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 world’s trading
nations and ratified in their parliaments. The goal is to help producers
of goods and services, exporters, and importers conduct their business.
The result is assurance. Consumers and producers know that they can
enjoy secure supplies and greater choice of the finished products,
components, raw materials and services that they use. Producers and
exporters know that foreign markets will remain open to them.
The result is also a more prosperous, peaceful and accountable economic
world. Virtually all decisions in the WTO are taken by consensus among
all member countries and they are ratified by members' parliaments.
Trade friction is channelled into the WTO's dispute settlement process
where the focus is on interpreting agreements and commitments, and how
to ensure that countries' trade policies conform with them. That way,
the risk of disputes spilling over into political or military conflict
By lowering trade barriers, the WTO’s system also breaks down other
barriers between peoples and nations.
At the heart of the system — known as the multilateral trading system —
are the WTO’s agreements, negotiated and signed by a large majority of
the world’s trading nations, and ratified in their parliaments. These
agreements are the legal ground-rules for international commerce.
Essentially, they are contracts, guaranteeing member countries important
trade rights. They also bind governments to keep their trade policies
within agreed limits to everybody’s benefit.
The agreements were negotiated and signed by governments. But their
purpose is to help producers of goods and services, exporters, and
importers conduct their business.
The goal is to improve the welfare of the peoples of the member
The World Trade Organization came into being in 1995. One of the
youngest of the international organizations, the WTO is the successor to
the General Agreement on Tariffs and Trade (GATT) established in the
wake of the Second World War.
So while the WTO is still young, the multilateral trading system that
was originally set up under GATT is well over 50 years old.
The past 50 years have seen an exceptional growth in world trade.
Merchandise exports grew on average by 6% annually. Total trade in 2000
was 22-times the level of 1950. GATT and the WTO have helped to create a
strong and prosperous trading system contributing to unprecedented
The system was developed through a series of trade negotiations, or
rounds, held under GATT. The first rounds dealt mainly with tariff
reductions but later negotiations included other areas such as
anti-dumping and non-tariff measures. The last round — the 1986-94
Uruguay Round — led to the WTO’s creation.
The negotiations did not end there. Some continued after the end of the
Uruguay Round. In February 1997 agreement was reached on
telecommunications services, with 69 governments agreeing to
wide-ranging liberalization measures that went beyond those agreed in
the Uruguay Round.
In the same year 40 governments successfully concluded negotiations for
tariff-free trade in information technology products, and 70 members
concluded a financial services deal covering more than 95% of trade in
banking, insurance, securities and financial information.
In 2000, new talks started on agriculture and services. These have now
been incorporated into a broader agenda launched at the fourth WTO
Ministerial Conference in Doha, Qatar, in November 2001.
The work programme, the Doha Development Agenda (DDA), adds negotiations
and other work on non-agricultural tariffs, trade and environment, WTO
rules such as anti-dumping and subsidies, investment, competition
policy, trade facilitation, transparency in government procurement,
intellectual property, and a range of issues raised by developing
countries as difficulties they face in implementing the present WTO
The WTO agreements
How can you ensure that trade is as fair as possible, and as free as is
practical? By negotiating rules and abiding by them.
The WTO’s rules — the agreements — are the result of negotiations
between the members. The current set were the outcome of the 1986–94
Uruguay Round negotiations which included a major revision of the
original General Agreement on Tariffs and Trade (GATT).
GATT is now the WTO’s principal rule-book for trade in goods. The
Uruguay Round also created new rules for dealing with trade in services,
relevant aspects of intellectual property, dispute settlement, and trade
policy reviews. The complete set runs to some 30,000 pages consisting of
about 30 agreements and separate commitments (called schedules) made by
individual members in specific areas such as lower customs duty rates
and services market-opening.
Through these agreements, WTO members operate a non-discriminatory
trading system that spells out their rights and their obligations. Each
country receives guarantees that its exports will be treated fairly and
consistently in other countries’ markets. Each promises to do the same
for imports into its own market. The system also gives developing
countries some flexibility in implementing their commitments.
It all began with trade in goods. From 1947 to 1994, GATT was the forum
for negotiating lower customs duty rates and other trade barriers; the
text of the General Agreement spelt out important rules, particularly
Since 1995, the updated GATT has become the WTO’s umbrella agreement for
trade in goods. It has annexes dealing with specific sectors such as
agriculture and textiles, and with specific issues such as state
trading, product standards, subsidies and actions taken against dumping.
Banks, insurance firms, telecommunications companies, tour operators,
hotel chains and transport companies looking to do business abroad can
now enjoy the same principles of freer and fairer trade that originally
only applied to trade in goods.
These principles appear in the new General Agreement on Trade in
Services (GATS). WTO members have also made individual commitments under
GATS stating which of their services sectors they are willing to open to
foreign competition, and how open those markets are.
The WTO’s intellectual property agreement amounts to rules for trade and
investment in ideas and creativity. The rules state how copyrights,
patents, trademarks, geographical names used to identify products,
industrial designs, integrated circuit layout-designs and undisclosed
information such as trade secrets — “intellectual property” — should be
protected when trade is involved.
The WTO’s 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.
Judgements by specially-appointed independent experts are based on
interpretations of the agreements and individual countries’ commitments.
The system encourages countries to settle their differences through
consultation. Failing that, they can follow a carefully mapped out,
stage-by-stage procedure that includes the possibility of a ruling by a
panel of experts, and the chance to appeal the ruling on legal grounds.
Confidence in the system is borne out by the number of cases brought to
the WTO — around 300 cases in eight years compared to the 300 disputes
dealt with during the entire life of GATT (1947–94).
The Trade Policy Review Mechanism’s purpose is to improve transparency,
to create a greater understanding of the policies that countries are
adopting, and to assess their impact. Many members also see the reviews
as constructive feedback on their policies.
All WTO members must undergo periodic scrutiny, each review containing
reports by the country concerned and the WTO Secretariat.
How to become a member of the WTO
Article XII of the WTO Agreement states that accession to the WTO will
be “on terms to be agreed” between the acceding government and the WTO.
Accession to the WTO is essentially a process of negotiation — quite
different from the process of accession to other international entities,
like the IMF, which is largely an automatic process.
Because each accession Working Party takes decisions by consensus, all
interested WTO Members must be in agreement that their individual
concerns have been met and that outstanding issues have been resolved in
the course of their bilateral and multilateral negotiations.
All documentation examined by the accession Working Party during the
process of negotiation remains restricted until completion of the
Who can apply
“Any state or customs territory having full autonomy in the conduct of
its trade policies is eligible to accede to the WTO on terms agreed
between it and WTO Members”. (Article XII of the WTO Agreement).
The request for accession
The accession process commences with the submission of a formal written
request for accession by the applicant government. This request is
considered by the General Council which establishes a Working Party to
examine the accession request and, ultimately, to submit the findings of
the Working Party to the General Council for approval. The Working Party
is open to all Members of the WTO.
Submission of a memorandum on the foreign trade regime
The applicant government presents a memorandum covering all aspects of
its trade and legal regime to the Working Party. This memorandum forms
the basis for detailed fact finding by the Working Party.
Subsequent Working Party meetings will see the examination of questions
posed by WTO Members based on the information provided in the memorandum
and the replies provided by the applicant government.
Conditions of entry
After examining all aspects of the existing trade and legal regimes of
the acceding government the Working Party goes into the substantive part
of the multilateral negotiations involved in accessions. This determines
the terms and conditions of entry for the applicant government. Terms
and conditions include commitments to observe WTO rules and disciplines
upon accession and transitional periods required to make any legislative
or structural changes where necessary to implement these commitments.
At the same time, the applicant government engages in bilateral
negotiations with interested Working Party members on concessions and
commitments on market access for goods and services. The results of
these bilateral negotiations are consolidated into a document which is
part of the final “accession package”.
The final “accession package”
The “accession package” consists of three documents which represent the
results of both the multilateral and bilateral phases outlined above.
A Report of the Working Party containing a summary of proceedings and
conditions of entry and a Protocol of Accession.
Schedules of market access commitments in goods and services agreed
between the acceding government and WTO Members.
Approval of the “accession package”
Once both the Working Party's Draft Report and Protocol of Accession and
the market access commitments in goods and services are completed to the
satisfaction of members of the Working Party, the “accession package” is
adopted at a final formal meeting of the Working Party.
The documents are then presented to the General Council or the
Ministerial Conference for adoption. Once approved by the General
Council or the Ministerial Conference, the accessions package is
redistributed as a non-restricted document.
Two final documents will be issued:
The Decision of the General Council
The Protocol of Accession of the new entrant a Protocol of Accession
annexed to the Report which states that the country accedes to the WTO
Agreement, defines the Schedules and outlines final provisions for
timing of acceptance of the Protocol and full membership of the WTO.
Becoming a full member
Once approved by the General Council of Ministerial Conference, the
applicant is then free to sign the Protocol of Accession stating that it
accepts the approved “accessions package” subject to ratification in its
national parliament. Normally three months is given from signature of
the Protocol of Accession for this to take place.
Thirty days after the applicant government notifies the WTO Secretariat
that it has completed its ratification procedures, the applicant
government becomes a full Member of the WTO.
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