World Trade Organization


The World Trade Organization is an intergovernmental organization that regulates and facilitates international trade. Established on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, it succeeded the General Agreement on Tariffs and Trade, which was created in 1948. As the world's largest international economic organization, the WTO has 166 members, representing over 98% of global trade and global GDP. It is headquartered in Geneva, Switzerland.
The WTO's primary functions are to provide a framework for negotiating trade agreements and to resolve trade disputes among its members. Its agreements, which are negotiated and signed by the majority of the world's trading nations and ratified in their parliaments, cover trade in goods, services, and intellectual property. The organization operates on the principle of non-discrimination—enshrined in the most-favoured-nation and national treatment provisions—but allows for exceptions for environmental protection, national security, and other objectives.
The WTO's highest decision-making body is the Ministerial Conference, which convenes biennially and makes decisions by consensus. Day-to-day business is managed by the General Council, composed of representatives from all member states. The organization is administered by a Secretariat led by the Director-General; since 2021, this position has been held by Ngozi Okonjo-Iweala of Nigeria. The WTO's annual budget is approximately 200 million USD, contributed by members based on their share of international trade.
Economic studies generally find that the WTO has boosted trade and reduced trade barriers. However, it has faced significant criticism. Critics argue that the benefits of WTO-facilitated free trade are not shared equally, that its agreements may disadvantage developing countries, and that commercial interests have been prioritised over environmental and labour concerns. The organization has also been central to major trade disputes and stalled negotiations, such as the Doha Development Round and the paralysis of its Appellate Body, which have raised questions about its future efficacy.

History

The WTO precursor, General Agreement on Tariffs and Trade, was established by a multilateral treaty of 23 countries in 1947 after the end of World War II, in the wake of other new multilateral institutions dedicated to international economic cooperation—such as the World Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization, never started, since the United States and other signatories did not ratify the establishment treaty, and so the GATT slowly became a de facto international organization.

GATT negotiations before Uruguay

Seven rounds of negotiations occurred under the General Agreement on Tariffs and Trade. The first real GATT trade rounds concentrated on further reducing tariffs. Then the Kennedy Round in the mid-sixties brought about a GATT anti-dumping agreement and a section on development. The Tokyo Round during the seventies represented the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely new ground. Because not all GATT members accepted these plurilateral agreements, they were often informally called "codes". Despite attempts in the mid-1950s and 1960s to establish some form of institutional mechanism for international trade, the GATT continued to operate for almost half a century as a semi-institutionalized multilateral treaty régime on a provisional basis.

Uruguay Round: 1986–1994

Well before GATT's 40th anniversary, GATT members concluded that the GATT system was straining to adapt to a globalizing world economy. In response to problems identified in the 1982 Ministerial Declaration, a meeting in Punta del Este, Uruguay, launched the eighth GATT round—known as the "Uruguay Round"—in September 1986.
In the biggest negotiating mandate on trade ever agreed, the Uruguay Round talks aimed to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed on 15 April 1994, during the ministerial meeting at Marrakesh, Morocco—hence known as the Marrakesh Agreement.
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations. GATT 1994 is not, however, the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions, and understandings was adopted. The agreements fall into six main parts:
In terms of the WTO's principle relating to tariff "ceiling-binding", the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986–1994 talks.

Ministerial conferences

The highest decision-making body of the WTO, the Ministerial Conference, usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. Some meetings, such as the inaugural ministerial conference in Singapore and the inaugural ministerial conference in Cancún, Mexico involved arguments between developed nations and low-income and lower-middle income countries, referred to as the "Singapore issues", such as agricultural subsidies; while others such as the Seattle conference in 1999 provoked large demonstrations. The fourth ministerial conference in Doha, Qatar in 2001 approved China's entry to the WTO and launched the Doha Development Round which was supplemented by the sixth WTO ministerial conference in Hong Kong, which agreed to phase out agricultural export subsidies and to adopt the European Union's Everything but Arms initiative to phase out tariffs for goods from the least developed countries. At the sixth WTO Ministerial Conference of 2005 in December, WTO launched the Aid for Trade initiative and it is specifically to assist developing countries in trade as included in the Sustainable Development Goal 8 which is to increase aid for trade support and economic growth.
The Twelfth Ministerial Conference was due to be held in Nur-Sultan, Kazakhstan, in June 2020, but was canceled because of the COVID-19 pandemic. It was later held in Geneva, Switzerland from 12–17 June 2022. The Thirteenth Ministerial Conference was held in Abu Dhabi, UAE on 26–29 February 2024, and extended to Friday 1 March 2024 to complete deliberations.

Doha Round (Doha Agenda): 2001–present

The WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries.
Progress stalled over differences between developed nations and the major low-income and lower-middle income countries on issues such as industrial tariffs and non-tariff barriers to trade particularly against and between the EU and the US over their maintenance of agricultural subsidies—seen to operate effectively as trade barriers. Repeated attempts to revive the talks proved unsuccessful, though the adoption of the Bali Ministerial Declaration in 2013 addressed bureaucratic barriers to commerce.
, the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round remains incomplete. The conflict between free trade in industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sectors and the substantiation of fair trade on agricultural products remain the major obstacles. This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round. As a result, there have been an increasing number of bilateral free trade agreements between governments. there were various negotiation groups in the WTO system for the current stalemated agricultural trade negotiation.

Functions

The WTO has several functions:
  • Overseeing the implementation, administration and operation of the covered agreements
  • Providing a forum for negotiations and for settling disputes.
  • Reviewing and documenting national trade policies.
  • Assisting developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.
  • Cooperating, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies to coordinate global economic policies.

    Differences between GATT and WTO

Decisions in GATT were, in practice, made through consensus, and member states were allowed numerous exceptions for not complying with GATT rules if GATT conflicted with legitimate domestic objectives. Many of the GATT's rules were ambiguous and flexible. GATT members could also block a dispute settlement if it was unlikely to lead to a mutually acceptable ruling. These organizational design decisions reflected a wariness among member states to delegate too much power to the international organization and fears that GATT would not allow member states to respond to domestic political pressures. Cooperation in GATT tended to be the outcome of shared norms, rather than explicit rules and threats of punishment.
WTO was created in order to accommodate more issue areas and a vastly enlarged membership. In comparison to GATT, the WTO included vastly more numerous and more precise obligations on member states. Member states that were non-compliant were subject to punishment or to dispute settlements that could produce adverse outcomes. The consensus-based nature of rule changes has contributed to deadlock in the WTO and discontent among member states, as they are unable to resolve problems.