WTO

An Introduction to the WTO

CONTENT
Introduction

Evolution of WTO Functions of WTO Principles Organizational structure Four main principal of GATT The WTO as a dispute settlement forum and monitoring body Services and the WTO Benefits for business

What is the WTO?

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 worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

The World Trade Organization (WTO)

Established on 1st January 1995 .As a result of the Uruguay Round negotiations (1986-1994) Located in Geneva, Switzerland Members: 149 countries (as of 11 Dec. 2005) At its simplest: A global organization dealing with rules of trade between nations.

Evolution of the WTO

Predecessor of the WTO The GATT 47

The General Agreement on Tariffs and Trade (GATT) 1947 -the first major effort to establish international rules governing trade in goods. Though initially conceived as a provisional legal instrument, it endured for almost 50 years.
It functioned without a formal organizational framework to oversee its implementation as the proposed International Trade Organization (ITO) never came into being and the ITO Charter (aka the Havana Charter) of which GATT was only to be a part, never came into effect.

GATTs primary focus was the reciprocal reduction of tariffs which later expanded to other trade related areas. In the years leading up to the Uruguay Round, GATT expanded its competence through several rounds of trade negotiations which witnessed the formulation of complex legal instruments on specific aspects of trade, particularly disciplines on the use of non tariff barriers.

 Administers the WTO Agreements and facilitates their operation and implementation
Provides a forum for trade negotiations among member states on matters covered by the Agreements and for further liberalization of trade amongst members Responsible for the settlement of differences and disputes between members Responsible for periodic reviews of the trade policies of members

FUNCTION OF WTO

Also provides technical assistance and training for developing countries

Cooperates with other international organizations on subjects of mutual interest

Organizational structure of the WTO

Ministerial Conference- The apex body for decision making (meets every 2 years). Composition:-ministerial representatives. General Council- performs the functions of the Conference between meetings and has specific duties assigned to it by the WTO agreements. Composition:governmental representatives. The General Council also meets as the Dispute Settlement Body and the Trade Policy Review Body. Councils for Trade in Goods (oversees GATT), Trade in Services (oversees GATS) and TRIPS which report to and assist the General Council. Committees on special subjects, Committees functioning under the Councils and Committees for the Plurilateral Agreements.

Membership- developed, developing, least developed countries and economies in transition. Decision making is by consensus. If consensus is not possible decisions will be taken by a majority vote.

ADVANTAGES
- The

WTO is a forum which discusses the differences on trade between members. - Is Transparency and predictability.- Establish a system of trade rules between countries. - The WTO makes more efficient the specialization of a country with a product, getting better advantages. - Help to balance the trade between countries. - Encourages the stability of the negotiations and helps the development of a country. - Try to balance opportunities for all countries. - Dont allow that developed countries trample on less develop countries.

DISADVANTAGES
However, the WTO has often been criticized for ignoring the plight of the developing world. It is argued the benefits of free trade accrue mostly to the developed world. 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.

 The WTO regulates trade in services through the General Agreement on Trade in Services (GATS). The GATS is broadly comparable to the GATT but there are significant differences in its approach to liberalization. Services cover a wide range of activities. Under the GATS, the term services include any service in any sector except services supplied in the exercise of governmental authority. The GATS applies to all measures by Members affecting trade in services. Measures can be laws, regulations, procedures, decisions, administrative action etc., of Member governments.

Services and the WTO

 Trade in services under the GATS is defined in terms of four modes of supply. They are :(1) from the territory of one Member into the territory of any other Member (aka cross border supply of services/ Mode 1) (2) in the territory of one Member to the service consumer of any other Member (aka consumption abroad/ Mode 2) (3) by a service supplier of one Member, through commercial presence in the territory of any other Member; (aka commercial presence/ Mode 3) (4) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member (aka presence of natural persons/ Mode 4)

WTO: Benefits for business

Creation of a stable, rule based, multilateral trading regime Market access translates into market opportunities The rule based system creates certain rights of access - Security of access tariff bindings and disciplines on barriers to trade whether tariff or non tariff. It also provides non discriminatory treatment of products and services. - Stability of access the application of uniform rules in key areas of the trading process e.g. customs valuation, import licenses etc. - Rights against unfair trade practices for Domestic industry Export industry Import industry

Participating in the process

Why is it important? Improve market access through continuous lobbying through chambers of commerce, trade/product/service organizations. Overcome problem areas in international trading e.g. technical standards, high tariffs on processed goods. Expand or protect trading interests through support or opposition of new subject areas in trade negotiations. Preserve or defend markets through their governments use of the dispute resolution mechanism.