WTO – the global trading system

Knut R. Sørlie, Assistant Director

28 August 2007
Russian delegation – presidential initiative
WTO - background

• Built on GATT (1948), established in 1995

• 151 member countries – Secretariat in Geneva
• Member-driven organisation – cooperation between
states/governments
• The power is in the committee-structure, where civil
servants from the member countries are participating
• Decisions based on consensus
What is WTO doing (I)?

• WTO is administering the existing agreements

• WTO is a forum for negotiations of new trade

rules and liberalisation of the world trade

• WTO has a dispute settlement instrument to solve

trade conflicts between member states
What is WTO doing (II)?

• WTO is regularly doing Trade Policy Reviews of

individual members

• WTO assists in technical assistance and capacity

building programmes for developing countries

• WTO co-operate with other global institutions

WTO’s Basic Principles

• WTO should secure non-discrimination through two

set of principles:

• Most Favoured Nation (MFN-principle)

(non-discrimination between countries)

• National Treatment (NT-principle)

(non-discrimination between national and foreign
companies/products/services
What is WTO covering?

• Trade in industrial goods (GATT)

• Trade in services (GATS) – from 1995
• Trade in agriculture (AoA) – from 1995
• Intellectual property rights (TRIPS) – from 1995
• In addition: underlying specific agreements on anti-
dumping, subsidies, technical barriers to trade,
veterinary and phytosanitary rules, import licensing,
customs valuation etc
What shall WTO prevent?

• Unpredictable rules - there is a commitment for

binding rules in the WTO
• Discrimination – through the principles MFN and
NT
• Protectionism – through progressive liberalisation
via negotiations
• Abuse of the big traders power through the
rules-based system and a dispute settlement
instrument
The ongoing trade negotiations – the
Doha round is controversial

• Started in November 2001 in Doha, Qatar – called a

developing round
• Aiming at reforming the trading system in order to
take better into account the interests of the
developing countries
• Many different groupings of members with different
interests on the different negotiating topics
• Bigger cuts in tariffs and subsidies than previous
trading rounds not least in agriculture, but also for
trade in industrial goods
What is the negotiations about?

• Market access for industrial products/fish (NAMA)

• Agriculture – reductions of domestic subsidies,

export support and tariffs

• Liberalisation of services in all modes of supply

(cross-border, consumption abroad, establishment
and temporary movement of persons)
What is the negotiations about (II)?

• Reform of rules on antidumping and subsidies

• Trade facilitation (the movement of goods across

borders)

• And some other minor issues

Challenges for the WTO

• Most important: how to secure a successful

conclusion of the Round

• How to strengthen the policing of the bilateral free

trade agreements (FTA) which can erode the non-
discrimination principle in the long run

• The development role of WTO

• The functioning of the dispute instrument

Challenges for the WTO

• Accession of new members, most importantly, Russia

• The coherence agenda (WTO’s role vis-à-vis other

global institutions)

• The agenda for future negotiations – the broadening

of the trade agenda