Trade

The Councils for Trade work under the General Council. There are three councils - Council for Trade in
Goods, Council for Trade-Related Aspects of Intellectual Property Rights, and Council for Trade in Services -
each council works in different fields. Apart from these three councils, six other bodies report to the General
Council reporting on issues such as trade and development, the environment, regional trading arrangements
and administrative issues.
1. Council for Trade in Goods- The workings of the General Agreement on Tariffs and Trade (GATT) which
covers international trade in goods, are the responsibility of the Council for Trade in Goods. It is made up of
representatives from all WTO member countries. The current chairperson is Amb. Yonov Frederick Agah
(Nigeria).
2. 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.
3. 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’s open to all WTO members, and can create subsidiary bodies as required.

Fourth level: Subsidiary Bodies

There are subsidiary bodies under each of the three councils.
1. The Goods Council- subsidiary under the Council for Trade in Goods. It has 11 committees consisting of
all member countries, dealing with specific subjects such as agriculture, market access, subsidies, anti-
dumping measures and so on. Committees include the following:
• Information Technology Agreement (ITA) Committee
• State Trading Enterprises
• Textiles Monitoring Body - Consists of a chairman and 10 members acting under it.
• Groups dealing with notifications - process by which governments inform the WTO about new
policies and measures in their countries.

2. The Services Council- subsidiary under the Council for Trade in Services which deals with financial
services, domestic regulations and other specific commitments.

3. Dispute Settlement panels and Appellate Body- subsidiary under the Dispute Settlement Body to resolve
disputes and the Appellate Body to deal with appeals.

The WTO operates on a one country, one vote system, but actual votes have never been taken. Decision
making is generally by consensus, and relative market size is the primary source of bargaining power. The
advantage of consensus decision-making is that it encourages efforts to find the most widely acceptable
decision. Main disadvantages include large time requirements and many rounds of negotiation to develop a
consensus decision, and the tendency for final agreements to use ambiguous language on contentious points
that makes future interpretation of treaties difficult.

DISPUTE SETTLEMENT BODY

Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as a
"unique contribution to the stability of the global economy". WTO members have agreed that, if they believe
fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of
taking action unilaterally.
The operation of the WTO dispute settlement process involves
The DSB panels, the Appellate Body, the WTO Secretariat, arbitrators, independent experts and several
specialized institutions.
The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body
(DSB). Like the General Council, the DSB is composed of representatives of all WTO Members. The DSB is
responsible for administering the DSU, i.e. for overseeing the entire dispute settlement process. If a member
state considers that a measure adopted by another member state has deprived it of a benefit accruing to it
under one of the covered agreements, it may call for consultations with the other member state. If
consultations fail to resolve the dispute within 60 days after receipt of the request for consultations, the
complainant state may request the establishment of a panel. It is not possible for the respondent state to
prevent or delay the establishment of a panel, unless the DSB by consensus decides otherwise. The panel,
normally consisting of three members appointed ad hoc by the Secretariat, sits to receive written and oral
submissions of the parties, on the basis of which it is expected to make findings and conclusions for
presentation to the DSB. The proceedings are confidential, and even when private parties are directly
concerned, they are not permitted to attend or make submissions separate from those of the state in question.
The final version of the panel's report is distributed first to the parties, and two weeks later it is circulated to
all the members of the WTO. The report must be adopted at a meeting of the DSB within 60 days of its
circulation, unless the DSB by consensus decides not to adopt the report or a party to the dispute gives notice
of its intention to appeal. A party may appeal a panel report to a standing Apellate Body, but only on issues of
law, and legal interpretations developed by the panel. Members may express their views on the report of the
Appellate Body, but they cannot derail it: an Apellate Body report shall be adopted by the DSB and
unconditionally accepted by the parties, unless the DSB decides by consensus within thirty days of its
circulation not to adopt the report.
ACCESSION AND MEMBERSHIP
The process of becoming a WTO member is unique to each applicant country, and the terms of accession are
dependent upon the country's stage of economic development and current trade regime. The process takes
about five years, on average, but it can last more if the country is less than fully committed to the process or if
political issues interfere. As is typical of WTO procedures, an offer of accession is only given once consensus
is reached among interested parties.

Members and Observers

The WTO has 151 members (almost all of the 123 nations participating in the Uruguay Round signed on at its
foundation, and the rest had to get membership).