WTO World Trade Organization

Introduction

1. The World Trade Organization (WTO) is an international organization dealing with the rules of trade between nations. 
2. WTO agreements are negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. 
3. The primary purpose of the WTO is to open trade for the benefit of all which aims to help producers of goods and services, exporters, and importers conduct their business.
4. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other.
5. After lengthy negotiations known as the Uruguay Round (1986-94) and earlier negotiations under the General Agreement on Tariffs and Trade (GATT), the WTO was established on 1st Jan 1995. The WTO is currently the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001.
6. The WTO has 164 members, of which 117 are developing countries or separate customs territories. WTO members represent 98% of the world trade.
7. WTO activities are supported by a Secretariat of some 700 staff, led by the WTO Director-General. Director General of WTO is Roberto Azevêdo.  
8. The Secretariat is located in Geneva, Switzerland, and has an annual budget of approximately $180 million. 
9. The three official languages of the WTO are English, French and Spanish.
10. The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva).

Functions of WTO

1. WTO Secretariat – WTO Secretariat coordinates the activities of WTO. The Secretariat employs over 600 staff, and its experts — lawyers, economists, statisticians and communications experts — assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced.
2. Trade negotiations – WTO agreements cover goods, services and intellectual property. They set procedures for settling disputes. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.
3. Implementation and monitoring – WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. All WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing reports by the country concerned and the WTO Secretariat.
4. Dispute settlement – 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.
5. Building trade capacity – WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards.
6. Outreach – The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

Principles of WTO Agreements

1. Non-discrimination – A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.
2. More open – Lowering trade barriers is one of the most obvious ways of encouraging trade barriers like customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.
3. Predictable and transparent – Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. 
4. More competitive – Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.
5. More beneficial for less developed countries – Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO members are developing countries and countries in transition to market economies.
6. Protect the environment – The WTO’s agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However, these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

History of WTO

1. Trade and foreign policy have been intertwined throughout history, with foreign policy often tailored to promote trade interests.
2. The General Agreement on Tariffs and Trade (GATT), was established by a multilateral treaty of 23 countries in 1947 after World War II.
3. From 1948 to 1994, GATT provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established but throughout those 47 years, it was a provisional agreement and organization.
4. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing GATT.

Impact of WTO

1. Engine of Globalization – The WTO has fueled globalization with both positive and negative effects. The history of international trade has been a battle between protectionism and free trade, and the WTO has fueled globalization with both positive and adverse effects. The organization’s efforts have increased global trade expansion, but a side effect has been a negative impact on local communities and human rights.
2. Boost to World trade – WTO boosted world trade and lowered trade barriers among the nations. In the absence of the WTO, the average country would face an increase in tariffs on their exports by 32 percentage points.
3. Body of trade agreements – The WTO has highly influenced the text of trade agreements, as nearly all recent preferential trade agreements (PTAs) reference the WTO explicitly. The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession.
4. Trade disputes settlements – As trade expands in volume, in the number of products traded, and in the numbers of countries and companies trading, there is a greater chance that disputes will arise. The WTO system helps resolve these disputes peacefully and constructively.
5. Promotion of peace and economy – WTO rules make it easier to trade. The increase in trade helps reduce poverty and promotes peace.
6. Balanced Trade policies – The WTO helps governments take a more balanced view of trade policy. Governments are better-placed to defend themselves against lobbying from narrow interest groups by focusing on trade-offs that are made in the interests of everyone in the economy. 
7. System encourages good governance – Under WTO rules, once a commitment has been made to liberalize a sector of trade, it is difficult to reverse. The rules also discourage a range of unwise policies.
8. Undemocratic Process  – WTO rules are written by and for corporations with inside access to the negotiations and the process is not democratic. 
9. Less care for Labor and Human Rights – WTO encourages a race to the bottom in wages. WTO has ruled that it is illegal for a government to ban a product based on the way it is produced, such as with child labor. It has also ruled that governments cannot take into account “non commercial values” such as human rights.
10. Environmental Degradation – WTO is attempting to deregulate industries including logging, fishing, water utilities, and energy distribution, which will lead to further exploitation of these natural resources.
11. Increasing Inequality – The richest 20% of the world’s population consume 86% of the world’s resources while the poorest 80% consume just 14%. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where the labor is cheapest and most easily exploited and environmental costs are low. 
12. Favorable to Rich Powerful Nations – WTO makes many important decisions whereby poor countries negotiators are not even invited to closed door meetings. Many countries do not even have enough trade personnel to participate in all the negotiations and many countries are too poor to defend themselves from WTO challenges.

Main Activities of WTO

The WTO’s main activities are:

negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade) and agreeing on rules governing the conduct of international trade (e.g. antidumping, subsidies, product standards, etc.)

administering and monitoring the application of the WTO’s agreed rules for trade in goods, trade in services, and trade-related intellectual property rights

monitoring and reviewing the trade policies of our members, as well as ensuring transparency of regional and bilateral trade agreements

settling disputes among our members regarding the interpretation and application of the agreements

building capacity of developing country government officials in international trade matters

assisting the process of accession of some 30 countries who are not yet members of the organization

conducting economic research and collecting and disseminating trade data in support of the WTO’s other main activities
explaining to and educating the public about the WTO, its mission and its activities.

Principles of WTO

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

Non-discrimination A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.

More open Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.

Predictable and transparent Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices.

More competitive Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions.

Protect the environment The WTO’s agreements permit members to take measures to protect not only the environment but also public health, animal health, and plant health. However, these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

WTO Agreements

The WTO oversees about 60 different agreements which have the status of international legal texts.

Member countries must sign and ratify all WTO agreements on accession.

Some of the more important agreements are; The Agreement on Agriculture (1995), The General Agreement on Trade in Services (1995), The Agreement on Trade-Related
Aspects of Intellectual Property Rights (1994), The Agreement on the Application of Sanitary and Phytosanitary Measures (1995), The Agreement on Technical Barriers to Trade (1994), and The Agreement on Customs Valuation.

History of the multilateral trading system

From the early days of the Silk Road to the creation of the General Agreement on Tariffs and Trade (GATT) and the birth of the WTO, trade has played an important role in supporting economic development and promoting peaceful relations among nations. This page traces the history of trade, from its earliest roots to the present day.
The early days of trade Trade and foreign policy have been intertwined throughout history, with foreign policy often tailored to promote trade interests. In the 3rd century BC, during the Han Dynasty, China used its military power to maintain the Silk Road for its value for trade. In the year 30 BC, Rome conquered Egypt in large part to have a better supply of grain.

Before the GATT A single page of text from 1941 is a powerful reminder that the desire for peace and security drove the creation of today’s global economic system. The global rules that underpin our multilateral economic system were a direct reaction to the Second World War and a desire for it to never be repeated. The lead negotiators for the creation of the GATT profoundly disagreed on the level of ambition to be achieved but finally overcame their differences.

The GATT years From 1948 to 1994, the GATT provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established but throughout those 47 years, it was a provisional agreement and organization.

Birth of the WTO The WTO’s creation on 1 January 1995 marked the biggest reform of international trade since the end of the Second World War. Whereas the GATT mainly dealt with trade in goods, the WTO and its agreements also cover trade in services and intellectual property. The birth of the WTO also created new procedures for the settlement of disputes.

1998 marked the 50th anniversary of the multilateral trading system.

Doha Round The Doha Round was launched in 2001 to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. A fundamental objective of the Doha Development Agenda is to improve the trading prospects of developing countries.

Over the past 20 years, WTO members have agreed major updates to the WTO rulebook to improve the flow of global trade. The WTO’s membership has expanded to 164 members, representing over 98% of international trade. In 2015, the WTO reached a significant milestone with the receipt of its 500th trade dispute for settlement.

WTO ministerial conferences The Ministerial Conference is the highest decision-making body of the WTO and usually meets every two years. The WTO’s first Ministerial Conference was held in Singapore in December 1996. Its most recent — the 11th — was held in Buenos Aires in December 2017.

GATT and WTO Directors-General The first Director-General of the GATT was Eric Wyndham White, who held office from 1948 to 1968. The current Director-General of the WTO is Roberto Azevêdo, who began a second four-year term in September 2017.

20th anniversary of the WTO In 2015, the WTO commemorated its 20th anniversary. During the year, a series of events were held, such as book launches, conferences, exhibitions, and other specially organized activities, focusing on various aspects of the WTO’s work over the past two decades.

Pakistan and the WTO

Pakistan is one of the founder Members of the WTO since 1995, and its predecessor organization the GATT set up in 1948.

Pakistan is following an export-led growth strategy and as such market access is of vital importance for its businesses.

The increase in preferential arrangements and free trade areas between some members is also eroding its market access. Therefore in order to maintain current markets and gain new ones for our exportable goods and services Pakistan is dependent on the WTO to get tariff and nontariff barriers lowered on an MFN basis. Such MFN liberalization effectively levels the playing field for competitive suppliers.

Pakistan has been actively engaged in the Doha round of trade talks that were launched in the Qatari capital in November 2001. Aptly named the “Doha Development Agenda” (DDA), this round of trade talks has been focusing on removing distortions in the world agriculture markets and attaining enhanced market access for both products and service providers from Pakistan.

Since 2001, there have two more ministerial conferences in Cancun in 2003 and Hong Kong in 2005 respectively. There have been many ups and downs in the road to a successful conclusion to the Doha round that takes into account the myriad interests of the developing membership.

There was a breakdown of talks in the summer of 2006 which led many observers to be skeptical of the entire process. However, sustained efforts by the membership led to a partial resumption of the talks in November 2006 and full resumption since January 2007 after the annual meeting of the World economic forum at Davos.