Understanding the WTO: Trade Rules and Negotiations
What is the World Trade Organization (WTO)?
The World Trade Organization (WTO) plays a crucial role in the global economy. It serves multiple functions, including:
- Facilitating the liberalization of international trade
- Providing a forum for governments to negotiate trade agreements
- Offering a platform for settling trade disputes
- Operating a system of international trade rules
The WTO as a Negotiating Forum
Fundamentally, the WTO is a venue where member governments address and resolve trade issues. The organization’s foundation is built upon negotiations, and its current activities are largely the result of past negotiations.
The most significant of these was the Uruguay Round (1986-1994), which encompassed the General Agreement on Tariffs and Trade (GATT). Currently, the WTO is hosting new negotiations under the Doha Development Agenda, launched in 2001.
The WTO’s Core: A Set of Rules
At the heart of the WTO are its agreements, negotiated and signed by the majority of the world’s trading nations. These documents establish the legal groundwork for international commerce. While governments negotiate and sign these agreements, their ultimate aim is to assist producers of goods and services, exporters, and importers in conducting their business, while also enabling governments to pursue social and environmental goals.
Key Principles of the WTO
The WTO operates based on several fundamental principles, including:
- Most Favored Nation (MFN): Treating all trading partners equally.
- National Treatment: Treating imported and domestically produced goods equally.
From GATT to the WTO: A Historical Perspective
From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for a significant portion of world trade. The Uruguay Round, which lasted seven and a half years, involved 123 countries and covered nearly all aspects of trade. It was arguably the largest trade negotiation in history.
How Does the WTO Operate?
The Ministerial Conference
The WTO’s institutional structure is headed by the Ministerial Conference, which comprises all WTO members and convenes at least every two years. Between these sessions, the General Council carries out the functions of the Conference.
Dispute Settlement
All multilateral trade agreements include provisions for dispute resolution. A breach of the rules leads to a formal process, effectively a court for trade offenses. Failure to comply can result in compensation measures and retaliation, with the approval of the General Council acting as the Dispute Settlement Body. The interlinkages between trade agreements are crucial in this context.
The Doha Round: Key Areas of Negotiation
Market Access
In agriculture, negotiations aim to open markets and reduce all forms of export subsidies and trade-distorting domestic support. For industrial products, the focus is on reducing or eliminating tariff peaks and escalation, as well as abolishing other non-tariff barriers.
TRIPS and Public Health
Ministers adopted a Declaration on TRIPS (Trade-Related Aspects of Intellectual Property Rights) and Public Health, addressing concerns about the potential implications of TRIPS for access to medicines in developing countries.
Trade and Environment
A commitment to the environment was also adopted, with governments negotiating the relationship between existing WTO rules and trade obligations arising from multilateral environmental agreements.