WORLD TRADE

ORGANIZATION

Goals
to improve the welfare of
the peoples of the
member countries.
to ensure that trade
flows as smoothly,
predictably and freely as
possible.

WTO structure
Ministerial Conference
General Council meeting as
Trade Policy Review
Body

Council for
Trade in Goods

General Council

Council for
Trade- Related Aspects
Of Intellectual
Property Rights

General Council meeting as

Dispute Settlement Body

Council for
Trade in Services

Objectives

Administering trade
agreements
Acting as a forum for trade
negotiations
Settling trade disputes
Reviewing national trade
policies
Assisting developing countries
in trade policy issues, through
technical assistance and
training programme
Cooperating with other
international organizations

World Trade Organization:

History
What GATT (and WTO) Does NOT Do
Regulate international financial
transactions and markets
Except in recent negotiations on trade in
financial services (e.g., banking, insurance)
Thats left up to IMF

Assist developing countries

Even though current Round is Doha
Development Agenda
Thats left up to World Bank

World Trade Organization:

Rounds
How negotiations take place
On Tariffs:
Tariff cuts are negotiated between principal
supplier country and principal demander country
Cuts are extended to all other members
But large countries dominate this process
In recent rounds, negotiations start with a formula for
tariff cuts, then negotiate exceptions

On Rules:
Groups of countries draft changes, then persuade
others
Again, large countries dominate

World Trade Organization:

Rounds
Do small and poor countries lose?
They need not lose, if they participate in the
process
They benefit from the rule of law: Otherwise
the large countries would be even more powerful
By grouping together, they can also exert
bargaining power

They may well lose if they do not

participate: growth of trade may exclude
them

World Trade Organization:

Today
WTO Today
Established Jan 1, 1995
Headquarters: Geneva, Switzerland
(also home of ILO, WIPO, and others)

World Trade Organization:

Today
WTOs Three Parts
GATT (Still exists, as largest part of
WTO)
GATS = General Agreement on Trade in
Services
TRIPs Agreement = Trade Related
Aspects of Intellectual Property Rights

World Trade Organization:

Today
WTOs Most Basic Principles
MFN = Most Favored Nation
Each member country should treat all members
as well as it treats its most favored nation
(i.e., the member that it treats the best)

National Treatment
Once a product or seller has entered a country,
it should be treated the same as products or
sellers that originated inside that country

(There are many exceptions to both of

these principles)

World Trade Organization:

Today
WTO Decision Making
Decisions by consensus: all member countries
must agree, at ministerial meetings
In practice, large and rich countries dominate
this process
They first agree among themselves
(This done in Green Room)
Then seek consensus based on that

Is this democratic
Yes: Every country has one vote
No: Rich countries dominate decisions

10 common
misunderstandings
about the WTO
1. The WTO dictates policy
2. The WTO is for free trade at any
cost
3. Commercial interests take
priority over development
4. and over the environment
5. and over health and safety

Cont
6. The WTO destroys jobs, worsens
poverty
7. Small countries are powerless in the
WTO
8. The WTO is the tool of powerful
lobbies
9. Weaker countries are forced to join
the WTO`
10.The WTO is undemocratic

1. its a member-driven
organization

The WTO does not tell governments how to conduct

their trade policies.
the rules of the WTO system are agreements
resulting from negotiations among member
governments.
the rules are ratified by all members
parliaments, and;
decisions taken in the WTO are generally made
by consensus among all members.

2. It all depends on what

countries want to bargain
The WTOs role is to provide the forum for
negotiating liberalization. It also provides the
rules for how liberalization can take place.
The rules written into the agreements allow
barriers to be lowered gradually so that domestic
producers can adjust.
But just how low those barriers should go is
something member countries bargain with each
other. Their negotiating positions depend on how
ready they feel they are to lower the barriers, and
on what they want to obtain from other members
in return.

3. Sustainable development
is a principal objective
The WTO agreements are full of provisions taking
the interests of development into account.
Underlying the WTOs trading system is the
fact that freer trade boosts economic growth
and supports development. In that sense,
commerce and development are good for
each other.

4. It cares about the

environment
Many provisions take environmental concerns
specifically into account.
The preamble of the Marrakesh Agreement
Establishing the World Trade Organization
includes among its objectives, optimal use of
the worlds resources, sustainable
development and environmental protection.

5. Safety concerns are built

into the WTO agreements.
The agreements were negotiated by WTO
member governments, and therefore the
agreements reflect their concerns.
Some of the agreements deal in greater
detail with product standards, and with
health and safety for food and other
products made from animals and plants. The
purpose is to defend governments rights to
ensure the safety of their citizens.

6. The WTO does not destroys jobs

nor widens the gap between rich and
poor.
The accusation is inaccurate and simplistic. Trade can
be a powerful force for creating jobs and reducing
poverty. Often it does just that. Sometimes
adjustments are necessary to deal with job losses,
and here the picture is complicated. In any case, the
alternative of protectionismis not the solution.
The relationship between trade and
employment is complex. Freer-flowing and more
stable trade boosts economic growth. It has the
potential to create jobs, it can help to reduce
poverty, and frequently it does both. The
biggest beneficiary is the country that lowers its
own trade barriers. The countries exporting to it
also gain, but less. In many cases, workers in
export sectors enjoy higher pay and greater job
security.

7. Small countries are not

powerless in the WTO
In the WTO trading system, everyone has to
follow the same rules. As a result, in the WTOs
dispute settlement procedure, developing
countries have successfully challenged some
actions taken by developed countries. Without
the WTO, these smaller countries would have
been powerless to act against their more
powerful trading partners.

8. The WTO is not a prey to

vested interests
The WTO system offers governments a means to
reduce the influence of narrow vested interests.
This is a natural result of the rounds type
of negotiation (i.e. negotiations that
encompass a broad range of sectors). The
outcome of a trade round has to be a
balance of interests. The private sector, nongovernmental organizations and other
lobbying groups do not participate in WTO
activities except in special events such as
seminars and symposiums. They can only
exert their influence on WTO decisions
through their governments.

9. Weaker countries are not

they are forced to join the
WTO

Most countries do feel that its better to

be in the WTO system than to be outside
it. Thats why the list of countries
negotiating membership includes both
large and small trading nations.
By joining the WTO, even a small country
automatically enjoys the benefits that all
WTO members grant to each other.

10. The WTO is

undemocratic
Decisions in the WTO are generally
by consensus. In principle, thats
even more democratic than majority
rule because everyone has to agree.

END