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GATT AND WTO
We have made sincere efforts to provide relevant details which would be of good use to the readers.
Learning can be and should be satisfying, stimulating and yes, even fun. The extent to which we have encouraged the reader to want to know is a measure of our success.
Constructive comments and suggestions will be highly appreciated.
WORLD TRADE ORGANIZATION
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. Trade friction is channeled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform to them. That way, the risk of disputes spilling over into political or military conflict is reduced.
By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations.
At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.The goal is to improve the welfare of the peoples of the member countries
UNDERSTANDING THE WTO
• The first step is to talk.
• Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other.
• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.
• But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
WHAT IS THE WORLD TRADE ORGANIZATION?
Simply put: the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.
Is it a bird, is it a plane?
There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. (But it’s not Superman, just in case anyone thought it could solve — or cause — all the world’s problems!)
Above all, it’s a negotiating forum … Essentially; the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001.
Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
It’s a set of rules … At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.
And it helps to settle disputes … This is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.
Born in 1995, but not so young
The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)
It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations.
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
BILATERAL TRADING SYSTEMS.
Bilateral agreements are made between two countries. Throughout the world, many governments have signed, are negotiating, or contemplating new bilateral free trade and investment agreements. But these agreements must be seen in a global context as stepping stones towards full integration into a global free market economy. They are another way to ensure that governments implement the liberalisation, privatization and deregulation measures of the corporate globalisation agenda.
They are based on assumptions that free trade and the removal of regulations on investment will lead to economic growth, the reduction of poverty, increased living standards and employment opportunities.
There is ample evidence to show that on the contrary, these kinds of agreements only allow transnational corporations (TNCs) more freedom to exploit workers and to shape the national and global economy to suit their interests.
MULTILATERAL TRADING SYSTEMS
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.
I.e. the system operated by the WTO. Most nations — including almost all the main trading nations — are members of the system. But some are not, so “multilateral” is used to describe the system instead of “global” or “world”.
In WTO affairs, “multilateral” also contrasts with actions taken regionally or by other smaller groups of countries. (This is different from the word’s use in other areas of international relations where, for example, a “multilateral” security arrangement can be regional.)
The principles
The trading system should be...
Without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);
Freer — barriers coming down through negotiation;
Predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;
More competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;
More beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges.
GATT: ‘provisional’ for almost half a century’
From 1948 to 1994, the General Agreement on Tariffs and Trade (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.
The original intention was to create a third institution to handle the trade side of international economic co-operation, joining the two “Bretton Woods” institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce and bind customs tariffs. With the Second World War only recently ended, they wanted to give an early boost to trade liberalization, and to begin to correct the legacy of protectionist measures which remained in place from the early 1930s.
This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion of trade, about one fifth of the world’s total. The 23 also agreed that they should accept some of the trade rules of the draft ITO Charter. This, they believed, should be done swiftly and “provisionally” in order to protect the value of the tariff concessions they had negotiated. The combined package of trade rules and tariff concessions became known as the General Agreement on Tariffs and Trade. It entered into force in January 1948, while the ITO Charter was still being negotiated. The 23 became founding GATT members (officially, “contracting parties”).
Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948, ratification in some national legislatures proved impossible. The most serious opposition was in the US Congress, even though the US government had been one of the driving forces. In 1950, the United States government announced that it would not seek Congressional ratification of the Havana Charter, and the ITO was effectively dead. Even though it was provisional, the GATT remained the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995.
For almost half a century, the GATT’s basic legal principles remained much as they were in 1948. There were additions in the form of a section on development added in the 1960s and “plurilateral” agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued. Much of this was achieved through a series of multilateral negotiations known as “trade rounds” — the biggest leaps forward in international trade liberalization have come through these rounds which were held under GATT’s auspices.
In the early years, the 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 was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system. The eighth, the Uruguay Round of 1986-94, was the last and most extensive of all. It led to the WTO and a new set of agreements.
The Tokyo Round: A first try to reform the system
The Tokyo Round lasted from 1973 to 1979, with 102 countries participating. It continued GATT’s efforts to progressively reduce tariffs. The results included an average one-third cut in customs duties in the world’s nine major industrial markets, bringing the average tariff on industrial products down to 4.7%. The tariff reductions phased in over a period of eight years, involved an element of “harmonization” — the higher the tariff, the larger the cut, proportionally.
In other issues, the Tokyo Round had mixed results. It failed to come to grips with the fundamental problems affecting farm trade and also stopped short of providing a modified agreement on “safeguards” (emergency import measures). Nevertheless, a series of agreements on non-tariff barriers did emerge from the negotiations, in some cases interpreting existing GATT rules, in others breaking entirely new ground. In most cases, only a relatively small number of (mainly industrialized) GATT members subscribed to these agreements and arrangements. Because they were not accepted by the full GATT membership, they were often informally called “codes”.
They were not multilateral, but they were a beginning. Several codes were eventually amended in the Uruguay Round and turned into multilateral commitments accepted by all WTO members. Only four remained “plurilateral” — those on government procurement, bovine meat, civil aircraft and dairy products. In 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.
Did GATT succeed?
GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.
But all was not well. As time passed new problems arose. The Tokyo Round in the 1970s was an attempt to tackle some of these but its achievements were limited. This was a sign of difficult times to come.
GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and
North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services — not covered by GATT rules — was of major interest to more and more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world merchandise trade. In other respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifibre Arrangement. Even GATT’s institutional structure and its dispute settlement system were causing concern.
These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
WTO Meeting in CANCUN, Mexico
The World Trade Organization’s (WTO) Fifth Ministerial Conference took place in Cancun, Mexico from September 10 to 14, 2003. These meetings are some of the most important to the world due to the various issues discussed that can impact, positively and negatively, various countries, especially poor ones, and their economic futures.
Over 10,000 people are thought to have attended the meeting: among them 3,000 journalists, 2,000 NGOs and 5,000 government delegates (including trade ministers and other ministers of agriculture, environment, finance and development).
The trade talks opened with key speakers warning of the importance and urgency of these issues.
Introduction
As with previous such meetings, even before starting there were debates and concerns on various issues such as:
• The apparent lack of democracy
The WTO and the meeting and decision-making processes, especially seen in previous ministerial meetings, have been long criticized as being non-transparent, often behind closed doors, and on the whole undemocratic, due to the strong influences and power of the richer nations. In the past there have even been closed-door Green Room meetings and consultations by richer countries, who then basically determine the agenda of the Ministerial meetings.
Leading up to this ministerial meeting, heads-of-delegations met to discuss the draft text. Amongst many concerns, it is interesting to note Botswana and the African-Caribbean-Pacific (ACP) countries comments on the decision-making process, as it highlights some of the concerns, quite politely, at the lack of democracy in various ways. Martin Khor of the Third World Network reports on this:
• To improve the decision-making process during the Ministerial, the ACP Group proposed the adoption of procedural rules to enhance transparency and inclusiveness.
These rules should ensure that:
o All WTO members decide on the appointment of the Chairpersons of Working Groups formed at the Ministerial Conference.
o The draft text that forms the basis of negotiations reflects the proposals of all members or groups of members.
o All WTO members be informed of consultations and are entitled to participate in them.
o All issues of importance, including consideration of a proposal to extend the length of the Conference, be put before WTO members as a whole for a decision.
• In the previous round in Doha, developing countries and non-governmental organizations charged rich countries and regions, such as the European Union (E.U.) and U.S of things like bullying and arm-twisting.
• Market access issues for developing countries (or Southern countries);
• Protectionism by industrialized (or Northern) countries and regions such as the U.S. and European Union (EU)
For example, The agricultural subsidies of the first world or industrialized countries result in their agricultural over-production and thus a downward pressure on prices leading to artificially-low global agricultural prices. Combined with years of disastrous structural adjustment policies upon the third world commodity prices have further plummeted;
• Rich countries dumping agricultural commodities on international markets at prices below the cost of production, and other unfair agricultural trade rules;
• Patent rules that appear to deny poor countries access to affordable medicines;
• Trying to introduce new issues before issues raised in the previous Ministerial, the Doha round, have been resolved.Some of these additional issues include those around investment, competition policy, transparency in government procurement and trade facilitation. Some of the existing issues include agriculture and patents. WTO member countries have been polarized over these issues. For example, developing countries in general want to avoid extra issues (especially investment), while some rich countries want to introduce these. (These issues are also known as the Singapore issues, to reflect where they were raised — Singapore in 1996 — not who raised them);
• And many more
Leading up to the meeting there was a Draft Cancun Ministerial Text being discussed. However, at a meeting of heads-of-delegation of WTO members at the end of August, various developing countries were very critical of it and said that the draft text is imbalanced and does not take account of their development needs and of their proposals in many areas.
It is interesting to note how various concerns that were raised here before the meeting, were very similar to those being raised before and at the previous ministerial meeting. In addition, previous meetings have highlighted continued non-democratic decision making processes, and arm-twisting type negotiation tactics of more powerful and wealthier countries. (See this site’s section on the Doha round for more details.) Many therefore feared that this round would not be different and according to some, it did indeed look like this is the way it was going before the talks ended.
The authoritative Joseph Stiglitz, mentioned further above, is worth quoting as he also highlighted before the meeting, how concerns from previous years were real:At their last meeting in Doha in November 2001, ministers recognised the inequities of the previous round of trade negotiations, the Uruguay round. This round was supposed to redress those imbalances.
One would have thought that the developing countries would look forward to the meeting as a chance to achieve a fairer global trading system. Instead, many fear that what has happened in the past will happen again: secret negotiations, arm twisting, and the display
of brute economic power by the US and Europe aimed at ensuring that the interests of the rich are protected.
While some progress has been made in making the negotiations more open and transparent, efforts to go further have met with resistance, and for good reason: unbalanced processes help ensure unbalanced outcomes. Ironically, the World Trade Organisation (WTO), where each country has one vote, might seem far more “democratic” than, say, the International Monetary Fund (IMF) where a single country, the US, has a veto. Yet the realpolitik of economic power has ensured that the interests of the developed countries predominate.
Trade is said to be the way to enhance growth and development and eliminate poverty. That might be the case in theory, but, currently, the 49 least developed countries that make up the world’s poorest countries have not shared in the growth of world trade. The 646 million people in the top exporting countries — the US, Germany, Japan, France and UK — have 100 times more trade than their poor counterparts. Those 49 countries have a similar population as those top five.
Some third world groups have been very critical of the WTO and how it is being used. Seeing it from their side, and the impact on the poor countries, a geopolitical dimension to what may sound like economic issues is added, and some suggest the WTO represents a continuation, but in different forms, of power struggle. Take for example what policy analyst at Focus on the Global South, and author, Aileen Kwa notes:
The WTO perpetrates a subtle and pervasive form of re-colonisation and warfare. It calls on members to relinquish their sovereign rights and policy freedom (by constraining their ability to put in place domestic regulations) in order to allow pillage by transnational corporations. The saturation of Northern markets makes it imperative that transnational corporations get access to markets in the South. The ever-expanding ambit of WTO rules are designed to do just that; pry open developing country markets, not only through the drastic reduction of tariffs, but by “beyond the border” measures. The result is the further subjugation of economies and peoples in the developing world.But this time round it seems that the poor countries have tried to resist such “re-colonization.”
But these talks collapsed.
• Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from. (This is part of the free trade and liberalization ideas that they promote, which have been under increasing criticism from many angles in recent years.)
• Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets. (This actually goes against the free trade ideas that these two regions especially promote.)
• This impasse led to the end of the talks for now but for the first time showed the developing countries make a successful and united stand to represent their concerns.
The trade talks collapsed over the rich countries attempts to discuss new issues without finishing off the existing and most pressing ones for the poor countries, while poorer countries resisted such an attempt.
But this time round, this talk signified perhaps a new state of affairs too: poorer countries, for one of the first times, have been able to make a united stand against the richer countries, who in the past have also used non-democratic pressures to get their interests represented in the WTO meetings and their outcomes, often at the expense of the poorer countries who have made even more concessions.
This has left rich countries blaming poor countries for the failed talks.
• Depending on who you are and how you look at it, the talks can be seen as a failure for not being able to make progress, but in some respects can be seen as a sort of success for poorer countries.
• For the first time then, the poorer countries have been able to take a bold stance.
• While the trade talks didn’t progress, the fact that it appears not to have made things worse for poorer countries could be seen as a success.
The developing countries that took a stand included larger ones such as China, India, Brazil and South Africa but also other blocs such as the African, Caribbean and Pacific (ACP) group, the African Union, the Least Developed Countries (LDCs) and Asian countries such as Malaysia.
• They all said they would not like to launch negotiations at the conference on the “Singapore issues” (or new issues) before existing ones are resolved.
• The existing ones impact the poor the most.
• The new ones are the ones that the rich countries and their corporations would like the most, because they are about more market access into poorer countries.
• It is not clear how beneficial multinational companies (MNCs) having more market access to poorer countries is for the poorer countries themselves.
From a historical perspective, Cancun is also an example of continued attempts by the rich countries to siphon wealth from the poor. Being locked into this process for centuries, perhaps many politicians from the rich world today do not see a way out or even realize these aspects.
Since its formation, the rich countries have been seeking to recruit as many developing nations into the WTO as they can, in order to open up the developing countries' markets and force them to trade on onerous terms. However, as the rich have done so, they have found themselves massively outnumbered. The EU and the US may already be regretting their efforts to persuade China to join. It has now become the rock — too big to bully and threaten — around which the unattached nations have begun to cluster.
Without international rules on trade, especially ones that are fair and democratically agreed to, you could end up with the old power games of colonial and imperial times. Rich countries could vie for bilateral agreements with poor countries in various ways and a plethora of those could get very complicated, and in their worst forms very ugly, as history has warned us with at least two disasters of massive proportions when trade disputes between more powerful countries impacted their economies severely enough: the great European/World Wars...
Whose WTO is it anyway?
The WTO is ‘member-driven’, with decisions taken by consensus among all member governments.
The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international organizations such as the World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of directors or the organization’s head.
When WTO rules impose disciplines on countries’ policies that is the outcome of negotiations among WTO members. The rules are enforced by the members themselves under agreed procedures that they negotiated, including the possibility of trade sanctions. But those sanctions are imposed by member countries, and authorized by the membership as a whole. This is quite different from other agencies whose bureaucracies can, for example, influence a country’s policy by threatening to withhold credit.
Reaching decisions by consensus among some 150 members can be difficult. Its main advantage is that decisions made this way are more acceptable to all members. And despite the difficulty, some remarkable agreements have been reached. Nevertheless, proposals for the creation of a smaller executive body — perhaps like a board of directors each representing different groups of countries — are heard periodically. But for now, the WTO is a member-driven, consensus-based organization.
WTO ORGANIZATION CHART
WTO structure: all WTO members may participate in all councils, committees, etc, except Appellate Body, Dispute Settlement panels, and plurilateral committees.
Chart
Membership, alliances and bureaucracy
All members have joined the system as a result of negotiation and therefore membership means a balance of rights and obligations. They enjoy the privileges that other member-countries give to them and the security that the trading rules provide. In return, they had to make commitments to open their markets and to abide by the rules — those commitments were the result of the membership (or “accession”) negotiations. Countries negotiating membership are WTO “observers”.
How to join the WTO: the accession process
Any state or customs territory having full autonomy in the conduct of its trade policies may join (“accede to”) the WTO, but WTO members must agree on the terms. Broadly speaking the application goes through four stages:
First, “tell us about yourself”. The government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO in a memorandum which is examined by the working party dealing with the country’s application. These working parties are open to all WTO members.
Second, “work out with us individually what you have to offer”. When the working party has made sufficient progress on principles and policies, parallel bilateral talks begin between the prospective new member and individual countries. They are bilateral because different countries have different trading interests. These talks cover tariff rates and specific market access commitments, and other policies in goods and services. The new member’s commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. In other words, the talks determine the benefits (in the form of export opportunities and guarantees) other WTO members can expect when the new member joins. (The talks can be highly complicated. It has been said that in some cases the negotiations are almost as large as an entire round of multilateral trade negotiations.)
Third, “let’s draft membership terms”. Once the working party has completed its examination of the applicant’s trade regime, and the parallel bilateral market access negotiations are complete, the working party finalizes the terms of accession. These appear in a report, a draft membership treaty (“protocol of accession”) and lists (“schedules”) of the member-to-be’s commitments.
Finally, “the decision”. The final package, consisting of the report, protocol and lists of commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-thirds majority of WTO members vote in favour, the applicant is free to sign the protocol and to accede to the organization. In many cases, the country’s own parliament or legislature has to ratify the agreement before membership is complete.
Representing us...
The work of the WTO is undertaken by representatives of member governments but its roots lie in the everyday activity of industry and commerce. Trade policies and negotiating positions are prepared in capitals, usually taking into account advice from private firms, business organizations, farmers, consumers and other interest groups.
Most countries have a diplomatic mission in Geneva, sometimes headed by a special ambassador to the WTO. Officials from the missions attend meetings of the many councils, committees, working parties and negotiating groups at WTO headquarters. Sometimes expert representatives are sent directly from capitals to put forward their governments’ views on specific questions.
Representing groups of countries……
Increasingly, countries are getting together to form groups and alliances in the WTO. In some cases they even speak with one voice using a single spokesman or negotiating team.
This is partly the natural result of economic integration — more customs unions, free trade areas and common markets are being set up around the world. It is also seen as a means for smaller countries to increase their bargaining power in negotiations with their larger trading partners. Sometimes when groups of countries adopt common positions consensus can be reached more easily. Sometimes the groups are specifically created to compromise and break a deadlock rather than to stick to a common position. But there are no hard and fast rules about the impact of groupings in the WTO.
The largest and most comprehensive group is the European Union (for legal reasons known officially as the “European Communities” in WTO business) and its 25 member states. The EU is a customs union with a single external trade policy and tariff. While the member states coordinate their position in Brussels and Geneva, the European Commission alone speaks for the EU at almost all WTO meetings. The EU is a WTO member in its own right as are each of its member states.
A lesser degree of economic integration has so far been achieved by WTO members in the Association of South East Asian Nations (ASEAN) — Brunei Darussalam, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Singapore. (The three remaining members, Cambodia, Laos and Viet Nam, are applying to join the WTO.) Nevertheless, they have many common trade interests and are frequently able to coordinate positions and to speak with a single voice. The role of spokesman rotates among ASEAN members and can be shared out according to topic. MERCOSUR, the Southern Common Market (Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associate members), has a similar set-up.
More recent efforts at regional economic integration have not yet reached the point where their constituents frequently have a single spokesman on WTO issues. An example is the North American Free Trade Agreement: NAFTA (Canada, US and Mexico). Among other groupings which occasionally present unified statements are the African Group, the least-developed countries, the African, Caribbean and Pacific Group (ACP) and the Latin American Economic System (SELA).
A well-known alliance of a different kind is the Cairns Group. It was set up just before the Uruguay Round began in 1986 to argue for agricultural trade liberalization. The group became an important third force in the farm talks and remains in operation. Its members are diverse, but sharing a common objective — that agriculture has to be liberalized — and the common view that they lack the resources to compete with larger countries in domestic and export subsidies.
The European Union and the WTO
The EU is one of the key players in the World Trade Organisation (WTO). This is because the EU has a common trade policy, where the European Commission negotiates on behalf of the Union 's 25 Member States. As such, the EU is one of the driving forces behind the current round of multilateral trade negotiations in the WTO, the Doha Development Agenda (DDA). The DDA comprises both further market opening and additional rule making, underpinned by commitments to take measures necessary to integrate developing countries into the world trading system, notably by strengthening assistance to build capacity. The main objective of the New Round is to put development at the heart of the world trade system in a way that will help them combat poverty.
In July 2004 the WTO Members adopted a Framework Agreement on the DDA that sets out the modalities for the further negotiations.
EU Trade Policy and the WTO
The EU has a common trade policy (“Common Commercial Policy”). In other words, where trade, including WTO matters, are concerned, the EU acts as one single actor, where the European Commission negotiates trade agreements and represents the European interests on behalf of the Union's 25 Member States.
The legal basis for the EU’s trade policy is Article 133 of the European Community Treaty. On this basis, the Commission negotiates on behalf of the Member States, in consultation with a special committee, “the Article 133 Committee”. The 133 Committee is composed of representatives from the 25 Member States and the European Commission. Its main function is to coordinate EU trade policy. The Committee meets on a weekly basis, usually on a Friday in Brussels at the headquarters of the Council of Ministers. It discusses the full range of trade policy
issues affecting the Community, from the strategic issues surrounding the launch of rounds of trade negotiations at the WTO to specific difficulties with the export of individual products, and considers the trade aspects of wider Community policies in order to ensure consistency of policy. In this Committee, the Commission presents and secures endorsement of the Member States on all trade policy issues. The major formal decisions (for example agreement to launch or conclude negotiations) are then confirmed by the Council of Ministers.
The European Community Treaty grants a more limited role to the European Parliament (EP) in terms of trade policy: according to the current treaty, the “assent” of the EP may be required for major treaty ratifications, when covering more than trade. However, the Commission favours greater Parliamentary involvement in Trade Policy and hence consults and informs the Parliament as systematically as possible. It supports a more formal extension of the Parliament’s powers over trade policy. The draft Constitutional Treaty of the EU provides for a major extension of the EP’s power over trade policy.
The current WTO trade round, the Doha Development Agenda, provides a good example of how trade policy is coordinated in practice. The Commission sets and carries forward the priorities and aims of the EU as laid down in guidelines given by the Council of Ministers. Officials from the Commission's Directorate General for Trade, under the authority of the Commissioner are charged with actually conducting the negotiations, and speak on behalf of the EU as a whole. Coordination with Member States is assured at all times through the 133 Committee, while the Commission regularly informs the Parliament. At the end of the Round, the Council has to agree formally the outcome.
WTO MEETING IN DOHA
The November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, provides the mandate for negotiations on a range of subjects and other work, including issues concerning the implementation of the present agreements.
The negotiations include those on agriculture and services, which began in early 2000. A number of other issues have now been added. The declaration sets 1 January 2005 as the date for completing all but two of the negotiations. Negotiations on the Dispute Settlement Understanding are to end in May 2003; those on a multilateral register of geographical indications for wines and spirits, by the next Ministerial Conference in 2003. Progress is to be reviewed at the Fifth Ministerial Conference in Cancun, Mexico, 10-14 September 2003.
“Implementation” is short-hand for problems raised particularly by developing countries about the implementation of the current WTO Agreements, i.e. the agreements arising from the Uruguay Round negotiations.
In Doha this important question was handled in two ways. First, ministers agreed to adopt around 50 decisions clarifying the obligations of developing country member governments with respect to issues including agriculture, subsidies, textiles and clothing, technical barriers to trade, trade-related investment measures and rules of origin.
Agreement on these points required hard bargaining between negotiators over the course of nearly three years.
Many other implementation issues of concern to developing countries have not been settled, however. For these issues, Ministers agreed in Doha on a future work programme for addressing these matters.
In paragraph 12 of the Ministerial Declaration, ministers underscored that they had taken a decision on the 50 or so measures in a separate ministerial document (the 14 November 2001 decision on “Implementation-Related Issues and Concerns”) and pointed out that “negotiations on outstanding implementation issues shall be an integral part of the Work Programme” in the coming years.
The ministers established a two-track approach. Those issues for which there was an agreed negotiating mandate in the declaration would be dealt with under the terms of that mandate.
Those implementation issues where there is no mandate to negotiate, would be the taken up as “a matter of priority” by relevant WTO councils and committees. These bodies are to report on their progress to the Trade Negotiations Committee by the end of 2002 for “appropriate action”.
1. General Agreement on Tariffs and Trade 1994 (GATT 1994)
Reaffirms that Article XVIII of the GATT 1994 is a special and differential treatment provision for developing countries and that recourse to it should be less onerous than to Article XII of the GATT 1994.
Noting the issues raised in the report of the Chairperson of the Committee on Market Access (WT/GC/50) concerning the meaning to be given to the phrase “substantial interest” in paragraph 2(d) of Article XIII of the GATT 1994, the Market Access Committee is directed to give further consideration to the issue and make recommendations to the General Council as expeditiously as possible but in any event not later than the end of 2002.
2. Agreement on Agriculture.
Urges members to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food security concerns.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, and approves the recommendations contained therein regarding (i) food aid; (ii) technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) review of follow-up.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of Article 10.2 of the Agreement on Agriculture, and approves the recommendations and reporting requirements contained therein.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the administration of tariff rate quotas and the submission by members of addenda to their notifications, and endorses the decision by the Committee to keep this matter under review.
3. Agreement on Textiles and Clothing.
Reaffirms the commitment to full and faithful implementation of the Agreement on Textiles and Clothing, and agrees:
1. That the provisions of the Agreement relating to the early integration of products and the elimination of quota restrictions should be effectively utilised.
2. That members will exercise particular consideration before initiating investigations in the context of antidumping remedies on textile and clothing exports from developing countries previously subject to quantitative restrictions under the Agreement for a period of two years following full integration of this Agreement into the WTO.
3. That without prejudice to their rights and obligations, members shall notify any changes in their rules of origin concerning products falling under the coverage of the Agreement to the Committee on Rules of Origin which may decide to examine them.
Requests the Council for Trade in Goods to examine the following proposals:
4. That when calculating the quota levels for small suppliers for the remaining years of the Agreement, members will apply the most favourable methodology available in respect of those members under the growth-on-growth provisions from the beginning of the implementation period; extend the same treatment to least-developed countries; and, where possible, eliminate quota restrictions on imports of such members;
5. That members will calculate the quota levels for the remaining years of the Agreement with respect to other restrained members as if implementation of the growth-on-growth provision for stage 3 had been advanced to 1 January 2000;
and make recommendations to the General Council by 31 July 2002 for appropriate action.
4. Agreement on Technical Barriers to Trade.
1. Confirms the approach to technical assistance being developed by the Committee on Technical Barriers to Trade, reflecting the results of the triennial review work in this area, and mandates this work to continue.
2. Subject to the conditions specified in paragraph 12 of Article 2 of the Agreement on Technical Barriers to Trade, the phrase “reasonable interval” shall be understood to mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives pursued.
3. (i) Takes note of the actions taken to date by the Director-General to facilitate the increased participation of members at different levels of development in the work of the relevant international standard setting organizations as well as his efforts to coordinate with these organizations and financial institutions in identifying TBT-related technical assistance needs and how best to address them; and
(ii) urges the Director-General to continue his cooperative efforts with these organizations and institutions, including with a view to according priority to the effective participation of least-developed countries and facilitating the provision of technical and financial assistance for this purpose.
4. (i) Urges members to provide, to the extent possible, the financial and technical assistance necessary to enable least-developed countries to respond adequately to the introduction of any new TBT measures which may have significant negative effects on their trade; and
(ii) urges members to ensure that technical assistance is provided to least-developed countries with a view to responding to the special problems faced by them in implementing the Agreement on Technical Barriers to Trade.
5. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
1. The TRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.
2. Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in question. To this end, developed-country members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2. These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually.
6. Final Provisions.
Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration (WT/MIN(01)/DEC/1), to ensure that WTO technical assistance focuses, on a priority basis, on assisting developing countries to implement existing WTO obligations as well as on increasing their capacity to participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO Secretariat should cooperate more closely with international and regional intergovernmental organisations so as to increase efficiency and synergies and avoid duplication of programmes.
FAILURE SO FAR.
Negotiations on liberalizing world markets in financial services, maritime services and basic telecommunications – which should have been completed in the Uruguay round but were set aside for later – all ended without global accords. In all three, the United States argued that market opening offers from other countries, especially in the developing world, were insufficient. But telecom talks have resumed and the hope is that the ministers will push in Singapore for an accord to be reached by February 15th, 1997, deadline.
WTO’S FUTURE
DANGERS AHEAD
The proliferation of regional trade agreements like the – Asia – Pacific economic co-operation(APEC) forum and the North American free trade agreement (NAFTA), for which there is a let-out from MFN under the general agreement. Some analyst fear regional trade groupings could turn into hostile economic and political blocs battling for markets and access to resources.
The WTO also faces growing pressures for protectionism among legislators and workers in the major industrial powers, and especially the United States, who say free trade and “globalization“ of the world economy mean jobs will be stolen by developing countries with cheaper labour.
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WORLD TRADE ORGANIZATION
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. Trade friction is channeled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform to them. That way, the risk of disputes spilling over into political or military conflict is reduced.
By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations.
At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.The goal is to improve the welfare of the peoples of the member countries
UNDERSTANDING THE WTO
• The first step is to talk.
• Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other.
• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.
• But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
WHAT IS THE WORLD TRADE ORGANIZATION?
Simply put: the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.
Is it a bird, is it a plane?
There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. (But it’s not Superman, just in case anyone thought it could solve — or cause — all the world’s problems!)
Above all, it’s a negotiating forum … Essentially; the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001.
Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
It’s a set of rules … At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.
And it helps to settle disputes … This is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.
Born in 1995, but not so young
The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)
It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations.
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
BILATERAL TRADING SYSTEMS.
Bilateral agreements are made between two countries. Throughout the world, many governments have signed, are negotiating, or contemplating new bilateral free trade and investment agreements. But these agreements must be seen in a global context as stepping stones towards full integration into a global free market economy. They are another way to ensure that governments implement the liberalisation, privatization and deregulation measures of the corporate globalisation agenda.
They are based on assumptions that free trade and the removal of regulations on investment will lead to economic growth, the reduction of poverty, increased living standards and employment opportunities.
There is ample evidence to show that on the contrary, these kinds of agreements only allow transnational corporations (TNCs) more freedom to exploit workers and to shape the national and global economy to suit their interests.
MULTILATERAL TRADING SYSTEMS
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.
I.e. the system operated by the WTO. Most nations — including almost all the main trading nations — are members of the system. But some are not, so “multilateral” is used to describe the system instead of “global” or “world”.
In WTO affairs, “multilateral” also contrasts with actions taken regionally or by other smaller groups of countries. (This is different from the word’s use in other areas of international relations where, for example, a “multilateral” security arrangement can be regional.)
The principles
The trading system should be...
Without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);
Freer — barriers coming down through negotiation;
Predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;
More competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;
More beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges.
GATT: ‘provisional’ for almost half a century’
From 1948 to 1994, the General Agreement on Tariffs and Trade (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.
The original intention was to create a third institution to handle the trade side of international economic co-operation, joining the two “Bretton Woods” institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce and bind customs tariffs. With the Second World War only recently ended, they wanted to give an early boost to trade liberalization, and to begin to correct the legacy of protectionist measures which remained in place from the early 1930s.
This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion of trade, about one fifth of the world’s total. The 23 also agreed that they should accept some of the trade rules of the draft ITO Charter. This, they believed, should be done swiftly and “provisionally” in order to protect the value of the tariff concessions they had negotiated. The combined package of trade rules and tariff concessions became known as the General Agreement on Tariffs and Trade. It entered into force in January 1948, while the ITO Charter was still being negotiated. The 23 became founding GATT members (officially, “contracting parties”).
Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948, ratification in some national legislatures proved impossible. The most serious opposition was in the US Congress, even though the US government had been one of the driving forces. In 1950, the United States government announced that it would not seek Congressional ratification of the Havana Charter, and the ITO was effectively dead. Even though it was provisional, the GATT remained the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995.
For almost half a century, the GATT’s basic legal principles remained much as they were in 1948. There were additions in the form of a section on development added in the 1960s and “plurilateral” agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued. Much of this was achieved through a series of multilateral negotiations known as “trade rounds” — the biggest leaps forward in international trade liberalization have come through these rounds which were held under GATT’s auspices.
In the early years, the 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 was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system. The eighth, the Uruguay Round of 1986-94, was the last and most extensive of all. It led to the WTO and a new set of agreements.
The Tokyo Round: A first try to reform the system
The Tokyo Round lasted from 1973 to 1979, with 102 countries participating. It continued GATT’s efforts to progressively reduce tariffs. The results included an average one-third cut in customs duties in the world’s nine major industrial markets, bringing the average tariff on industrial products down to 4.7%. The tariff reductions phased in over a period of eight years, involved an element of “harmonization” — the higher the tariff, the larger the cut, proportionally.
In other issues, the Tokyo Round had mixed results. It failed to come to grips with the fundamental problems affecting farm trade and also stopped short of providing a modified agreement on “safeguards” (emergency import measures). Nevertheless, a series of agreements on non-tariff barriers did emerge from the negotiations, in some cases interpreting existing GATT rules, in others breaking entirely new ground. In most cases, only a relatively small number of (mainly industrialized) GATT members subscribed to these agreements and arrangements. Because they were not accepted by the full GATT membership, they were often informally called “codes”.
They were not multilateral, but they were a beginning. Several codes were eventually amended in the Uruguay Round and turned into multilateral commitments accepted by all WTO members. Only four remained “plurilateral” — those on government procurement, bovine meat, civil aircraft and dairy products. In 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.
Did GATT succeed?
GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.
But all was not well. As time passed new problems arose. The Tokyo Round in the 1970s was an attempt to tackle some of these but its achievements were limited. This was a sign of difficult times to come.
GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and
North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services — not covered by GATT rules — was of major interest to more and more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world merchandise trade. In other respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifibre Arrangement. Even GATT’s institutional structure and its dispute settlement system were causing concern.
These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
WTO Meeting in CANCUN, Mexico
The World Trade Organization’s (WTO) Fifth Ministerial Conference took place in Cancun, Mexico from September 10 to 14, 2003. These meetings are some of the most important to the world due to the various issues discussed that can impact, positively and negatively, various countries, especially poor ones, and their economic futures.
Over 10,000 people are thought to have attended the meeting: among them 3,000 journalists, 2,000 NGOs and 5,000 government delegates (including trade ministers and other ministers of agriculture, environment, finance and development).
The trade talks opened with key speakers warning of the importance and urgency of these issues.
Introduction
As with previous such meetings, even before starting there were debates and concerns on various issues such as:
• The apparent lack of democracy
The WTO and the meeting and decision-making processes, especially seen in previous ministerial meetings, have been long criticized as being non-transparent, often behind closed doors, and on the whole undemocratic, due to the strong influences and power of the richer nations. In the past there have even been closed-door Green Room meetings and consultations by richer countries, who then basically determine the agenda of the Ministerial meetings.
Leading up to this ministerial meeting, heads-of-delegations met to discuss the draft text. Amongst many concerns, it is interesting to note Botswana and the African-Caribbean-Pacific (ACP) countries comments on the decision-making process, as it highlights some of the concerns, quite politely, at the lack of democracy in various ways. Martin Khor of the Third World Network reports on this:
• To improve the decision-making process during the Ministerial, the ACP Group proposed the adoption of procedural rules to enhance transparency and inclusiveness.
These rules should ensure that:
o All WTO members decide on the appointment of the Chairpersons of Working Groups formed at the Ministerial Conference.
o The draft text that forms the basis of negotiations reflects the proposals of all members or groups of members.
o All WTO members be informed of consultations and are entitled to participate in them.
o All issues of importance, including consideration of a proposal to extend the length of the Conference, be put before WTO members as a whole for a decision.
• In the previous round in Doha, developing countries and non-governmental organizations charged rich countries and regions, such as the European Union (E.U.) and U.S of things like bullying and arm-twisting.
• Market access issues for developing countries (or Southern countries);
• Protectionism by industrialized (or Northern) countries and regions such as the U.S. and European Union (EU)
For example, The agricultural subsidies of the first world or industrialized countries result in their agricultural over-production and thus a downward pressure on prices leading to artificially-low global agricultural prices. Combined with years of disastrous structural adjustment policies upon the third world commodity prices have further plummeted;
• Rich countries dumping agricultural commodities on international markets at prices below the cost of production, and other unfair agricultural trade rules;
• Patent rules that appear to deny poor countries access to affordable medicines;
• Trying to introduce new issues before issues raised in the previous Ministerial, the Doha round, have been resolved.Some of these additional issues include those around investment, competition policy, transparency in government procurement and trade facilitation. Some of the existing issues include agriculture and patents. WTO member countries have been polarized over these issues. For example, developing countries in general want to avoid extra issues (especially investment), while some rich countries want to introduce these. (These issues are also known as the Singapore issues, to reflect where they were raised — Singapore in 1996 — not who raised them);
• And many more
Leading up to the meeting there was a Draft Cancun Ministerial Text being discussed. However, at a meeting of heads-of-delegation of WTO members at the end of August, various developing countries were very critical of it and said that the draft text is imbalanced and does not take account of their development needs and of their proposals in many areas.
It is interesting to note how various concerns that were raised here before the meeting, were very similar to those being raised before and at the previous ministerial meeting. In addition, previous meetings have highlighted continued non-democratic decision making processes, and arm-twisting type negotiation tactics of more powerful and wealthier countries. (See this site’s section on the Doha round for more details.) Many therefore feared that this round would not be different and according to some, it did indeed look like this is the way it was going before the talks ended.
The authoritative Joseph Stiglitz, mentioned further above, is worth quoting as he also highlighted before the meeting, how concerns from previous years were real:At their last meeting in Doha in November 2001, ministers recognised the inequities of the previous round of trade negotiations, the Uruguay round. This round was supposed to redress those imbalances.
One would have thought that the developing countries would look forward to the meeting as a chance to achieve a fairer global trading system. Instead, many fear that what has happened in the past will happen again: secret negotiations, arm twisting, and the display
of brute economic power by the US and Europe aimed at ensuring that the interests of the rich are protected.
While some progress has been made in making the negotiations more open and transparent, efforts to go further have met with resistance, and for good reason: unbalanced processes help ensure unbalanced outcomes. Ironically, the World Trade Organisation (WTO), where each country has one vote, might seem far more “democratic” than, say, the International Monetary Fund (IMF) where a single country, the US, has a veto. Yet the realpolitik of economic power has ensured that the interests of the developed countries predominate.
Trade is said to be the way to enhance growth and development and eliminate poverty. That might be the case in theory, but, currently, the 49 least developed countries that make up the world’s poorest countries have not shared in the growth of world trade. The 646 million people in the top exporting countries — the US, Germany, Japan, France and UK — have 100 times more trade than their poor counterparts. Those 49 countries have a similar population as those top five.
Some third world groups have been very critical of the WTO and how it is being used. Seeing it from their side, and the impact on the poor countries, a geopolitical dimension to what may sound like economic issues is added, and some suggest the WTO represents a continuation, but in different forms, of power struggle. Take for example what policy analyst at Focus on the Global South, and author, Aileen Kwa notes:
The WTO perpetrates a subtle and pervasive form of re-colonisation and warfare. It calls on members to relinquish their sovereign rights and policy freedom (by constraining their ability to put in place domestic regulations) in order to allow pillage by transnational corporations. The saturation of Northern markets makes it imperative that transnational corporations get access to markets in the South. The ever-expanding ambit of WTO rules are designed to do just that; pry open developing country markets, not only through the drastic reduction of tariffs, but by “beyond the border” measures. The result is the further subjugation of economies and peoples in the developing world.But this time round it seems that the poor countries have tried to resist such “re-colonization.”
But these talks collapsed.
• Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from. (This is part of the free trade and liberalization ideas that they promote, which have been under increasing criticism from many angles in recent years.)
• Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets. (This actually goes against the free trade ideas that these two regions especially promote.)
• This impasse led to the end of the talks for now but for the first time showed the developing countries make a successful and united stand to represent their concerns.
The trade talks collapsed over the rich countries attempts to discuss new issues without finishing off the existing and most pressing ones for the poor countries, while poorer countries resisted such an attempt.
But this time round, this talk signified perhaps a new state of affairs too: poorer countries, for one of the first times, have been able to make a united stand against the richer countries, who in the past have also used non-democratic pressures to get their interests represented in the WTO meetings and their outcomes, often at the expense of the poorer countries who have made even more concessions.
This has left rich countries blaming poor countries for the failed talks.
• Depending on who you are and how you look at it, the talks can be seen as a failure for not being able to make progress, but in some respects can be seen as a sort of success for poorer countries.
• For the first time then, the poorer countries have been able to take a bold stance.
• While the trade talks didn’t progress, the fact that it appears not to have made things worse for poorer countries could be seen as a success.
The developing countries that took a stand included larger ones such as China, India, Brazil and South Africa but also other blocs such as the African, Caribbean and Pacific (ACP) group, the African Union, the Least Developed Countries (LDCs) and Asian countries such as Malaysia.
• They all said they would not like to launch negotiations at the conference on the “Singapore issues” (or new issues) before existing ones are resolved.
• The existing ones impact the poor the most.
• The new ones are the ones that the rich countries and their corporations would like the most, because they are about more market access into poorer countries.
• It is not clear how beneficial multinational companies (MNCs) having more market access to poorer countries is for the poorer countries themselves.
From a historical perspective, Cancun is also an example of continued attempts by the rich countries to siphon wealth from the poor. Being locked into this process for centuries, perhaps many politicians from the rich world today do not see a way out or even realize these aspects.
Since its formation, the rich countries have been seeking to recruit as many developing nations into the WTO as they can, in order to open up the developing countries' markets and force them to trade on onerous terms. However, as the rich have done so, they have found themselves massively outnumbered. The EU and the US may already be regretting their efforts to persuade China to join. It has now become the rock — too big to bully and threaten — around which the unattached nations have begun to cluster.
Without international rules on trade, especially ones that are fair and democratically agreed to, you could end up with the old power games of colonial and imperial times. Rich countries could vie for bilateral agreements with poor countries in various ways and a plethora of those could get very complicated, and in their worst forms very ugly, as history has warned us with at least two disasters of massive proportions when trade disputes between more powerful countries impacted their economies severely enough: the great European/World Wars...
Whose WTO is it anyway?
The WTO is ‘member-driven’, with decisions taken by consensus among all member governments.
The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international organizations such as the World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of directors or the organization’s head.
When WTO rules impose disciplines on countries’ policies that is the outcome of negotiations among WTO members. The rules are enforced by the members themselves under agreed procedures that they negotiated, including the possibility of trade sanctions. But those sanctions are imposed by member countries, and authorized by the membership as a whole. This is quite different from other agencies whose bureaucracies can, for example, influence a country’s policy by threatening to withhold credit.
Reaching decisions by consensus among some 150 members can be difficult. Its main advantage is that decisions made this way are more acceptable to all members. And despite the difficulty, some remarkable agreements have been reached. Nevertheless, proposals for the creation of a smaller executive body — perhaps like a board of directors each representing different groups of countries — are heard periodically. But for now, the WTO is a member-driven, consensus-based organization.
WTO ORGANIZATION CHART
WTO structure: all WTO members may participate in all councils, committees, etc, except Appellate Body, Dispute Settlement panels, and plurilateral committees.
Chart
Membership, alliances and bureaucracy
All members have joined the system as a result of negotiation and therefore membership means a balance of rights and obligations. They enjoy the privileges that other member-countries give to them and the security that the trading rules provide. In return, they had to make commitments to open their markets and to abide by the rules — those commitments were the result of the membership (or “accession”) negotiations. Countries negotiating membership are WTO “observers”.
How to join the WTO: the accession process
Any state or customs territory having full autonomy in the conduct of its trade policies may join (“accede to”) the WTO, but WTO members must agree on the terms. Broadly speaking the application goes through four stages:
First, “tell us about yourself”. The government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO in a memorandum which is examined by the working party dealing with the country’s application. These working parties are open to all WTO members.
Second, “work out with us individually what you have to offer”. When the working party has made sufficient progress on principles and policies, parallel bilateral talks begin between the prospective new member and individual countries. They are bilateral because different countries have different trading interests. These talks cover tariff rates and specific market access commitments, and other policies in goods and services. The new member’s commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. In other words, the talks determine the benefits (in the form of export opportunities and guarantees) other WTO members can expect when the new member joins. (The talks can be highly complicated. It has been said that in some cases the negotiations are almost as large as an entire round of multilateral trade negotiations.)
Third, “let’s draft membership terms”. Once the working party has completed its examination of the applicant’s trade regime, and the parallel bilateral market access negotiations are complete, the working party finalizes the terms of accession. These appear in a report, a draft membership treaty (“protocol of accession”) and lists (“schedules”) of the member-to-be’s commitments.
Finally, “the decision”. The final package, consisting of the report, protocol and lists of commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-thirds majority of WTO members vote in favour, the applicant is free to sign the protocol and to accede to the organization. In many cases, the country’s own parliament or legislature has to ratify the agreement before membership is complete.
Representing us...
The work of the WTO is undertaken by representatives of member governments but its roots lie in the everyday activity of industry and commerce. Trade policies and negotiating positions are prepared in capitals, usually taking into account advice from private firms, business organizations, farmers, consumers and other interest groups.
Most countries have a diplomatic mission in Geneva, sometimes headed by a special ambassador to the WTO. Officials from the missions attend meetings of the many councils, committees, working parties and negotiating groups at WTO headquarters. Sometimes expert representatives are sent directly from capitals to put forward their governments’ views on specific questions.
Representing groups of countries……
Increasingly, countries are getting together to form groups and alliances in the WTO. In some cases they even speak with one voice using a single spokesman or negotiating team.
This is partly the natural result of economic integration — more customs unions, free trade areas and common markets are being set up around the world. It is also seen as a means for smaller countries to increase their bargaining power in negotiations with their larger trading partners. Sometimes when groups of countries adopt common positions consensus can be reached more easily. Sometimes the groups are specifically created to compromise and break a deadlock rather than to stick to a common position. But there are no hard and fast rules about the impact of groupings in the WTO.
The largest and most comprehensive group is the European Union (for legal reasons known officially as the “European Communities” in WTO business) and its 25 member states. The EU is a customs union with a single external trade policy and tariff. While the member states coordinate their position in Brussels and Geneva, the European Commission alone speaks for the EU at almost all WTO meetings. The EU is a WTO member in its own right as are each of its member states.
A lesser degree of economic integration has so far been achieved by WTO members in the Association of South East Asian Nations (ASEAN) — Brunei Darussalam, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Singapore. (The three remaining members, Cambodia, Laos and Viet Nam, are applying to join the WTO.) Nevertheless, they have many common trade interests and are frequently able to coordinate positions and to speak with a single voice. The role of spokesman rotates among ASEAN members and can be shared out according to topic. MERCOSUR, the Southern Common Market (Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associate members), has a similar set-up.
More recent efforts at regional economic integration have not yet reached the point where their constituents frequently have a single spokesman on WTO issues. An example is the North American Free Trade Agreement: NAFTA (Canada, US and Mexico). Among other groupings which occasionally present unified statements are the African Group, the least-developed countries, the African, Caribbean and Pacific Group (ACP) and the Latin American Economic System (SELA).
A well-known alliance of a different kind is the Cairns Group. It was set up just before the Uruguay Round began in 1986 to argue for agricultural trade liberalization. The group became an important third force in the farm talks and remains in operation. Its members are diverse, but sharing a common objective — that agriculture has to be liberalized — and the common view that they lack the resources to compete with larger countries in domestic and export subsidies.
The European Union and the WTO
The EU is one of the key players in the World Trade Organisation (WTO). This is because the EU has a common trade policy, where the European Commission negotiates on behalf of the Union 's 25 Member States. As such, the EU is one of the driving forces behind the current round of multilateral trade negotiations in the WTO, the Doha Development Agenda (DDA). The DDA comprises both further market opening and additional rule making, underpinned by commitments to take measures necessary to integrate developing countries into the world trading system, notably by strengthening assistance to build capacity. The main objective of the New Round is to put development at the heart of the world trade system in a way that will help them combat poverty.
In July 2004 the WTO Members adopted a Framework Agreement on the DDA that sets out the modalities for the further negotiations.
EU Trade Policy and the WTO
The EU has a common trade policy (“Common Commercial Policy”). In other words, where trade, including WTO matters, are concerned, the EU acts as one single actor, where the European Commission negotiates trade agreements and represents the European interests on behalf of the Union's 25 Member States.
The legal basis for the EU’s trade policy is Article 133 of the European Community Treaty. On this basis, the Commission negotiates on behalf of the Member States, in consultation with a special committee, “the Article 133 Committee”. The 133 Committee is composed of representatives from the 25 Member States and the European Commission. Its main function is to coordinate EU trade policy. The Committee meets on a weekly basis, usually on a Friday in Brussels at the headquarters of the Council of Ministers. It discusses the full range of trade policy
issues affecting the Community, from the strategic issues surrounding the launch of rounds of trade negotiations at the WTO to specific difficulties with the export of individual products, and considers the trade aspects of wider Community policies in order to ensure consistency of policy. In this Committee, the Commission presents and secures endorsement of the Member States on all trade policy issues. The major formal decisions (for example agreement to launch or conclude negotiations) are then confirmed by the Council of Ministers.
The European Community Treaty grants a more limited role to the European Parliament (EP) in terms of trade policy: according to the current treaty, the “assent” of the EP may be required for major treaty ratifications, when covering more than trade. However, the Commission favours greater Parliamentary involvement in Trade Policy and hence consults and informs the Parliament as systematically as possible. It supports a more formal extension of the Parliament’s powers over trade policy. The draft Constitutional Treaty of the EU provides for a major extension of the EP’s power over trade policy.
The current WTO trade round, the Doha Development Agenda, provides a good example of how trade policy is coordinated in practice. The Commission sets and carries forward the priorities and aims of the EU as laid down in guidelines given by the Council of Ministers. Officials from the Commission's Directorate General for Trade, under the authority of the Commissioner are charged with actually conducting the negotiations, and speak on behalf of the EU as a whole. Coordination with Member States is assured at all times through the 133 Committee, while the Commission regularly informs the Parliament. At the end of the Round, the Council has to agree formally the outcome.
WTO MEETING IN DOHA
The November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, provides the mandate for negotiations on a range of subjects and other work, including issues concerning the implementation of the present agreements.
The negotiations include those on agriculture and services, which began in early 2000. A number of other issues have now been added. The declaration sets 1 January 2005 as the date for completing all but two of the negotiations. Negotiations on the Dispute Settlement Understanding are to end in May 2003; those on a multilateral register of geographical indications for wines and spirits, by the next Ministerial Conference in 2003. Progress is to be reviewed at the Fifth Ministerial Conference in Cancun, Mexico, 10-14 September 2003.
“Implementation” is short-hand for problems raised particularly by developing countries about the implementation of the current WTO Agreements, i.e. the agreements arising from the Uruguay Round negotiations.
In Doha this important question was handled in two ways. First, ministers agreed to adopt around 50 decisions clarifying the obligations of developing country member governments with respect to issues including agriculture, subsidies, textiles and clothing, technical barriers to trade, trade-related investment measures and rules of origin.
Agreement on these points required hard bargaining between negotiators over the course of nearly three years.
Many other implementation issues of concern to developing countries have not been settled, however. For these issues, Ministers agreed in Doha on a future work programme for addressing these matters.
In paragraph 12 of the Ministerial Declaration, ministers underscored that they had taken a decision on the 50 or so measures in a separate ministerial document (the 14 November 2001 decision on “Implementation-Related Issues and Concerns”) and pointed out that “negotiations on outstanding implementation issues shall be an integral part of the Work Programme” in the coming years.
The ministers established a two-track approach. Those issues for which there was an agreed negotiating mandate in the declaration would be dealt with under the terms of that mandate.
Those implementation issues where there is no mandate to negotiate, would be the taken up as “a matter of priority” by relevant WTO councils and committees. These bodies are to report on their progress to the Trade Negotiations Committee by the end of 2002 for “appropriate action”.
1. General Agreement on Tariffs and Trade 1994 (GATT 1994)
Reaffirms that Article XVIII of the GATT 1994 is a special and differential treatment provision for developing countries and that recourse to it should be less onerous than to Article XII of the GATT 1994.
Noting the issues raised in the report of the Chairperson of the Committee on Market Access (WT/GC/50) concerning the meaning to be given to the phrase “substantial interest” in paragraph 2(d) of Article XIII of the GATT 1994, the Market Access Committee is directed to give further consideration to the issue and make recommendations to the General Council as expeditiously as possible but in any event not later than the end of 2002.
2. Agreement on Agriculture.
Urges members to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food security concerns.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, and approves the recommendations contained therein regarding (i) food aid; (ii) technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) review of follow-up.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of Article 10.2 of the Agreement on Agriculture, and approves the recommendations and reporting requirements contained therein.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the administration of tariff rate quotas and the submission by members of addenda to their notifications, and endorses the decision by the Committee to keep this matter under review.
3. Agreement on Textiles and Clothing.
Reaffirms the commitment to full and faithful implementation of the Agreement on Textiles and Clothing, and agrees:
1. That the provisions of the Agreement relating to the early integration of products and the elimination of quota restrictions should be effectively utilised.
2. That members will exercise particular consideration before initiating investigations in the context of antidumping remedies on textile and clothing exports from developing countries previously subject to quantitative restrictions under the Agreement for a period of two years following full integration of this Agreement into the WTO.
3. That without prejudice to their rights and obligations, members shall notify any changes in their rules of origin concerning products falling under the coverage of the Agreement to the Committee on Rules of Origin which may decide to examine them.
Requests the Council for Trade in Goods to examine the following proposals:
4. That when calculating the quota levels for small suppliers for the remaining years of the Agreement, members will apply the most favourable methodology available in respect of those members under the growth-on-growth provisions from the beginning of the implementation period; extend the same treatment to least-developed countries; and, where possible, eliminate quota restrictions on imports of such members;
5. That members will calculate the quota levels for the remaining years of the Agreement with respect to other restrained members as if implementation of the growth-on-growth provision for stage 3 had been advanced to 1 January 2000;
and make recommendations to the General Council by 31 July 2002 for appropriate action.
4. Agreement on Technical Barriers to Trade.
1. Confirms the approach to technical assistance being developed by the Committee on Technical Barriers to Trade, reflecting the results of the triennial review work in this area, and mandates this work to continue.
2. Subject to the conditions specified in paragraph 12 of Article 2 of the Agreement on Technical Barriers to Trade, the phrase “reasonable interval” shall be understood to mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives pursued.
3. (i) Takes note of the actions taken to date by the Director-General to facilitate the increased participation of members at different levels of development in the work of the relevant international standard setting organizations as well as his efforts to coordinate with these organizations and financial institutions in identifying TBT-related technical assistance needs and how best to address them; and
(ii) urges the Director-General to continue his cooperative efforts with these organizations and institutions, including with a view to according priority to the effective participation of least-developed countries and facilitating the provision of technical and financial assistance for this purpose.
4. (i) Urges members to provide, to the extent possible, the financial and technical assistance necessary to enable least-developed countries to respond adequately to the introduction of any new TBT measures which may have significant negative effects on their trade; and
(ii) urges members to ensure that technical assistance is provided to least-developed countries with a view to responding to the special problems faced by them in implementing the Agreement on Technical Barriers to Trade.
5. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
1. The TRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.
2. Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in question. To this end, developed-country members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2. These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually.
6. Final Provisions.
Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration (WT/MIN(01)/DEC/1), to ensure that WTO technical assistance focuses, on a priority basis, on assisting developing countries to implement existing WTO obligations as well as on increasing their capacity to participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO Secretariat should cooperate more closely with international and regional intergovernmental organisations so as to increase efficiency and synergies and avoid duplication of programmes.
FAILURE SO FAR.
Negotiations on liberalizing world markets in financial services, maritime services and basic telecommunications – which should have been completed in the Uruguay round but were set aside for later – all ended without global accords. In all three, the United States argued that market opening offers from other countries, especially in the developing world, were insufficient. But telecom talks have resumed and the hope is that the ministers will push in Singapore for an accord to be reached by February 15th, 1997, deadline.
WTO’S FUTURE
DANGERS AHEAD
The proliferation of regional trade agreements like the – Asia – Pacific economic co-operation(APEC) forum and the North American free trade agreement (NAFTA), for which there is a let-out from MFN under the general agreement. Some analyst fear regional trade groupings could turn into hostile economic and political blocs battling for markets and access to resources.
The WTO also faces growing pressures for protectionism among legislators and workers in the major industrial powers, and especially the United States, who say free trade and “globalization“ of the world economy mean jobs will be stolen by developing countries with cheaper labour.
GATT AND WTO
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WORLD TRADE ORGANIZATION
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. Trade friction is channeled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform to them. That way, the risk of disputes spilling over into political or military conflict is reduced.
By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations.
At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.The goal is to improve the welfare of the peoples of the member countries
UNDERSTANDING THE WTO
• The first step is to talk.
• Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other.
• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.
• But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
WHAT IS THE WORLD TRADE ORGANIZATION?
Simply put: the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.
Is it a bird, is it a plane?
There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. (But it’s not Superman, just in case anyone thought it could solve — or cause — all the world’s problems!)
Above all, it’s a negotiating forum … Essentially; the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001.
Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
It’s a set of rules … At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.
And it helps to settle disputes … This is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.
Born in 1995, but not so young
The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)
It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations.
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
BILATERAL TRADING SYSTEMS.
Bilateral agreements are made between two countries. Throughout the world, many governments have signed, are negotiating, or contemplating new bilateral free trade and investment agreements. But these agreements must be seen in a global context as stepping stones towards full integration into a global free market economy. They are another way to ensure that governments implement the liberalisation, privatization and deregulation measures of the corporate globalisation agenda.
They are based on assumptions that free trade and the removal of regulations on investment will lead to economic growth, the reduction of poverty, increased living standards and employment opportunities.
There is ample evidence to show that on the contrary, these kinds of agreements only allow transnational corporations (TNCs) more freedom to exploit workers and to shape the national and global economy to suit their interests.
MULTILATERAL TRADING SYSTEMS
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.
I.e. the system operated by the WTO. Most nations — including almost all the main trading nations — are members of the system. But some are not, so “multilateral” is used to describe the system instead of “global” or “world”.
In WTO affairs, “multilateral” also contrasts with actions taken regionally or by other smaller groups of countries. (This is different from the word’s use in other areas of international relations where, for example, a “multilateral” security arrangement can be regional.)
The principles
The trading system should be...
Without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);
Freer — barriers coming down through negotiation;
Predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;
More competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;
More beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges.
GATT: ‘provisional’ for almost half a century’
From 1948 to 1994, the General Agreement on Tariffs and Trade (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.
The original intention was to create a third institution to handle the trade side of international economic co-operation, joining the two “Bretton Woods” institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce and bind customs tariffs. With the Second World War only recently ended, they wanted to give an early boost to trade liberalization, and to begin to correct the legacy of protectionist measures which remained in place from the early 1930s.
This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion of trade, about one fifth of the world’s total. The 23 also agreed that they should accept some of the trade rules of the draft ITO Charter. This, they believed, should be done swiftly and “provisionally” in order to protect the value of the tariff concessions they had negotiated. The combined package of trade rules and tariff concessions became known as the General Agreement on Tariffs and Trade. It entered into force in January 1948, while the ITO Charter was still being negotiated. The 23 became founding GATT members (officially, “contracting parties”).
Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948, ratification in some national legislatures proved impossible. The most serious opposition was in the US Congress, even though the US government had been one of the driving forces. In 1950, the United States government announced that it would not seek Congressional ratification of the Havana Charter, and the ITO was effectively dead. Even though it was provisional, the GATT remained the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995.
For almost half a century, the GATT’s basic legal principles remained much as they were in 1948. There were additions in the form of a section on development added in the 1960s and “plurilateral” agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued. Much of this was achieved through a series of multilateral negotiations known as “trade rounds” — the biggest leaps forward in international trade liberalization have come through these rounds which were held under GATT’s auspices.
In the early years, the 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 was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system. The eighth, the Uruguay Round of 1986-94, was the last and most extensive of all. It led to the WTO and a new set of agreements.
The Tokyo Round: A first try to reform the system
The Tokyo Round lasted from 1973 to 1979, with 102 countries participating. It continued GATT’s efforts to progressively reduce tariffs. The results included an average one-third cut in customs duties in the world’s nine major industrial markets, bringing the average tariff on industrial products down to 4.7%. The tariff reductions phased in over a period of eight years, involved an element of “harmonization” — the higher the tariff, the larger the cut, proportionally.
In other issues, the Tokyo Round had mixed results. It failed to come to grips with the fundamental problems affecting farm trade and also stopped short of providing a modified agreement on “safeguards” (emergency import measures). Nevertheless, a series of agreements on non-tariff barriers did emerge from the negotiations, in some cases interpreting existing GATT rules, in others breaking entirely new ground. In most cases, only a relatively small number of (mainly industrialized) GATT members subscribed to these agreements and arrangements. Because they were not accepted by the full GATT membership, they were often informally called “codes”.
They were not multilateral, but they were a beginning. Several codes were eventually amended in the Uruguay Round and turned into multilateral commitments accepted by all WTO members. Only four remained “plurilateral” — those on government procurement, bovine meat, civil aircraft and dairy products. In 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.
Did GATT succeed?
GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.
But all was not well. As time passed new problems arose. The Tokyo Round in the 1970s was an attempt to tackle some of these but its achievements were limited. This was a sign of difficult times to come.
GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and
North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services — not covered by GATT rules — was of major interest to more and more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world merchandise trade. In other respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifibre Arrangement. Even GATT’s institutional structure and its dispute settlement system were causing concern.
These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
WTO Meeting in CANCUN, Mexico
The World Trade Organization’s (WTO) Fifth Ministerial Conference took place in Cancun, Mexico from September 10 to 14, 2003. These meetings are some of the most important to the world due to the various issues discussed that can impact, positively and negatively, various countries, especially poor ones, and their economic futures.
Over 10,000 people are thought to have attended the meeting: among them 3,000 journalists, 2,000 NGOs and 5,000 government delegates (including trade ministers and other ministers of agriculture, environment, finance and development).
The trade talks opened with key speakers warning of the importance and urgency of these issues.
Introduction
As with previous such meetings, even before starting there were debates and concerns on various issues such as:
• The apparent lack of democracy
The WTO and the meeting and decision-making processes, especially seen in previous ministerial meetings, have been long criticized as being non-transparent, often behind closed doors, and on the whole undemocratic, due to the strong influences and power of the richer nations. In the past there have even been closed-door Green Room meetings and consultations by richer countries, who then basically determine the agenda of the Ministerial meetings.
Leading up to this ministerial meeting, heads-of-delegations met to discuss the draft text. Amongst many concerns, it is interesting to note Botswana and the African-Caribbean-Pacific (ACP) countries comments on the decision-making process, as it highlights some of the concerns, quite politely, at the lack of democracy in various ways. Martin Khor of the Third World Network reports on this:
• To improve the decision-making process during the Ministerial, the ACP Group proposed the adoption of procedural rules to enhance transparency and inclusiveness.
These rules should ensure that:
o All WTO members decide on the appointment of the Chairpersons of Working Groups formed at the Ministerial Conference.
o The draft text that forms the basis of negotiations reflects the proposals of all members or groups of members.
o All WTO members be informed of consultations and are entitled to participate in them.
o All issues of importance, including consideration of a proposal to extend the length of the Conference, be put before WTO members as a whole for a decision.
• In the previous round in Doha, developing countries and non-governmental organizations charged rich countries and regions, such as the European Union (E.U.) and U.S of things like bullying and arm-twisting.
• Market access issues for developing countries (or Southern countries);
• Protectionism by industrialized (or Northern) countries and regions such as the U.S. and European Union (EU)
For example, The agricultural subsidies of the first world or industrialized countries result in their agricultural over-production and thus a downward pressure on prices leading to artificially-low global agricultural prices. Combined with years of disastrous structural adjustment policies upon the third world commodity prices have further plummeted;
• Rich countries dumping agricultural commodities on international markets at prices below the cost of production, and other unfair agricultural trade rules;
• Patent rules that appear to deny poor countries access to affordable medicines;
• Trying to introduce new issues before issues raised in the previous Ministerial, the Doha round, have been resolved.Some of these additional issues include those around investment, competition policy, transparency in government procurement and trade facilitation. Some of the existing issues include agriculture and patents. WTO member countries have been polarized over these issues. For example, developing countries in general want to avoid extra issues (especially investment), while some rich countries want to introduce these. (These issues are also known as the Singapore issues, to reflect where they were raised — Singapore in 1996 — not who raised them);
• And many more
Leading up to the meeting there was a Draft Cancun Ministerial Text being discussed. However, at a meeting of heads-of-delegation of WTO members at the end of August, various developing countries were very critical of it and said that the draft text is imbalanced and does not take account of their development needs and of their proposals in many areas.
It is interesting to note how various concerns that were raised here before the meeting, were very similar to those being raised before and at the previous ministerial meeting. In addition, previous meetings have highlighted continued non-democratic decision making processes, and arm-twisting type negotiation tactics of more powerful and wealthier countries. (See this site’s section on the Doha round for more details.) Many therefore feared that this round would not be different and according to some, it did indeed look like this is the way it was going before the talks ended.
The authoritative Joseph Stiglitz, mentioned further above, is worth quoting as he also highlighted before the meeting, how concerns from previous years were real:At their last meeting in Doha in November 2001, ministers recognised the inequities of the previous round of trade negotiations, the Uruguay round. This round was supposed to redress those imbalances.
One would have thought that the developing countries would look forward to the meeting as a chance to achieve a fairer global trading system. Instead, many fear that what has happened in the past will happen again: secret negotiations, arm twisting, and the display
of brute economic power by the US and Europe aimed at ensuring that the interests of the rich are protected.
While some progress has been made in making the negotiations more open and transparent, efforts to go further have met with resistance, and for good reason: unbalanced processes help ensure unbalanced outcomes. Ironically, the World Trade Organisation (WTO), where each country has one vote, might seem far more “democratic” than, say, the International Monetary Fund (IMF) where a single country, the US, has a veto. Yet the realpolitik of economic power has ensured that the interests of the developed countries predominate.
Trade is said to be the way to enhance growth and development and eliminate poverty. That might be the case in theory, but, currently, the 49 least developed countries that make up the world’s poorest countries have not shared in the growth of world trade. The 646 million people in the top exporting countries — the US, Germany, Japan, France and UK — have 100 times more trade than their poor counterparts. Those 49 countries have a similar population as those top five.
Some third world groups have been very critical of the WTO and how it is being used. Seeing it from their side, and the impact on the poor countries, a geopolitical dimension to what may sound like economic issues is added, and some suggest the WTO represents a continuation, but in different forms, of power struggle. Take for example what policy analyst at Focus on the Global South, and author, Aileen Kwa notes:
The WTO perpetrates a subtle and pervasive form of re-colonisation and warfare. It calls on members to relinquish their sovereign rights and policy freedom (by constraining their ability to put in place domestic regulations) in order to allow pillage by transnational corporations. The saturation of Northern markets makes it imperative that transnational corporations get access to markets in the South. The ever-expanding ambit of WTO rules are designed to do just that; pry open developing country markets, not only through the drastic reduction of tariffs, but by “beyond the border” measures. The result is the further subjugation of economies and peoples in the developing world.But this time round it seems that the poor countries have tried to resist such “re-colonization.”
But these talks collapsed.
• Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from. (This is part of the free trade and liberalization ideas that they promote, which have been under increasing criticism from many angles in recent years.)
• Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets. (This actually goes against the free trade ideas that these two regions especially promote.)
• This impasse led to the end of the talks for now but for the first time showed the developing countries make a successful and united stand to represent their concerns.
The trade talks collapsed over the rich countries attempts to discuss new issues without finishing off the existing and most pressing ones for the poor countries, while poorer countries resisted such an attempt.
But this time round, this talk signified perhaps a new state of affairs too: poorer countries, for one of the first times, have been able to make a united stand against the richer countries, who in the past have also used non-democratic pressures to get their interests represented in the WTO meetings and their outcomes, often at the expense of the poorer countries who have made even more concessions.
This has left rich countries blaming poor countries for the failed talks.
• Depending on who you are and how you look at it, the talks can be seen as a failure for not being able to make progress, but in some respects can be seen as a sort of success for poorer countries.
• For the first time then, the poorer countries have been able to take a bold stance.
• While the trade talks didn’t progress, the fact that it appears not to have made things worse for poorer countries could be seen as a success.
The developing countries that took a stand included larger ones such as China, India, Brazil and South Africa but also other blocs such as the African, Caribbean and Pacific (ACP) group, the African Union, the Least Developed Countries (LDCs) and Asian countries such as Malaysia.
• They all said they would not like to launch negotiations at the conference on the “Singapore issues” (or new issues) before existing ones are resolved.
• The existing ones impact the poor the most.
• The new ones are the ones that the rich countries and their corporations would like the most, because they are about more market access into poorer countries.
• It is not clear how beneficial multinational companies (MNCs) having more market access to poorer countries is for the poorer countries themselves.
From a historical perspective, Cancun is also an example of continued attempts by the rich countries to siphon wealth from the poor. Being locked into this process for centuries, perhaps many politicians from the rich world today do not see a way out or even realize these aspects.
Since its formation, the rich countries have been seeking to recruit as many developing nations into the WTO as they can, in order to open up the developing countries' markets and force them to trade on onerous terms. However, as the rich have done so, they have found themselves massively outnumbered. The EU and the US may already be regretting their efforts to persuade China to join. It has now become the rock — too big to bully and threaten — around which the unattached nations have begun to cluster.
Without international rules on trade, especially ones that are fair and democratically agreed to, you could end up with the old power games of colonial and imperial times. Rich countries could vie for bilateral agreements with poor countries in various ways and a plethora of those could get very complicated, and in their worst forms very ugly, as history has warned us with at least two disasters of massive proportions when trade disputes between more powerful countries impacted their economies severely enough: the great European/World Wars...
Whose WTO is it anyway?
The WTO is ‘member-driven’, with decisions taken by consensus among all member governments.
The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international organizations such as the World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of directors or the organization’s head.
When WTO rules impose disciplines on countries’ policies that is the outcome of negotiations among WTO members. The rules are enforced by the members themselves under agreed procedures that they negotiated, including the possibility of trade sanctions. But those sanctions are imposed by member countries, and authorized by the membership as a whole. This is quite different from other agencies whose bureaucracies can, for example, influence a country’s policy by threatening to withhold credit.
Reaching decisions by consensus among some 150 members can be difficult. Its main advantage is that decisions made this way are more acceptable to all members. And despite the difficulty, some remarkable agreements have been reached. Nevertheless, proposals for the creation of a smaller executive body — perhaps like a board of directors each representing different groups of countries — are heard periodically. But for now, the WTO is a member-driven, consensus-based organization.
WTO ORGANIZATION CHART
WTO structure: all WTO members may participate in all councils, committees, etc, except Appellate Body, Dispute Settlement panels, and plurilateral committees.
Chart
Membership, alliances and bureaucracy
All members have joined the system as a result of negotiation and therefore membership means a balance of rights and obligations. They enjoy the privileges that other member-countries give to them and the security that the trading rules provide. In return, they had to make commitments to open their markets and to abide by the rules — those commitments were the result of the membership (or “accession”) negotiations. Countries negotiating membership are WTO “observers”.
How to join the WTO: the accession process
Any state or customs territory having full autonomy in the conduct of its trade policies may join (“accede to”) the WTO, but WTO members must agree on the terms. Broadly speaking the application goes through four stages:
First, “tell us about yourself”. The government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO in a memorandum which is examined by the working party dealing with the country’s application. These working parties are open to all WTO members.
Second, “work out with us individually what you have to offer”. When the working party has made sufficient progress on principles and policies, parallel bilateral talks begin between the prospective new member and individual countries. They are bilateral because different countries have different trading interests. These talks cover tariff rates and specific market access commitments, and other policies in goods and services. The new member’s commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. In other words, the talks determine the benefits (in the form of export opportunities and guarantees) other WTO members can expect when the new member joins. (The talks can be highly complicated. It has been said that in some cases the negotiations are almost as large as an entire round of multilateral trade negotiations.)
Third, “let’s draft membership terms”. Once the working party has completed its examination of the applicant’s trade regime, and the parallel bilateral market access negotiations are complete, the working party finalizes the terms of accession. These appear in a report, a draft membership treaty (“protocol of accession”) and lists (“schedules”) of the member-to-be’s commitments.
Finally, “the decision”. The final package, consisting of the report, protocol and lists of commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-thirds majority of WTO members vote in favour, the applicant is free to sign the protocol and to accede to the organization. In many cases, the country’s own parliament or legislature has to ratify the agreement before membership is complete.
Representing us...
The work of the WTO is undertaken by representatives of member governments but its roots lie in the everyday activity of industry and commerce. Trade policies and negotiating positions are prepared in capitals, usually taking into account advice from private firms, business organizations, farmers, consumers and other interest groups.
Most countries have a diplomatic mission in Geneva, sometimes headed by a special ambassador to the WTO. Officials from the missions attend meetings of the many councils, committees, working parties and negotiating groups at WTO headquarters. Sometimes expert representatives are sent directly from capitals to put forward their governments’ views on specific questions.
Representing groups of countries……
Increasingly, countries are getting together to form groups and alliances in the WTO. In some cases they even speak with one voice using a single spokesman or negotiating team.
This is partly the natural result of economic integration — more customs unions, free trade areas and common markets are being set up around the world. It is also seen as a means for smaller countries to increase their bargaining power in negotiations with their larger trading partners. Sometimes when groups of countries adopt common positions consensus can be reached more easily. Sometimes the groups are specifically created to compromise and break a deadlock rather than to stick to a common position. But there are no hard and fast rules about the impact of groupings in the WTO.
The largest and most comprehensive group is the European Union (for legal reasons known officially as the “European Communities” in WTO business) and its 25 member states. The EU is a customs union with a single external trade policy and tariff. While the member states coordinate their position in Brussels and Geneva, the European Commission alone speaks for the EU at almost all WTO meetings. The EU is a WTO member in its own right as are each of its member states.
A lesser degree of economic integration has so far been achieved by WTO members in the Association of South East Asian Nations (ASEAN) — Brunei Darussalam, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Singapore. (The three remaining members, Cambodia, Laos and Viet Nam, are applying to join the WTO.) Nevertheless, they have many common trade interests and are frequently able to coordinate positions and to speak with a single voice. The role of spokesman rotates among ASEAN members and can be shared out according to topic. MERCOSUR, the Southern Common Market (Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associate members), has a similar set-up.
More recent efforts at regional economic integration have not yet reached the point where their constituents frequently have a single spokesman on WTO issues. An example is the North American Free Trade Agreement: NAFTA (Canada, US and Mexico). Among other groupings which occasionally present unified statements are the African Group, the least-developed countries, the African, Caribbean and Pacific Group (ACP) and the Latin American Economic System (SELA).
A well-known alliance of a different kind is the Cairns Group. It was set up just before the Uruguay Round began in 1986 to argue for agricultural trade liberalization. The group became an important third force in the farm talks and remains in operation. Its members are diverse, but sharing a common objective — that agriculture has to be liberalized — and the common view that they lack the resources to compete with larger countries in domestic and export subsidies.
The European Union and the WTO
The EU is one of the key players in the World Trade Organisation (WTO). This is because the EU has a common trade policy, where the European Commission negotiates on behalf of the Union 's 25 Member States. As such, the EU is one of the driving forces behind the current round of multilateral trade negotiations in the WTO, the Doha Development Agenda (DDA). The DDA comprises both further market opening and additional rule making, underpinned by commitments to take measures necessary to integrate developing countries into the world trading system, notably by strengthening assistance to build capacity. The main objective of the New Round is to put development at the heart of the world trade system in a way that will help them combat poverty.
In July 2004 the WTO Members adopted a Framework Agreement on the DDA that sets out the modalities for the further negotiations.
EU Trade Policy and the WTO
The EU has a common trade policy (“Common Commercial Policy”). In other words, where trade, including WTO matters, are concerned, the EU acts as one single actor, where the European Commission negotiates trade agreements and represents the European interests on behalf of the Union's 25 Member States.
The legal basis for the EU’s trade policy is Article 133 of the European Community Treaty. On this basis, the Commission negotiates on behalf of the Member States, in consultation with a special committee, “the Article 133 Committee”. The 133 Committee is composed of representatives from the 25 Member States and the European Commission. Its main function is to coordinate EU trade policy. The Committee meets on a weekly basis, usually on a Friday in Brussels at the headquarters of the Council of Ministers. It discusses the full range of trade policy
issues affecting the Community, from the strategic issues surrounding the launch of rounds of trade negotiations at the WTO to specific difficulties with the export of individual products, and considers the trade aspects of wider Community policies in order to ensure consistency of policy. In this Committee, the Commission presents and secures endorsement of the Member States on all trade policy issues. The major formal decisions (for example agreement to launch or conclude negotiations) are then confirmed by the Council of Ministers.
The European Community Treaty grants a more limited role to the European Parliament (EP) in terms of trade policy: according to the current treaty, the “assent” of the EP may be required for major treaty ratifications, when covering more than trade. However, the Commission favours greater Parliamentary involvement in Trade Policy and hence consults and informs the Parliament as systematically as possible. It supports a more formal extension of the Parliament’s powers over trade policy. The draft Constitutional Treaty of the EU provides for a major extension of the EP’s power over trade policy.
The current WTO trade round, the Doha Development Agenda, provides a good example of how trade policy is coordinated in practice. The Commission sets and carries forward the priorities and aims of the EU as laid down in guidelines given by the Council of Ministers. Officials from the Commission's Directorate General for Trade, under the authority of the Commissioner are charged with actually conducting the negotiations, and speak on behalf of the EU as a whole. Coordination with Member States is assured at all times through the 133 Committee, while the Commission regularly informs the Parliament. At the end of the Round, the Council has to agree formally the outcome.
WTO MEETING IN DOHA
The November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, provides the mandate for negotiations on a range of subjects and other work, including issues concerning the implementation of the present agreements.
The negotiations include those on agriculture and services, which began in early 2000. A number of other issues have now been added. The declaration sets 1 January 2005 as the date for completing all but two of the negotiations. Negotiations on the Dispute Settlement Understanding are to end in May 2003; those on a multilateral register of geographical indications for wines and spirits, by the next Ministerial Conference in 2003. Progress is to be reviewed at the Fifth Ministerial Conference in Cancun, Mexico, 10-14 September 2003.
“Implementation” is short-hand for problems raised particularly by developing countries about the implementation of the current WTO Agreements, i.e. the agreements arising from the Uruguay Round negotiations.
In Doha this important question was handled in two ways. First, ministers agreed to adopt around 50 decisions clarifying the obligations of developing country member governments with respect to issues including agriculture, subsidies, textiles and clothing, technical barriers to trade, trade-related investment measures and rules of origin.
Agreement on these points required hard bargaining between negotiators over the course of nearly three years.
Many other implementation issues of concern to developing countries have not been settled, however. For these issues, Ministers agreed in Doha on a future work programme for addressing these matters.
In paragraph 12 of the Ministerial Declaration, ministers underscored that they had taken a decision on the 50 or so measures in a separate ministerial document (the 14 November 2001 decision on “Implementation-Related Issues and Concerns”) and pointed out that “negotiations on outstanding implementation issues shall be an integral part of the Work Programme” in the coming years.
The ministers established a two-track approach. Those issues for which there was an agreed negotiating mandate in the declaration would be dealt with under the terms of that mandate.
Those implementation issues where there is no mandate to negotiate, would be the taken up as “a matter of priority” by relevant WTO councils and committees. These bodies are to report on their progress to the Trade Negotiations Committee by the end of 2002 for “appropriate action”.
1. General Agreement on Tariffs and Trade 1994 (GATT 1994)
Reaffirms that Article XVIII of the GATT 1994 is a special and differential treatment provision for developing countries and that recourse to it should be less onerous than to Article XII of the GATT 1994.
Noting the issues raised in the report of the Chairperson of the Committee on Market Access (WT/GC/50) concerning the meaning to be given to the phrase “substantial interest” in paragraph 2(d) of Article XIII of the GATT 1994, the Market Access Committee is directed to give further consideration to the issue and make recommendations to the General Council as expeditiously as possible but in any event not later than the end of 2002.
2. Agreement on Agriculture.
Urges members to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food security concerns.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, and approves the recommendations contained therein regarding (i) food aid; (ii) technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) review of follow-up.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of Article 10.2 of the Agreement on Agriculture, and approves the recommendations and reporting requirements contained therein.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the administration of tariff rate quotas and the submission by members of addenda to their notifications, and endorses the decision by the Committee to keep this matter under review.
3. Agreement on Textiles and Clothing.
Reaffirms the commitment to full and faithful implementation of the Agreement on Textiles and Clothing, and agrees:
1. That the provisions of the Agreement relating to the early integration of products and the elimination of quota restrictions should be effectively utilised.
2. That members will exercise particular consideration before initiating investigations in the context of antidumping remedies on textile and clothing exports from developing countries previously subject to quantitative restrictions under the Agreement for a period of two years following full integration of this Agreement into the WTO.
3. That without prejudice to their rights and obligations, members shall notify any changes in their rules of origin concerning products falling under the coverage of the Agreement to the Committee on Rules of Origin which may decide to examine them.
Requests the Council for Trade in Goods to examine the following proposals:
4. That when calculating the quota levels for small suppliers for the remaining years of the Agreement, members will apply the most favourable methodology available in respect of those members under the growth-on-growth provisions from the beginning of the implementation period; extend the same treatment to least-developed countries; and, where possible, eliminate quota restrictions on imports of such members;
5. That members will calculate the quota levels for the remaining years of the Agreement with respect to other restrained members as if implementation of the growth-on-growth provision for stage 3 had been advanced to 1 January 2000;
and make recommendations to the General Council by 31 July 2002 for appropriate action.
4. Agreement on Technical Barriers to Trade.
1. Confirms the approach to technical assistance being developed by the Committee on Technical Barriers to Trade, reflecting the results of the triennial review work in this area, and mandates this work to continue.
2. Subject to the conditions specified in paragraph 12 of Article 2 of the Agreement on Technical Barriers to Trade, the phrase “reasonable interval” shall be understood to mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives pursued.
3. (i) Takes note of the actions taken to date by the Director-General to facilitate the increased participation of members at different levels of development in the work of the relevant international standard setting organizations as well as his efforts to coordinate with these organizations and financial institutions in identifying TBT-related technical assistance needs and how best to address them; and
(ii) urges the Director-General to continue his cooperative efforts with these organizations and institutions, including with a view to according priority to the effective participation of least-developed countries and facilitating the provision of technical and financial assistance for this purpose.
4. (i) Urges members to provide, to the extent possible, the financial and technical assistance necessary to enable least-developed countries to respond adequately to the introduction of any new TBT measures which may have significant negative effects on their trade; and
(ii) urges members to ensure that technical assistance is provided to least-developed countries with a view to responding to the special problems faced by them in implementing the Agreement on Technical Barriers to Trade.
5. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
1. The TRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.
2. Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in question. To this end, developed-country members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2. These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually.
6. Final Provisions.
Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration (WT/MIN(01)/DEC/1), to ensure that WTO technical assistance focuses, on a priority basis, on assisting developing countries to implement existing WTO obligations as well as on increasing their capacity to participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO Secretariat should cooperate more closely with international and regional intergovernmental organisations so as to increase efficiency and synergies and avoid duplication of programmes.
FAILURE SO FAR.
Negotiations on liberalizing world markets in financial services, maritime services and basic telecommunications – which should have been completed in the Uruguay round but were set aside for later – all ended without global accords. In all three, the United States argued that market opening offers from other countries, especially in the developing world, were insufficient. But telecom talks have resumed and the hope is that the ministers will push in Singapore for an accord to be reached by February 15th, 1997, deadline.
WTO’S FUTURE
DANGERS AHEAD
The proliferation of regional trade agreements like the – Asia – Pacific economic co-operation(APEC) forum and the North American free trade agreement (NAFTA), for which there is a let-out from MFN under the general agreement. Some analyst fear regional trade groupings could turn into hostile economic and political blocs battling for markets and access to resources.
The WTO also faces growing pressures for protectionism among legislators and workers in the major industrial powers, and especially the United States, who say free trade and “globalization“ of the world economy mean jobs will be stolen by developing countries with cheaper labour.
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WORLD TRADE ORGANIZATION
The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Virtually all decisions in the WTO are taken by consensus among all member countries and they are ratified by members' parliaments. Trade friction is channeled into the WTO's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries' trade policies conform to them. That way, the risk of disputes spilling over into political or military conflict is reduced.
By lowering trade barriers, the WTO’s system also breaks down other barriers between peoples and nations.
At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit.The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business.The goal is to improve the welfare of the peoples of the member countries
UNDERSTANDING THE WTO
• The first step is to talk.
• Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other.
• At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.
• But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
WHAT IS THE WORLD TRADE ORGANIZATION?
Simply put: the World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.
Is it a bird, is it a plane?
There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. (But it’s not Superman, just in case anyone thought it could solve — or cause — all the world’s problems!)
Above all, it’s a negotiating forum … Essentially; the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001.
Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.
It’s a set of rules … At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.
The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be “transparent” and predictable.
And it helps to settle disputes … This is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.
Born in 1995, but not so young
The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system. (The second WTO ministerial meeting, held in Geneva in May 1998, included a celebration of the 50th anniversary of the system.)
It did not take long for the General Agreement to give birth to an unofficial, de facto international organization, also known informally as GATT. Over the years GATT evolved through several rounds of negotiations.
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
BILATERAL TRADING SYSTEMS.
Bilateral agreements are made between two countries. Throughout the world, many governments have signed, are negotiating, or contemplating new bilateral free trade and investment agreements. But these agreements must be seen in a global context as stepping stones towards full integration into a global free market economy. They are another way to ensure that governments implement the liberalisation, privatization and deregulation measures of the corporate globalisation agenda.
They are based on assumptions that free trade and the removal of regulations on investment will lead to economic growth, the reduction of poverty, increased living standards and employment opportunities.
There is ample evidence to show that on the contrary, these kinds of agreements only allow transnational corporations (TNCs) more freedom to exploit workers and to shape the national and global economy to suit their interests.
MULTILATERAL TRADING SYSTEMS
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.
I.e. the system operated by the WTO. Most nations — including almost all the main trading nations — are members of the system. But some are not, so “multilateral” is used to describe the system instead of “global” or “world”.
In WTO affairs, “multilateral” also contrasts with actions taken regionally or by other smaller groups of countries. (This is different from the word’s use in other areas of international relations where, for example, a “multilateral” security arrangement can be regional.)
The principles
The trading system should be...
Without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);
Freer — barriers coming down through negotiation;
Predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;
More competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;
More beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges.
GATT: ‘provisional’ for almost half a century’
From 1948 to 1994, the General Agreement on Tariffs and Trade (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.
The original intention was to create a third institution to handle the trade side of international economic co-operation, joining the two “Bretton Woods” institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce and bind customs tariffs. With the Second World War only recently ended, they wanted to give an early boost to trade liberalization, and to begin to correct the legacy of protectionist measures which remained in place from the early 1930s.
This first round of negotiations resulted in 45,000 tariff concessions affecting $10 billion of trade, about one fifth of the world’s total. The 23 also agreed that they should accept some of the trade rules of the draft ITO Charter. This, they believed, should be done swiftly and “provisionally” in order to protect the value of the tariff concessions they had negotiated. The combined package of trade rules and tariff concessions became known as the General Agreement on Tariffs and Trade. It entered into force in January 1948, while the ITO Charter was still being negotiated. The 23 became founding GATT members (officially, “contracting parties”).
Although the ITO Charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948, ratification in some national legislatures proved impossible. The most serious opposition was in the US Congress, even though the US government had been one of the driving forces. In 1950, the United States government announced that it would not seek Congressional ratification of the Havana Charter, and the ITO was effectively dead. Even though it was provisional, the GATT remained the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995.
For almost half a century, the GATT’s basic legal principles remained much as they were in 1948. There were additions in the form of a section on development added in the 1960s and “plurilateral” agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued. Much of this was achieved through a series of multilateral negotiations known as “trade rounds” — the biggest leaps forward in international trade liberalization have come through these rounds which were held under GATT’s auspices.
In the early years, the 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 was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system. The eighth, the Uruguay Round of 1986-94, was the last and most extensive of all. It led to the WTO and a new set of agreements.
The Tokyo Round: A first try to reform the system
The Tokyo Round lasted from 1973 to 1979, with 102 countries participating. It continued GATT’s efforts to progressively reduce tariffs. The results included an average one-third cut in customs duties in the world’s nine major industrial markets, bringing the average tariff on industrial products down to 4.7%. The tariff reductions phased in over a period of eight years, involved an element of “harmonization” — the higher the tariff, the larger the cut, proportionally.
In other issues, the Tokyo Round had mixed results. It failed to come to grips with the fundamental problems affecting farm trade and also stopped short of providing a modified agreement on “safeguards” (emergency import measures). Nevertheless, a series of agreements on non-tariff barriers did emerge from the negotiations, in some cases interpreting existing GATT rules, in others breaking entirely new ground. In most cases, only a relatively small number of (mainly industrialized) GATT members subscribed to these agreements and arrangements. Because they were not accepted by the full GATT membership, they were often informally called “codes”.
They were not multilateral, but they were a beginning. Several codes were eventually amended in the Uruguay Round and turned into multilateral commitments accepted by all WTO members. Only four remained “plurilateral” — those on government procurement, bovine meat, civil aircraft and dairy products. In 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.
Did GATT succeed?
GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.
But all was not well. As time passed new problems arose. The Tokyo Round in the 1970s was an attempt to tackle some of these but its achievements were limited. This was a sign of difficult times to come.
GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. High rates of unemployment and constant factory closures led governments in Western Europe and
North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade. Both these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. For a start, world trade had become far more complex and important than 40 years before: the globalization of the world economy was underway, trade in services — not covered by GATT rules — was of major interest to more and more countries, and international investment had expanded. The expansion of services trade was also closely tied to further increases in world merchandise trade. In other respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifibre Arrangement. Even GATT’s institutional structure and its dispute settlement system were causing concern.
These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
WTO Meeting in CANCUN, Mexico
The World Trade Organization’s (WTO) Fifth Ministerial Conference took place in Cancun, Mexico from September 10 to 14, 2003. These meetings are some of the most important to the world due to the various issues discussed that can impact, positively and negatively, various countries, especially poor ones, and their economic futures.
Over 10,000 people are thought to have attended the meeting: among them 3,000 journalists, 2,000 NGOs and 5,000 government delegates (including trade ministers and other ministers of agriculture, environment, finance and development).
The trade talks opened with key speakers warning of the importance and urgency of these issues.
Introduction
As with previous such meetings, even before starting there were debates and concerns on various issues such as:
• The apparent lack of democracy
The WTO and the meeting and decision-making processes, especially seen in previous ministerial meetings, have been long criticized as being non-transparent, often behind closed doors, and on the whole undemocratic, due to the strong influences and power of the richer nations. In the past there have even been closed-door Green Room meetings and consultations by richer countries, who then basically determine the agenda of the Ministerial meetings.
Leading up to this ministerial meeting, heads-of-delegations met to discuss the draft text. Amongst many concerns, it is interesting to note Botswana and the African-Caribbean-Pacific (ACP) countries comments on the decision-making process, as it highlights some of the concerns, quite politely, at the lack of democracy in various ways. Martin Khor of the Third World Network reports on this:
• To improve the decision-making process during the Ministerial, the ACP Group proposed the adoption of procedural rules to enhance transparency and inclusiveness.
These rules should ensure that:
o All WTO members decide on the appointment of the Chairpersons of Working Groups formed at the Ministerial Conference.
o The draft text that forms the basis of negotiations reflects the proposals of all members or groups of members.
o All WTO members be informed of consultations and are entitled to participate in them.
o All issues of importance, including consideration of a proposal to extend the length of the Conference, be put before WTO members as a whole for a decision.
• In the previous round in Doha, developing countries and non-governmental organizations charged rich countries and regions, such as the European Union (E.U.) and U.S of things like bullying and arm-twisting.
• Market access issues for developing countries (or Southern countries);
• Protectionism by industrialized (or Northern) countries and regions such as the U.S. and European Union (EU)
For example, The agricultural subsidies of the first world or industrialized countries result in their agricultural over-production and thus a downward pressure on prices leading to artificially-low global agricultural prices. Combined with years of disastrous structural adjustment policies upon the third world commodity prices have further plummeted;
• Rich countries dumping agricultural commodities on international markets at prices below the cost of production, and other unfair agricultural trade rules;
• Patent rules that appear to deny poor countries access to affordable medicines;
• Trying to introduce new issues before issues raised in the previous Ministerial, the Doha round, have been resolved.Some of these additional issues include those around investment, competition policy, transparency in government procurement and trade facilitation. Some of the existing issues include agriculture and patents. WTO member countries have been polarized over these issues. For example, developing countries in general want to avoid extra issues (especially investment), while some rich countries want to introduce these. (These issues are also known as the Singapore issues, to reflect where they were raised — Singapore in 1996 — not who raised them);
• And many more
Leading up to the meeting there was a Draft Cancun Ministerial Text being discussed. However, at a meeting of heads-of-delegation of WTO members at the end of August, various developing countries were very critical of it and said that the draft text is imbalanced and does not take account of their development needs and of their proposals in many areas.
It is interesting to note how various concerns that were raised here before the meeting, were very similar to those being raised before and at the previous ministerial meeting. In addition, previous meetings have highlighted continued non-democratic decision making processes, and arm-twisting type negotiation tactics of more powerful and wealthier countries. (See this site’s section on the Doha round for more details.) Many therefore feared that this round would not be different and according to some, it did indeed look like this is the way it was going before the talks ended.
The authoritative Joseph Stiglitz, mentioned further above, is worth quoting as he also highlighted before the meeting, how concerns from previous years were real:At their last meeting in Doha in November 2001, ministers recognised the inequities of the previous round of trade negotiations, the Uruguay round. This round was supposed to redress those imbalances.
One would have thought that the developing countries would look forward to the meeting as a chance to achieve a fairer global trading system. Instead, many fear that what has happened in the past will happen again: secret negotiations, arm twisting, and the display
of brute economic power by the US and Europe aimed at ensuring that the interests of the rich are protected.
While some progress has been made in making the negotiations more open and transparent, efforts to go further have met with resistance, and for good reason: unbalanced processes help ensure unbalanced outcomes. Ironically, the World Trade Organisation (WTO), where each country has one vote, might seem far more “democratic” than, say, the International Monetary Fund (IMF) where a single country, the US, has a veto. Yet the realpolitik of economic power has ensured that the interests of the developed countries predominate.
Trade is said to be the way to enhance growth and development and eliminate poverty. That might be the case in theory, but, currently, the 49 least developed countries that make up the world’s poorest countries have not shared in the growth of world trade. The 646 million people in the top exporting countries — the US, Germany, Japan, France and UK — have 100 times more trade than their poor counterparts. Those 49 countries have a similar population as those top five.
Some third world groups have been very critical of the WTO and how it is being used. Seeing it from their side, and the impact on the poor countries, a geopolitical dimension to what may sound like economic issues is added, and some suggest the WTO represents a continuation, but in different forms, of power struggle. Take for example what policy analyst at Focus on the Global South, and author, Aileen Kwa notes:
The WTO perpetrates a subtle and pervasive form of re-colonisation and warfare. It calls on members to relinquish their sovereign rights and policy freedom (by constraining their ability to put in place domestic regulations) in order to allow pillage by transnational corporations. The saturation of Northern markets makes it imperative that transnational corporations get access to markets in the South. The ever-expanding ambit of WTO rules are designed to do just that; pry open developing country markets, not only through the drastic reduction of tariffs, but by “beyond the border” measures. The result is the further subjugation of economies and peoples in the developing world.But this time round it seems that the poor countries have tried to resist such “re-colonization.”
But these talks collapsed.
• Richer countries wanted to talk about newer issues that mostly they themselves would have benefited from. (This is part of the free trade and liberalization ideas that they promote, which have been under increasing criticism from many angles in recent years.)
• Poorer countries wanted to finish older issues mostly on agriculture that affected them the most, especially the impact of European and U.S. subsidies on their own agriculture and lack of access to those markets. (This actually goes against the free trade ideas that these two regions especially promote.)
• This impasse led to the end of the talks for now but for the first time showed the developing countries make a successful and united stand to represent their concerns.
The trade talks collapsed over the rich countries attempts to discuss new issues without finishing off the existing and most pressing ones for the poor countries, while poorer countries resisted such an attempt.
But this time round, this talk signified perhaps a new state of affairs too: poorer countries, for one of the first times, have been able to make a united stand against the richer countries, who in the past have also used non-democratic pressures to get their interests represented in the WTO meetings and their outcomes, often at the expense of the poorer countries who have made even more concessions.
This has left rich countries blaming poor countries for the failed talks.
• Depending on who you are and how you look at it, the talks can be seen as a failure for not being able to make progress, but in some respects can be seen as a sort of success for poorer countries.
• For the first time then, the poorer countries have been able to take a bold stance.
• While the trade talks didn’t progress, the fact that it appears not to have made things worse for poorer countries could be seen as a success.
The developing countries that took a stand included larger ones such as China, India, Brazil and South Africa but also other blocs such as the African, Caribbean and Pacific (ACP) group, the African Union, the Least Developed Countries (LDCs) and Asian countries such as Malaysia.
• They all said they would not like to launch negotiations at the conference on the “Singapore issues” (or new issues) before existing ones are resolved.
• The existing ones impact the poor the most.
• The new ones are the ones that the rich countries and their corporations would like the most, because they are about more market access into poorer countries.
• It is not clear how beneficial multinational companies (MNCs) having more market access to poorer countries is for the poorer countries themselves.
From a historical perspective, Cancun is also an example of continued attempts by the rich countries to siphon wealth from the poor. Being locked into this process for centuries, perhaps many politicians from the rich world today do not see a way out or even realize these aspects.
Since its formation, the rich countries have been seeking to recruit as many developing nations into the WTO as they can, in order to open up the developing countries' markets and force them to trade on onerous terms. However, as the rich have done so, they have found themselves massively outnumbered. The EU and the US may already be regretting their efforts to persuade China to join. It has now become the rock — too big to bully and threaten — around which the unattached nations have begun to cluster.
Without international rules on trade, especially ones that are fair and democratically agreed to, you could end up with the old power games of colonial and imperial times. Rich countries could vie for bilateral agreements with poor countries in various ways and a plethora of those could get very complicated, and in their worst forms very ugly, as history has warned us with at least two disasters of massive proportions when trade disputes between more powerful countries impacted their economies severely enough: the great European/World Wars...
Whose WTO is it anyway?
The WTO is ‘member-driven’, with decisions taken by consensus among all member governments.
The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva). Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international organizations such as the World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of directors or the organization’s head.
When WTO rules impose disciplines on countries’ policies that is the outcome of negotiations among WTO members. The rules are enforced by the members themselves under agreed procedures that they negotiated, including the possibility of trade sanctions. But those sanctions are imposed by member countries, and authorized by the membership as a whole. This is quite different from other agencies whose bureaucracies can, for example, influence a country’s policy by threatening to withhold credit.
Reaching decisions by consensus among some 150 members can be difficult. Its main advantage is that decisions made this way are more acceptable to all members. And despite the difficulty, some remarkable agreements have been reached. Nevertheless, proposals for the creation of a smaller executive body — perhaps like a board of directors each representing different groups of countries — are heard periodically. But for now, the WTO is a member-driven, consensus-based organization.
WTO ORGANIZATION CHART
WTO structure: all WTO members may participate in all councils, committees, etc, except Appellate Body, Dispute Settlement panels, and plurilateral committees.
Chart
Membership, alliances and bureaucracy
All members have joined the system as a result of negotiation and therefore membership means a balance of rights and obligations. They enjoy the privileges that other member-countries give to them and the security that the trading rules provide. In return, they had to make commitments to open their markets and to abide by the rules — those commitments were the result of the membership (or “accession”) negotiations. Countries negotiating membership are WTO “observers”.
How to join the WTO: the accession process
Any state or customs territory having full autonomy in the conduct of its trade policies may join (“accede to”) the WTO, but WTO members must agree on the terms. Broadly speaking the application goes through four stages:
First, “tell us about yourself”. The government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO in a memorandum which is examined by the working party dealing with the country’s application. These working parties are open to all WTO members.
Second, “work out with us individually what you have to offer”. When the working party has made sufficient progress on principles and policies, parallel bilateral talks begin between the prospective new member and individual countries. They are bilateral because different countries have different trading interests. These talks cover tariff rates and specific market access commitments, and other policies in goods and services. The new member’s commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. In other words, the talks determine the benefits (in the form of export opportunities and guarantees) other WTO members can expect when the new member joins. (The talks can be highly complicated. It has been said that in some cases the negotiations are almost as large as an entire round of multilateral trade negotiations.)
Third, “let’s draft membership terms”. Once the working party has completed its examination of the applicant’s trade regime, and the parallel bilateral market access negotiations are complete, the working party finalizes the terms of accession. These appear in a report, a draft membership treaty (“protocol of accession”) and lists (“schedules”) of the member-to-be’s commitments.
Finally, “the decision”. The final package, consisting of the report, protocol and lists of commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-thirds majority of WTO members vote in favour, the applicant is free to sign the protocol and to accede to the organization. In many cases, the country’s own parliament or legislature has to ratify the agreement before membership is complete.
Representing us...
The work of the WTO is undertaken by representatives of member governments but its roots lie in the everyday activity of industry and commerce. Trade policies and negotiating positions are prepared in capitals, usually taking into account advice from private firms, business organizations, farmers, consumers and other interest groups.
Most countries have a diplomatic mission in Geneva, sometimes headed by a special ambassador to the WTO. Officials from the missions attend meetings of the many councils, committees, working parties and negotiating groups at WTO headquarters. Sometimes expert representatives are sent directly from capitals to put forward their governments’ views on specific questions.
Representing groups of countries……
Increasingly, countries are getting together to form groups and alliances in the WTO. In some cases they even speak with one voice using a single spokesman or negotiating team.
This is partly the natural result of economic integration — more customs unions, free trade areas and common markets are being set up around the world. It is also seen as a means for smaller countries to increase their bargaining power in negotiations with their larger trading partners. Sometimes when groups of countries adopt common positions consensus can be reached more easily. Sometimes the groups are specifically created to compromise and break a deadlock rather than to stick to a common position. But there are no hard and fast rules about the impact of groupings in the WTO.
The largest and most comprehensive group is the European Union (for legal reasons known officially as the “European Communities” in WTO business) and its 25 member states. The EU is a customs union with a single external trade policy and tariff. While the member states coordinate their position in Brussels and Geneva, the European Commission alone speaks for the EU at almost all WTO meetings. The EU is a WTO member in its own right as are each of its member states.
A lesser degree of economic integration has so far been achieved by WTO members in the Association of South East Asian Nations (ASEAN) — Brunei Darussalam, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Singapore. (The three remaining members, Cambodia, Laos and Viet Nam, are applying to join the WTO.) Nevertheless, they have many common trade interests and are frequently able to coordinate positions and to speak with a single voice. The role of spokesman rotates among ASEAN members and can be shared out according to topic. MERCOSUR, the Southern Common Market (Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associate members), has a similar set-up.
More recent efforts at regional economic integration have not yet reached the point where their constituents frequently have a single spokesman on WTO issues. An example is the North American Free Trade Agreement: NAFTA (Canada, US and Mexico). Among other groupings which occasionally present unified statements are the African Group, the least-developed countries, the African, Caribbean and Pacific Group (ACP) and the Latin American Economic System (SELA).
A well-known alliance of a different kind is the Cairns Group. It was set up just before the Uruguay Round began in 1986 to argue for agricultural trade liberalization. The group became an important third force in the farm talks and remains in operation. Its members are diverse, but sharing a common objective — that agriculture has to be liberalized — and the common view that they lack the resources to compete with larger countries in domestic and export subsidies.
The European Union and the WTO
The EU is one of the key players in the World Trade Organisation (WTO). This is because the EU has a common trade policy, where the European Commission negotiates on behalf of the Union 's 25 Member States. As such, the EU is one of the driving forces behind the current round of multilateral trade negotiations in the WTO, the Doha Development Agenda (DDA). The DDA comprises both further market opening and additional rule making, underpinned by commitments to take measures necessary to integrate developing countries into the world trading system, notably by strengthening assistance to build capacity. The main objective of the New Round is to put development at the heart of the world trade system in a way that will help them combat poverty.
In July 2004 the WTO Members adopted a Framework Agreement on the DDA that sets out the modalities for the further negotiations.
EU Trade Policy and the WTO
The EU has a common trade policy (“Common Commercial Policy”). In other words, where trade, including WTO matters, are concerned, the EU acts as one single actor, where the European Commission negotiates trade agreements and represents the European interests on behalf of the Union's 25 Member States.
The legal basis for the EU’s trade policy is Article 133 of the European Community Treaty. On this basis, the Commission negotiates on behalf of the Member States, in consultation with a special committee, “the Article 133 Committee”. The 133 Committee is composed of representatives from the 25 Member States and the European Commission. Its main function is to coordinate EU trade policy. The Committee meets on a weekly basis, usually on a Friday in Brussels at the headquarters of the Council of Ministers. It discusses the full range of trade policy
issues affecting the Community, from the strategic issues surrounding the launch of rounds of trade negotiations at the WTO to specific difficulties with the export of individual products, and considers the trade aspects of wider Community policies in order to ensure consistency of policy. In this Committee, the Commission presents and secures endorsement of the Member States on all trade policy issues. The major formal decisions (for example agreement to launch or conclude negotiations) are then confirmed by the Council of Ministers.
The European Community Treaty grants a more limited role to the European Parliament (EP) in terms of trade policy: according to the current treaty, the “assent” of the EP may be required for major treaty ratifications, when covering more than trade. However, the Commission favours greater Parliamentary involvement in Trade Policy and hence consults and informs the Parliament as systematically as possible. It supports a more formal extension of the Parliament’s powers over trade policy. The draft Constitutional Treaty of the EU provides for a major extension of the EP’s power over trade policy.
The current WTO trade round, the Doha Development Agenda, provides a good example of how trade policy is coordinated in practice. The Commission sets and carries forward the priorities and aims of the EU as laid down in guidelines given by the Council of Ministers. Officials from the Commission's Directorate General for Trade, under the authority of the Commissioner are charged with actually conducting the negotiations, and speak on behalf of the EU as a whole. Coordination with Member States is assured at all times through the 133 Committee, while the Commission regularly informs the Parliament. At the end of the Round, the Council has to agree formally the outcome.
WTO MEETING IN DOHA
The November 2001 declaration of the Fourth Ministerial Conference in Doha, Qatar, provides the mandate for negotiations on a range of subjects and other work, including issues concerning the implementation of the present agreements.
The negotiations include those on agriculture and services, which began in early 2000. A number of other issues have now been added. The declaration sets 1 January 2005 as the date for completing all but two of the negotiations. Negotiations on the Dispute Settlement Understanding are to end in May 2003; those on a multilateral register of geographical indications for wines and spirits, by the next Ministerial Conference in 2003. Progress is to be reviewed at the Fifth Ministerial Conference in Cancun, Mexico, 10-14 September 2003.
“Implementation” is short-hand for problems raised particularly by developing countries about the implementation of the current WTO Agreements, i.e. the agreements arising from the Uruguay Round negotiations.
In Doha this important question was handled in two ways. First, ministers agreed to adopt around 50 decisions clarifying the obligations of developing country member governments with respect to issues including agriculture, subsidies, textiles and clothing, technical barriers to trade, trade-related investment measures and rules of origin.
Agreement on these points required hard bargaining between negotiators over the course of nearly three years.
Many other implementation issues of concern to developing countries have not been settled, however. For these issues, Ministers agreed in Doha on a future work programme for addressing these matters.
In paragraph 12 of the Ministerial Declaration, ministers underscored that they had taken a decision on the 50 or so measures in a separate ministerial document (the 14 November 2001 decision on “Implementation-Related Issues and Concerns”) and pointed out that “negotiations on outstanding implementation issues shall be an integral part of the Work Programme” in the coming years.
The ministers established a two-track approach. Those issues for which there was an agreed negotiating mandate in the declaration would be dealt with under the terms of that mandate.
Those implementation issues where there is no mandate to negotiate, would be the taken up as “a matter of priority” by relevant WTO councils and committees. These bodies are to report on their progress to the Trade Negotiations Committee by the end of 2002 for “appropriate action”.
1. General Agreement on Tariffs and Trade 1994 (GATT 1994)
Reaffirms that Article XVIII of the GATT 1994 is a special and differential treatment provision for developing countries and that recourse to it should be less onerous than to Article XII of the GATT 1994.
Noting the issues raised in the report of the Chairperson of the Committee on Market Access (WT/GC/50) concerning the meaning to be given to the phrase “substantial interest” in paragraph 2(d) of Article XIII of the GATT 1994, the Market Access Committee is directed to give further consideration to the issue and make recommendations to the General Council as expeditiously as possible but in any event not later than the end of 2002.
2. Agreement on Agriculture.
Urges members to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food security concerns.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries, and approves the recommendations contained therein regarding (i) food aid; (ii) technical and financial assistance in the context of aid programmes to improve agricultural productivity and infrastructure; (iii) financing normal levels of commercial imports of basic foodstuffs; and (iv) review of follow-up.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the implementation of Article 10.2 of the Agreement on Agriculture, and approves the recommendations and reporting requirements contained therein.
Takes note of the report of the Committee on Agriculture (G/AG/11) regarding the administration of tariff rate quotas and the submission by members of addenda to their notifications, and endorses the decision by the Committee to keep this matter under review.
3. Agreement on Textiles and Clothing.
Reaffirms the commitment to full and faithful implementation of the Agreement on Textiles and Clothing, and agrees:
1. That the provisions of the Agreement relating to the early integration of products and the elimination of quota restrictions should be effectively utilised.
2. That members will exercise particular consideration before initiating investigations in the context of antidumping remedies on textile and clothing exports from developing countries previously subject to quantitative restrictions under the Agreement for a period of two years following full integration of this Agreement into the WTO.
3. That without prejudice to their rights and obligations, members shall notify any changes in their rules of origin concerning products falling under the coverage of the Agreement to the Committee on Rules of Origin which may decide to examine them.
Requests the Council for Trade in Goods to examine the following proposals:
4. That when calculating the quota levels for small suppliers for the remaining years of the Agreement, members will apply the most favourable methodology available in respect of those members under the growth-on-growth provisions from the beginning of the implementation period; extend the same treatment to least-developed countries; and, where possible, eliminate quota restrictions on imports of such members;
5. That members will calculate the quota levels for the remaining years of the Agreement with respect to other restrained members as if implementation of the growth-on-growth provision for stage 3 had been advanced to 1 January 2000;
and make recommendations to the General Council by 31 July 2002 for appropriate action.
4. Agreement on Technical Barriers to Trade.
1. Confirms the approach to technical assistance being developed by the Committee on Technical Barriers to Trade, reflecting the results of the triennial review work in this area, and mandates this work to continue.
2. Subject to the conditions specified in paragraph 12 of Article 2 of the Agreement on Technical Barriers to Trade, the phrase “reasonable interval” shall be understood to mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives pursued.
3. (i) Takes note of the actions taken to date by the Director-General to facilitate the increased participation of members at different levels of development in the work of the relevant international standard setting organizations as well as his efforts to coordinate with these organizations and financial institutions in identifying TBT-related technical assistance needs and how best to address them; and
(ii) urges the Director-General to continue his cooperative efforts with these organizations and institutions, including with a view to according priority to the effective participation of least-developed countries and facilitating the provision of technical and financial assistance for this purpose.
4. (i) Urges members to provide, to the extent possible, the financial and technical assistance necessary to enable least-developed countries to respond adequately to the introduction of any new TBT measures which may have significant negative effects on their trade; and
(ii) urges members to ensure that technical assistance is provided to least-developed countries with a view to responding to the special problems faced by them in implementing the Agreement on Technical Barriers to Trade.
5. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
1. The TRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.
2. Reaffirming that the provisions of Article 66.2 of the TRIPS Agreement are mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for ensuring the monitoring and full implementation of the obligations in question. To this end, developed-country members shall submit prior to the end of 2002 detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2. These submissions shall be subject to a review in the TRIPS Council and information shall be updated by Members annually.
6. Final Provisions.
Requests the Director-General, consistent with paragraphs 38 to 43 of the Ministerial Declaration (WT/MIN(01)/DEC/1), to ensure that WTO technical assistance focuses, on a priority basis, on assisting developing countries to implement existing WTO obligations as well as on increasing their capacity to participate more effectively in future multilateral trade negotiations. In carrying out this mandate, the WTO Secretariat should cooperate more closely with international and regional intergovernmental organisations so as to increase efficiency and synergies and avoid duplication of programmes.
FAILURE SO FAR.
Negotiations on liberalizing world markets in financial services, maritime services and basic telecommunications – which should have been completed in the Uruguay round but were set aside for later – all ended without global accords. In all three, the United States argued that market opening offers from other countries, especially in the developing world, were insufficient. But telecom talks have resumed and the hope is that the ministers will push in Singapore for an accord to be reached by February 15th, 1997, deadline.
WTO’S FUTURE
DANGERS AHEAD
The proliferation of regional trade agreements like the – Asia – Pacific economic co-operation(APEC) forum and the North American free trade agreement (NAFTA), for which there is a let-out from MFN under the general agreement. Some analyst fear regional trade groupings could turn into hostile economic and political blocs battling for markets and access to resources.
The WTO also faces growing pressures for protectionism among legislators and workers in the major industrial powers, and especially the United States, who say free trade and “globalization“ of the world economy mean jobs will be stolen by developing countries with cheaper labour.
Pushpinder
Pushpinder Singh
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jitenmazee
Banned
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