World Trade Organization

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WORLD TRADE ORGANIZATION.

The World Trade Organization (WTO) is an international organization that administers a number of commercial agreements to regulate trade relations between its members. It was established on 1 January 1995, as a result of the Marrakech Agreement of April 1994, which concluded the Uruguay Round of GATT negotiations (1986–1994), with the aim of setting up an institutional framework to rule multilateral trade in a smooth, fair, free, and predictable way. It is based in Geneva, Switzerland, and as of early 2005, it counted 148 members, representing almost 97 percent of world trade.

At the end of World War II, the United States wanted to establish an institution to manage international trade relations, to be placed side by side with the Bretton Woods institutions, the World Bank and the International Monetary Fund. As a result, in 1950 the International Trade Organization (ITO) was created as a specialized agency of the United Nations. While waiting for the final draft and then for the ratification of the ITO, a provisional agreement was established in 1947 among some twenty-three major trading countries to negotiate reciprocal reduction of tariffs and to ensure that trade restrictions other than tariffs did not impair or nullify concessions negotiated. This accord, the General Agreement on Tariffs and Trade (GATT 1947), came into force on 1 January 1948 as a prelude to the ITO. However, it was soon established as the only agreement concerned with international trade negotiations because, in 1950, it became clear that the U.S. Congress would not ratify the ITO, fearing that it would markedly constrain domestic sovereignty. As a result, the provisional GATT became the only basis of the multilateral trading system, and from 1948 to 1994 it provided the rules of international trade.

In spite of attempts made from time to time since 1950 to place the GATT on a more stable institutional footing, this goal was only achieved in the 1990s. In 1990, during the Uruguay Round, the Canadian government put forward a proposal for a multilateral trade organization in order to establish an institutional framework for governing world trade, encompassing the updated General Agreement on Tariffs and Trade (GATT 1994), the General Agreement on Trade in Services (GATS), the intellectual property agreement (TRIPs), the Trade Related Investment Measures (TRIMs), the Dispute Settlement Understanding (DSU), and all the other agreements and arrangements concluded during the Uruguay Round. While the European Union supported the Canadian proposal, the United States initially resisted it because of U.S. Congress suspicions of any restriction of its prerogatives in trade policy. It was only after negotiations on the substance of the new organization that the United States also consented to setting it up under the name of World Trade Organization.

The WTO is led by the Ministerial Conference of all members, which convenes at least once every two years. Between the meetings of the Ministerial Conference, the General Council, largely composed of ambassadors and heads of delegations in Geneva, meets several times per year to carry out the functions of the WTO. When needed, the General Council sits as the Trade Policy Review Body (TPRB) to review trade policies of member states and as the Dispute Settlement Body (DSB) to judge on trade disputes.

Three secondary councils, the Goods Council, Services Council, and Intellectual Property Council, work under the guidance of the General Council and report to it, while additional subsidiary working groups and committees operate in matters covered by GATT, GATS, and TRIPs. Specialized committees, working groups, and working parties deal with areas such as accessions, environment, development, and government procurement. Decisions are generally taken by consensus. If consensus cannot be achieved, recourse to voting can occur, but only when WTO provisions explicitly allow this. Unlike other international organizations where weighted voting is used, in WTO the vote is based on the rule "one member, one vote."

The WTO Secretariat, headed by the director general, is the administrative body of the WTO. It provides technical support to the various councils and committees and the ministerial conferences, supplies world trade data, and explains WTO affairs to the public. Moreover, it reviews trade policy of member states and supplies legal assistance in the dispute settlement process.

In the WTO system, a central position is held by the Dispute Settlement Understanding treaty, which set up the Dispute Settlement Body (DSB) to arbitrate trade disputes between governments. The DSU agreement established a more structured procedure than GATT 1947 and introduced greater discipline for the length of time a case should take to be settled, with flexible deadlines set in various stages of the procedure. The outcome of a trade dispute is decided by the DSB on the recommendation of a dispute panel and, if necessary, a report from the Appellate Body. The DSB rules according to a procedure known as "reverse consensus," which requires that the recommendations of the dispute panel and the Appellate Body should be adopted unless there is a consensus of the members to reject them. While under the previous GATT procedure rulings could only be adopted by consensus, under the DSU rulings are automatically adopted unless there is a consensus to reject them: any country willing to obstruct a ruling has to convince all other WTO members, including its adversary in the case, to support its view. The DSB has also the key function of authorizing retaliatory measures if the losing party does not implement its rulings. By establishing in considerable detail the procedures and timetable to be followed in resolving disputes, by adopting automatic adoption, and by foreseeing authorized retaliatory measures, the DSU underlines that punctual settlement of trade disputes is vital if the WTO is to function efficiently.

Since the late 1990s the WTO has come under attack by the antiglobalization movement, which has protested the globalization drive of the WTO and what is perceived as the undemocratic nature of this international organization.

See alsoGlobalization.