WTO and International Trade Institutions

Introduction

The World Trade Organization (WTO) is the principal global institution dealing with the rules of international trade. It provides a framework for negotiating trade rules, monitoring trade policies and resolving certain trade disputes.

The WTO emerged from the post-war trading system that developed through the General Agreement on Tariffs and Trade (GATT).

World Trade Organization

World Trade Organization: The international organization responsible for administering the global framework of multilateral trade rules.

The WTO was established in 1995 as a result of the Uruguay Round of trade negotiations.

General Agreement on Tariffs and Trade

GATT: The multilateral agreement that established important rules for international trade in goods and served as the foundation of the post-war multilateral trading system before the creation of the WTO.

GATT 1947: The original multilateral agreement concerning trade in goods.

GATT 1994: The goods-trade agreement incorporated into the WTO legal framework.

Core WTO Principles

Most-Favoured-Nation Treatment: A principle generally requiring WTO members to extend specified trade advantages granted to one member to other members, subject to permitted exceptions.

National Treatment: The principle that imported products, after entering the market under applicable rules, should generally receive treatment no less favourable than comparable domestic products.

Tariff: A customs duty imposed on imported goods.

Tariff Binding: A commitment not to raise a tariff above an agreed maximum level.

Transparency: The principle that trade rules and measures should be sufficiently clear and publicly available.

WTO Agreements

The WTO legal framework includes agreements concerning:

• Trade in goods
• Trade in services
• Intellectual property
• Dispute settlement
• Trade policy review
• Agriculture
• Subsidies
• Anti-dumping measures
• Technical barriers
• Sanitary and phytosanitary measures

Trade in Services

General Agreement on Trade in Services: WTO agreement establishing rules concerning international trade in services.

Services Trade: International transactions involving services rather than physical goods.

Mode of Supply: The way in which a service is supplied internationally.

Intellectual Property

TRIPS: WTO agreement concerning trade-related aspects of intellectual property rights.

It addresses areas such as:

• Copyright
• Trademarks
• Patents
• Geographical indications
• Industrial designs
• Trade secrets

Trade Barriers

Tariff Barrier: A trade restriction based on customs duties.

Non-Tariff Measure: A government measure other than a tariff that can affect international trade.

Import Quota: A quantitative limit on imports.

Import Licensing: A requirement that importers obtain authorization before importing specified goods.

Technical Barrier to Trade: A technical regulation, standard or conformity-assessment procedure that may affect trade.

Sanitary and Phytosanitary Measure: A measure concerning food safety and animal or plant health.

Trade Remedies

Anti-Dumping Measure: A trade remedy applied under specified conditions against imports considered to be dumped and causing or threatening injury to a domestic industry.

Dumping: Exporting a product at a price below a specified benchmark, such as its normal value, under applicable trade rules.

Countervailing Measure: A trade remedy addressing subsidized imports that cause or threaten injury under applicable rules.

Safeguard Measure: A temporary trade restriction used under specified conditions to protect a domestic industry from serious injury caused by increased imports.

WTO Dispute Settlement

WTO Dispute Settlement: The institutional process through which WTO members resolve disputes concerning WTO agreements.

Dispute Settlement Body: The WTO body responsible for administering the dispute settlement system.

Panel: A group established to examine a WTO dispute and issue findings.

Appellate Review: Review of legal issues arising from a panel report under the WTO dispute-settlement framework, noting that the WTO dispute settlement system has faced major institutional disruptions in recent years.

Trade Liberalization

Trade Liberalization: Reduction of barriers to international trade.

Free Trade: Trade conducted with minimal or no tariffs and other restrictions, subject to the applicable legal framework.

Trade Facilitation: Measures designed to simplify and accelerate international trade procedures.

Regional Trade Agreement: An agreement among countries providing preferential trade arrangements.

Free Trade Area: A group of economies in which internal trade barriers are reduced or eliminated while members generally retain their own external trade policies.

Customs Union: A group of economies that removes internal tariffs and applies a common external tariff toward non-members.

Common Market: A deeper form of economic integration allowing freer movement of goods and services and, depending on the arrangement, factors of production.

Preferential Trade

Preferential Trade Agreement: An agreement granting participating countries trade advantages not necessarily extended to all trading partners.

Rules of Origin: Criteria used to determine the country of origin of goods for trade-policy purposes.

Trade Preference: Preferential access granted to specified goods or countries.

International Trade Institutions Beyond WTO

International trade governance also involves:

United Nations Conference on Trade and Development: A UN body focused on trade, investment, development and issues affecting developing countries.

International Trade Centre: A joint agency of the WTO and the United Nations that supports trade and export development.

World Customs Organization: An international organization concerned with customs administration and customs standards.

Regional Trade Institutions: Regional organizations and agreements that establish trade rules among participating economies.

Trade and Development

International trade can affect:

• Economic growth
• Employment
• Consumer prices
• Industrial development
• Foreign exchange earnings
• Technology transfer
• Global value chains
• Developing-country market access

Trade policy therefore forms an important part of international political economy.

Key Distinctions

WTO vs GATT: GATT was primarily a multilateral trade agreement concerning goods; the WTO is an international organization administering a broader trade-law framework.

Tariff vs Quota: A tariff imposes a financial charge on imports; a quota limits the quantity of imports.

Free Trade Area vs Customs Union: A free trade area removes or reduces internal trade barriers while members maintain separate external tariffs; a customs union also establishes a common external tariff.

Dumping vs Subsidy: Dumping concerns export pricing under applicable trade rules; a subsidy involves government financial support or other benefits.

Anti-Dumping vs Countervailing Measures: Anti-dumping measures address qualifying dumped imports; countervailing measures address qualifying subsidized imports.

Trade Liberalization vs Protectionism: Trade liberalization reduces trade barriers; protectionism uses measures intended to protect domestic producers from foreign competition.

Key Terms at a Glance

WTO | GATT | GATT 1947 | GATT 1994 | Most-Favoured-Nation Treatment | National Treatment | Tariff | Tariff Binding | Trade in Services | GATS | TRIPS | Non-Tariff Measure | Import Quota | Import Licensing | Technical Barriers | Sanitary and Phytosanitary Measures | Anti-Dumping | Dumping | Countervailing Measures | Safeguards | Dispute Settlement Body | Trade Liberalization | Trade Facilitation | Free Trade Area | Customs Union | Common Market | Rules of Origin | UNCTAD | International Trade Centre | World Customs Organization

Related Glossaries

International Political Economy | International Law | Global Finance | Economic Statecraft | Globalization | International Organizations | Regional Economic Integration