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The World Trade Organization (WTO) is an
intergovernmental organization An intergovernmental organization (IGO) is an organization composed primarily of sovereign states (referred to as ''member states''), or of other organizations through formal treaties for handling/serving common interests and governed by interna ...
that regulates and facilitates
international trade International trade is the exchange of capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule ...
between nations. Governments use the organization to establish, revise, and enforce the rules that govern international trade. It officially commenced operations on 1 January 1995, pursuant to the 1994
Marrakesh Agreement The Marrakesh Agreement, manifested by the Marrakesh Declaration, was an agreement signed in Marrakesh, Morocco, by 123 nations on 15 April 1994, marking the culmination of the 8-year-long Uruguay Round and establishing the World Trade Organiza ...
, thus replacing the
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barrier Trade barriers are government-induced restrictio ...
(GATT) that had been established in 1948. The WTO is the world's largest international economic organization, with 164 member states representing over 98% of global trade and global GDP. The WTO facilitates trade in goods, services and intellectual property among participating countries by providing a framework for negotiating
trade agreement A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common tra ...
s, which usually aim to reduce or eliminate
tariff A tariff is a imposed by a of a country or of a on or of goods. Besides being a source of for the government, import duties can also be a form of regulation of and policy that taxes foreign products to encourage or safeguard domestic indu ...
s,
quotas Quota may refer to: Arts and Media * '' The Quota'', a 1961 album by saxophonist Jimmy Heath * ''Quota'' (EP), a 2011 EP by Eleventyseven Politics and Economics * Gender quota (disambiguation) * Import quota An import quota is a type of trade ...
, and other restrictions; these agreements are signed by representatives of member governments
Understanding the WTO
'' Handbook at WTO official website. (Note that the document's printed folio numbers do not match the pdf page numbers.)
and ratified by their legislatures. The WTO also administers independent
dispute resolution Dispute resolution or dispute settlement is the process of resolving disputes between parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted with DXO PhotoLab Clearview; cropped away black borde ...
for enforcing participants' adherence to trade agreements and resolving trade-related disputes. The organization prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. The WTO is headquartered in
Geneva , neighboring_municipalities= Carouge Carouge () is a Municipalities of Switzerland, municipality in the Canton of Geneva, Switzerland. History Carouge is first mentioned in the Early Middle Ages as ''Quadruvium'' and ''Quatruvio''. In 1248 ...

Geneva
,
Switzerland , french: Suisse(sse), it, svizzero/svizzera or , rm, Svizzer/Svizra , government_type = under an , leader_title1 = , leader_name1 = , leader_title2 = , leader_name2 = , legislatur ...

Switzerland
. Its top decision making body is the Ministerial Conference, which is composed of all member states and usually convenes biennially; consensus is emphasized in all decisions. Day-to-day functions are handled by the General Council, made up of representatives from all members. A Secretariat of over 600 personnel, led by the Director-General and four deputies, provides administrative, professional, and technical services. The WTO's annual budget is roughly 220 million
USD The United States dollar (symbol A symbol is a mark, sign, or word In linguistics, a word of a spoken language can be defined as the smallest sequence of phonemes that can be uttered in isolation with semantic, objective or pragmatics, ...
, which is contributed by members based on their proportion of international trade. Studies show the WTO has boosted trade and reduced trade barriers. It has also influenced trade agreement generally; a 2017 analysis found that the vast majority of preferential trade agreements (PTAs) up to that point explicitly reference the WTO, with substantial portions of text copied from WTO agreements. of the United Nations
Sustainable Development Goals The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked global goals designed to be a "blueprint to achieve a better and more sustainable Sustainability is the capacity to endure in a relatively ongoing wa ...

Sustainable Development Goals
also referenced WTO agreements as instruments of reducing inequality. However, critics contend that the benefits of WTO-facilitated free trade are not shared equally, citing the outcomes of negotiations and data showing a continually widening gap between rich and poor nations.


History

The WTO precursor
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barrier Trade barriers are government-induced restrictio ...
(GATT), was established by a multilateral treaty of 23 countries in 1947 after
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a that lasted from 1939 to 1945. It involved —including all of the great powers—forming two opposing s: the and the . In a total war directly involving m ...
in the wake of other new multilateral institutions dedicated to international economic cooperation—such as the
World Bank The World Bank is an international financial institution An international financial institution (IFI) is a financial institution that has been established (or chartered) by more than one country, and hence is subject to international law. Its o ...
(founded 1944) and the
International Monetary Fund The International Monetary Fund (IMF) is an international financial institution, headquartered in Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monu ...

International Monetary Fund
(founded 1944 or 1945). A comparable international institution for trade, named the
International Trade OrganizationThe International Trade Organization (ITO) was the proposed name for an international institution for the regulation of trade. Led by the United States The United States of America (USA), commonly known as the United States (U.S. or US), o ...
never started as the
U.S The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America North America is a continent entirely within the Northern Hemisphere and a ...

U.S
. and other signatories did not ratify the establishment treaty, and so GATT slowly became a ''
de facto ''De facto'' ( ; , "in fact") describes practices that exist in reality, even though they are not officially recognized by laws. It is commonly used to refer to what happens in practice, in contrast with ''de jure'' ("by law"), which refers to th ...
'' international organization.It was contemplated that the GATT would apply for several years until the ITO came into force. However, since the ITO never materialized, the GATT gradually became the focus for international governmental cooperation on trade matters, with economist Nicholas Halford overseeing the implementation of GATT in members' policies. (P. van den Bossche, ''The Law and Policy of the World Trade Organization'', 81; J.H. Jackson, ''Managing the Trading System'', 134).


GATT negotiations before Uruguay

Seven rounds of negotiations occurred under
GATT The General Agreement on Tariffs and Trade (GATT) is a treaty, legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or import quota, quotas. ...
(1949 to 1979). The first real GATT trade rounds (1947 to 1960) concentrated on further reducing
tariff A tariff is a imposed by a of a country or of a on or of goods. Besides being a source of for the government, import duties can also be a form of regulation of and policy that taxes foreign products to encourage or safeguard domestic indu ...
s. Then the
Kennedy Round The Kennedy Round was the sixth session of General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reduci ...
in the mid-sixties brought about a GATT anti-dumping agreement and a section on development. The Tokyo Round during the seventies represented the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely new ground. Because not all GATT members accepted these
plurilateral agreementA plurilateral agreement is a multi-national legal or trade agreement between countries. In economic jargon, it is an agreement between more than two countries, but not a great many, which would be multilateral agreement. Use of the term in the Worl ...
s, they were often informally called "codes". (The Uruguay Round amended several of these codes and turned them into multilateral commitments accepted by all WTO members. Only four remained plurilateral (those on government procurement, bovine meat, civil aircraft, and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.The GATT Years: from Havana to Marrakesh
, WTO official site
) Despite attempts in the mid-1950s and 1960s to establish some form of institutional mechanism for international trade, the GATT continued to operate for almost half a century as a semi-institutionalized multilateral treaty régime on a provisional basis. Footer, M.E. ''Analysis of the World Trade Organization'', 17.


Uruguay Round: 1986–1994

Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new world economy.P. Gallagher, ''The First Ten Years of the WTO'', 4The Uruguay Round
, WTO official site
In response to the problems identified in the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of certain countries' policies on world trade GATT could not manage, etc.), the eighth GATT round—known as the Uruguay Round—was launched in September 1986, in
Punta del Este Punta del Este () is a city and resort on the Atlantic Coast in the Maldonado Department of southeastern Uruguay Uruguay (; ; pt, Uruguai), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in the ...

Punta del Este
, Uruguay. It was the biggest negotiating mandate on trade ever agreed: the talks aimed to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review. The Final Act concluding the
Uruguay Uruguay (; ; pt, Uruguai), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in South America South America is a continent entirely in the Western Hemisphere and mostly in the Southern He ...

Uruguay
Round and officially establishing the WTO regime was signed 15 April 1994, during the ministerial meeting at
Marrakesh Marrakesh or Marrakech ( or ; ar, مراكش, murrākuš; ber, ⴰⵎⵓⵔⴰⴽⵓⵛ, amurakuš) is the fourth largest city in the Morocco, Kingdom of Morocco. It is one of the four Imperial cities of Morocco and is the capital of the Marrake ...

Marrakesh
,
Morocco ) , image_map = Morocco (orthographic projection, WS claimed).svg , map_caption = Location of Morocco in northwest Africa.Dark green: Undisputed territory of Morocco.Lighter green: Western Sahara, a United Nations lis ...

Morocco
, and hence is known as the
Marrakesh Agreement The Marrakesh Agreement, manifested by the Marrakesh Declaration, was an agreement signed in Marrakesh, Morocco, by 123 nations on 15 April 1994, marking the culmination of the 8-year-long Uruguay Round and establishing the World Trade Organiza ...
. The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between ''GATT 1994'', the updated parts of GATT, and ''GATT 1947'', the original agreement which is still the heart of GATT 1994). GATT 1994 is not, however, the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions, and understandings was adopted. The agreements fall into six main parts: * the Agreement Establishing the WTO * the Multilateral Agreements on Trade in Goods * the
General Agreement on Trade in Services The General Agreement on Trade in Services (GATS) is a treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovereign states and international organizations, but can s ...
* the
Agreement on Trade-Related Aspects of Intellectual Property Rights The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization The World Trade Organization (WTO) is an intergovernmental or ...
* dispute settlement * reviews of governments' trade policiesOverview: a Navigational Guide
, WTO official site For the complete list of "The Uruguay Round Agreements", se

, WTO official site, an
Uruguay Round Agreements, Understandings, Decisions and Declarations
, WorldTradeLaw.net
In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986–1994 talks.


Ministerial conferences

The highest decision-making body of the WTO, the
Ministerial Conference The Ministerial Conference is the top decision making body of the World Trade Organization (WTO). There have been eleven ministerial conferences from 1996 to 2017, usually every two years. Ministerial conferences First ministerial conference T ...
, usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. Some meetings, such as the inaugural ministerial conference in Singapore and the Cancun conference in 2003 involved arguments between developed and developing economies referred to as the "
Singapore issuesThe "Singapore issues" refers to four working groups set up during the World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. It offici ...
" such as
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farm A farm is an area of land that is devoted primarily to agricultural processes with the ...
; while others such as the Seattle conference in 1999 provoked large demonstrations. The fourth ministerial conference in
Doha Doha ( ar, الدوحة, ad-Dawḥa or ''ad-Dōḥa'') is the capital city, capital and most populous city of Qatar. It has a population of 2,382,000 (2018). The city is located on the coast of the Persian Gulf, Persian gulf in the east of the ...

Doha
in 2001 approved China's entry to the WTO and launched the
Doha Development Round The Doha Development Round or Doha Development Agenda (DDA) is the trade-negotiation round of the World Trade Organization (WTO) which commenced in World Trade Organization Ministerial Conference of 2001, November 2001 under then director-general ...
which was supplemented by the sixth WTO ministerial conference (in
Hong Kong Hong Kong (; , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (HKSAR), is a List of cities in China, city and Special administrative regions of China, special administrative region of China on the ...

Hong Kong
) which agreed to phase out agricultural export subsidies and to adopt the
European Union The European Union (EU) is a political and economic union of member states that are located primarily in Europe Europe is a which is also recognised as part of , located entirely in the and mostly in the . It comprises the wester ...

European Union
's
Everything but Arms 375px, Everything but Arms (EBA) is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty-free and Import quota, quota-free, with the exception of armaments. EBA entered into force on 5 Ma ...
initiative to phase out tariffs for goods from the Least Developed Countries. At the sixth WTO Ministerial Conference of 2005 in December, WTO launched the
Aid for Trade Aid for Trade is an initiative by the World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. It officially commenced operations on 1 J ...
initiative and it is specifically to assist developing countries in
trade Trade involves the transfer of goods from one person or entity to another, often in exchange for money. Economists refer to a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of r ...

trade
as included in the
Sustainable Development Goal 8 Sustainable Development Goal 8 (SDG 8 or Global Goal 8) is about "decent work and economic growth" and is one of the 17 Sustainable Development Goals The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked ...

Sustainable Development Goal 8
which is to increase aid for trade support and economic growth. The Twelfth Ministerial Conference (MC12) was due to be held in
Nur-Sultan Nur-Sultan (; ; kz, Нұр-Сұлтан, Nūr-Sūltan; russian: Нур-Султан), formerly known as Akmolinsk (russian: Акмолинск, Akmolinsk), Tselinograd (russian: Целиногра́д), and Astana (, cyrl, Астана), is t ...
,
Kazakhstan Kazakhstan ( kk, Қазақстан, Qazaqstan; russian: Казахстан, Kazakhstan), officially the Republic of Kazakhstan,; russian: Республика Казахстан, Respublika Kazakhstan, link=no) is a country located mainly in ...

Kazakhstan
, in June 2020 but was canceled because of the
COVID-19 Coronavirus disease 2019 (COVID-19) is a contagious disease A contagious disease is a disease A disease is a particular abnormal condition that negatively affects the structure A structure is an arrangement and organization o ...

COVID-19
pandemic A pandemic (from , , "all" and , , "local people" the 'crowd') is an of an that has spread across a large region, for instance multiple or worldwide, affecting a substantial number of individuals. A widespread disease with a stable number o ...

pandemic
.


Doha Round (Doha Agenda): 2001–present

The WTO launched the current round of negotiations, the
Doha Development Round The Doha Development Round or Doha Development Agenda (DDA) is the trade-negotiation round of the World Trade Organization (WTO) which commenced in World Trade Organization Ministerial Conference of 2001, November 2001 under then director-general ...
, at the fourth ministerial conference in
Doha Doha ( ar, الدوحة, ad-Dawḥa or ''ad-Dōḥa'') is the capital city, capital and most populous city of Qatar. It has a population of 2,382,000 (2018). The city is located on the coast of the Persian Gulf, Persian gulf in the east of the ...

Doha
,
Qatar Qatar (, , or ; ar, قطر, Qaṭar ; local vernacular pronunciation: ), officially the State of Qatar,) is a country in Western Asia. It occupies the small Qatar Peninsula on the northeastern coast of the Arabian Peninsula, and shares it ...

Qatar
in November 2001. This was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further
trade liberalization Free trade is a trade policy A commercial policy (also referred to as a trade policy or international trade policy) is a government's policy governing international trade International trade is the exchange of capital, goods, and service ...
and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries.European Commissio
The Doha Round
Progress stalled over differences between
developed nations A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state A sovereign state is a political entity that is represented by one centralized governmen ...
and the major
developing countries 450px, Example of Older Classifications by the IMF and the United Nations, UN from 2008 A developing country is a country with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, ...
on issues such as industrial tariffs and non-tariff barriers to trade particularly against and between the EU and the US over their maintenance of
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farm A farm is an area of land that is devoted primarily to agricultural processes with the ...
—seen to operate effectively as trade barriers. Repeated attempts to revive the talks proved unsuccessful, though the adoption of the Bali Ministerial Declaration in 2013Bali Ministerial Declaration and decisions
at WTO official website. Accessed 31 December 2013
addressed bureaucratic barriers to commerce. , the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round remains incomplete. The conflict between free trade on industrial goods and services but retention of
protectionism Protectionism is the economic policy The economic policy of governments covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labour market, nationalization, national o ...
on farm subsidies to domestic
agricultural sector The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming Agriculture is the science, art and practice of cultivating plants and livestock. Agriculture was the key ...
s (requested by
developed countries A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state A sovereign state is a political entity that is represented by one centralized governmen ...
) and the substantiation of
fair trade Fair trade is an arrangement designed to help producers in growing countries achieve sustainable and equitable trade relationships. Members of the fair trade movement add the payment of higher prices to exporters, as well as improved social ...
on agricultural products (requested by developing countries) remain the major obstacles. This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round. As a result, there have been an increasing number of bilateral
free trade agreementsA free trade agreement (FTA) or treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovereign states and international organizations, but can sometimes include individ ...
between governments. there were various negotiation groups in the WTO system for the current stalemated agricultural trade negotiation.


Functions

Among the various functions of the WTO, these are regarded by analysts as the most important: * It oversees the implementation, administration and operation of the covered agreements (with the exception is that it does not enforce any agreements when China came into the WTO in Dec 2001)Functions of the WTO
, IISD

, WTO official site
* It provides a forum for negotiations and for settling disputes.A Bredimas, ''International Economic Law'', II, 17C. Deere
Decision-making in the WTO: Medieval or Up-to-Date?
/ref> Additionally, it is WTO's duty to review and propagate the national trade policies and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of , least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.WTO Assistance for Developing Countries
WTO official site
# The WTO shall facilitate the implementation, administration, and operation and further the objectives of this Agreement and the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration, and operation of the multilateral Trade Agreements. # The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement. # The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes. # The WTO shall administer a Trade Policy Review Mechanism. # to achieve greater coherence in global economic policymaking, the WTO shall cooperate, as appropriate, with the International Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies. The above five listings are the additional functions of the World Trade Organization. As globalization proceeds in today's society, the necessity of an
International Organization An international organization (also known as an international institution or intergovernmental organization) is a stable set of norms and rules meant to govern the behavior of states and other actors in the international system. Organizations m ...
to manage the trading systems has been of vital importance. As the trade volume increases, issues such as protectionism, trade barriers, subsidies, violation of intellectual property arise due to the differences in the trading rules of every nation. The World Trade Organization serves as the mediator between the nations when such problems arise. WTO could be referred to as the product of globalization and also as one of the most important organizations in today's globalized society. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization.Economic research and analysis
, WTO official site
Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.


Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of "trade policy." Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: # Non-discrimination. It has two major components: the
most favored nation In international economic relations and international politics, most favoured nation (MFN) is a status or level of treatment accorded by one state State may refer to: Arts, entertainment, and media Literature * ''State Magazine'', a monthly maga ...
(MFN) rule and the
national treatment National treatment is a principle in international law International law, also known as public international law and law of nations, is the set of rules, norms, and standards generally accepted in relations between nations. It establishes normativ ...
policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e., a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members.B. Hoekman, ''The WTO: Functions and Basic Principles'', 42 "Grant someone a special favor and you have to do the same for all other WTO members."Principles of the Trading System
, WTO official site
National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle
non-tariff barriers to trade Non-tariff barriers to trade (NTBs; also called non-tariff measures, NTMs) are trade barrier Trade barriers are government-induced restrictions on international trade. Economists generally agree that trade barriers are detrimental and decrease o ...
(e.g. technical standards, security standards et al. discriminating against imported goods). # Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from
unilateral __NOTOC__ Unilateralism is any doctrine or agenda that supports one-sided action. Such action may be in disregard for other parties, or as an expression of a commitment toward a direction which other parties may find disagreeable. As a word, ''unil ...
liberalization; reciprocal concessions intend to ensure that such gains will materialize.B. Hoekman, ''The WTO: Functions and Basic Principles'', 43 # Binding and enforceable commitments. The
tariff A tariff is a imposed by a of a country or of a on or of goods. Besides being a source of for the government, import duties can also be a form of regulation of and policy that taxes foreign products to encourage or safeguard domestic indu ...
commitments made by WTO members in multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures. # Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM).B. Hoekman, ''The WTO: Functions and Basic Principles'', 44 The WTO system tries also to improve predictability and stability, discouraging the use of
quotas Quota may refer to: Arts and Media * '' The Quota'', a 1961 album by saxophonist Jimmy Heath * ''Quota'' (EP), a 2011 EP by Eleventyseven Politics and Economics * Gender quota (disambiguation) * Import quota An import quota is a type of trade ...
and other measures used to set limits on quantities of imports. # Safety values. In specific circumstances, governments are able to restrict trade. The WTO's agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. There are three types of provision in this direction: # articles allowing for the use of trade measures to attain non-economic objectives; # articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies. # provisions permitting intervention in trade for economic reasons. Exceptions to the MFN principle also allow for preferential treatment of
developing countries 450px, Example of Older Classifications by the IMF and the United Nations, UN from 2008 A developing country is a country with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, ...
, regional
free trade area A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreementA free trade agreement (FTA) or treaty A treaty is a formal legally binding written agreement between actors in international l ...
s and
customs union A customs union is generally defined as a type of trade bloc A trade bloc is a type of trade pact, intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and Non-tariff barriers to tr ...

customs union
s.


Organizational structure

The highest authority of the WTO is the Ministerial Conference, which must meet at least every two years. In between each Ministerial Conference, the daily work is handled by three bodies whose membership is the same; they only differ by the terms of reference under which each body is constituted. * The General Council * The Dispute Settlement Body * The Trade Policy Review Body The General Council, whose Chair as of 2020 is David Walker of New Zealand, has the following subsidiary bodies which oversee committees in different areas: ; Council for Trade in Goods: There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of the Goods Council. The body has its chairman and only 10 members. The body also has several groups relating to textiles. ; Council for Trade-Related Aspects of Intellectual Property Rights: Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field. ; Council for Trade in Services: The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the
General Agreement on Trade in Services The General Agreement on Trade in Services (GATS) is a treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovereign states and international organizations, but can s ...
(GATS). It is open to all WTO members and can create subsidiary bodies as required. ;Trade Negotiations Committee: The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's director-general. the committee was tasked with the
Doha Development Round The Doha Development Round or Doha Development Agenda (DDA) is the trade-negotiation round of the World Trade Organization (WTO) which commenced in World Trade Organization Ministerial Conference of 2001, November 2001 under then director-general ...
. The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules, and specific commitments. The council has several different committees, working groups, and working parties. There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer. As of 31 December 2019, the number of WTO staff on a regular budget is 338 women and 285 men.


Decision-making

The WTO describes itself as "a rules-based, member-driven organization—all decisions are made by the member governments, and the rules are the outcome of negotiations among members". The WTO Agreement foresees votes where consensus cannot be reached, but the practice of consensus dominates the process of decision-making. Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favoring Europe and the U.S., and may not lead to
Pareto improvement Pareto efficiency or Pareto optimality is a situation where no individual or preference criterion can be better off without making at least one individual or preference criterion worse off or without any loss thereof. The concept is named after ...
.


Dispute settlement

The WTO's dispute-settlement system "is the result of the evolution of rules, procedures and practices developed over almost half a century under the GATT 1947". In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994. Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as a "unique contribution to the stability of the global economy". WTO members have agreed that, if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally.Settling Disputes:a Unique Contribution
, WTO official site
The operation of the WTO dispute settlement process involves case-specific panels appointed by the Dispute Settlement Body (DSB), the
Appellate Body The Appellate Body of the World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. It officially commenced operations on 1 January 199 ...
, The Director-General and the WTO Secretariat, arbitrators, and advisory experts. The priority is to settle disputes, preferably through a mutually agreed solution, and provision has been made for the process to be conducted in an efficient and timely manner so that "If a case is adjudicated, it should normally take no more than one year for a panel ruling and no more than 16 months if the case is appealed... If the complainant deems the case urgent, consideration of the case should take even less time. WTO member nations are obliged to accept the process as exclusive and compulsory. According to a 2018 study in the ''Journal of Politics'', states are less likely and slower to enforce WTO violations when the violations affect states in a diffuse manner. This is because states face collective action problems with pursuing litigation: they all expect other states to carry the costs of litigation. A 2016 study in ''International Studies Quarterly'' challenges that the WTO dispute settlement system leads to greater increases in trade. However, the dispute settlement system cannot be used to resolve trade disputes that arise from political disagreements. When Qatar requested the establishment of a dispute panel concerning measures imposed by the UAE, other GCC countries and the US were quick to dismiss its request as a political matter, stating that national security issues were political and not appropriate for the WTO dispute system.


Accession and membership

The process of becoming a WTO member is unique to each applicant country, and the terms of accession are dependent upon the country's stage of economic development and the current trade regime.Accessions Summary
, Center for International Development
The process takes about five years, on average, but it can last longer if the country is less than fully committed to the process or if political issues interfere. The shortest accession negotiation was that of the
Kyrgyz Republic Kyrgyzstan, officially the Kyrgyz Republic, also known as Kirghizia (in Russian), is a landlocked country in Central Asia Central Asia is a region in Asia which stretches from the Caspian Sea in the west to China and Mongolia in the east, ...
, while the longest was that of Russia, which, having first applied to join GATT in 1993, was approved for membership in December 2011 and became a WTO member on 22 August 2012.Ministerial Conference approves Russia's WTO membership
WTO News Item, 16 December 2011
Kazakhstan also had a long accession negotiation process. The Working Party on the Accession of
Kazakhstan Kazakhstan ( kk, Қазақстан, Qazaqstan; russian: Казахстан, Kazakhstan), officially the Republic of Kazakhstan,; russian: Республика Казахстан, Respublika Kazakhstan, link=no) is a country located mainly in ...

Kazakhstan
was established in 1996 and was approved for membership in 2015. The second longest was that of Vanuatu, whose Working Party on the Accession of Vanuatu was established on 11 July 1995. After a final meeting of the Working Party in October 2001, Vanuatu requested more time to consider its accession terms. In 2008, it indicated its interest to resume and conclude its WTO accession. The Working Party on the Accession of Vanuatu was reconvened informally on 4 April 2011 to discuss Vanuatu's future WTO membership. The re-convened Working Party completed its mandate on 2 May 2011. The General Council formally approved the Accession Package of Vanuatu on 26 October 2011. On 24 August 2012, the WTO welcomed Vanuatu as its 157th member. An offer of accession is only given once consensus is reached among interested parties.C. Michalopoulos, ''WTO Accession'', 64 A 2017 study argues that "political ties rather than issue-area functional gains determine who joins" and shows "how geopolitical alignment shapes the demand and supply sides of membership". The "findings challenge the view that states first liberalize trade to join the GATT/WTO. Instead, democracy and foreign policy similarity encourage states to join."


Accession process

A country wishing to accede to the WTO submits an application to the General Council, and has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements.Membership, Alliances and Bureaucracy
, WTO official site
The application is submitted to the WTO in a
memorandum A memorandum (abbrev.: memo; from the Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Throug ...
which is examined by a working party open to all interested WTO Members.C. Michalopoulos, ''WTO Accession'', 62–63 After all necessary background information has been acquired, the working party focuses on issues of discrepancy between the WTO rules and the applicant's international and domestic trade policies and laws. The working party determines the terms and conditions of entry into the WTO for the applicant nation and may consider transitional periods to allow countries some leeway in complying with the WTO rules. The final phase of accession involves bilateral negotiations between the applicant nation and other working party members regarding the concessions and commitments on tariff levels and market access for 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. For instance, as a result of joining the WTO,
Armenia Armenia (; hy, Հայաստան, translit=Hayastan, ), officially the Republic of Armenia,, is a landlocked country A landlocked country is a country A country is a distinct territory, territorial body or political entity. It is ...

Armenia
offered a 15 per cent ceiling bound tariff rate on accessing its market for goods. Together with the tariff bindings being
ad valorem An ''ad valorem'' tax (Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken in the area around Rome, known as Latium. Through the power of th ...
there are no specific or compound rates. Moreover, there are no
tariff-rate quota In economics, a tariff-rate quota (TRQ) (also called a tariff quota) is a two-tiered tariff A tariff is a imposed by a of a country or of a on or of goods. Besides being a source of for the government, import duties can also be a form of ...
s on both industrial and agricultural products. Armenia's economic and trade performance growth was noted since its first review in 2010, especially its revival from the 2008 global financial crisis, with an average annual 4% GDP growth rate, despite some fluctuations.
Armenia Armenia (; hy, Հայաստան, translit=Hayastan, ), officially the Republic of Armenia,, is a landlocked country A landlocked country is a country A country is a distinct territory, territorial body or political entity. It is ...

Armenia
's economy was marked by low inflation, diminishing poverty, and essential progress in enhancing its macroeconomic steadiness in which trade in goods and services, which is the equivalent of 87% of GDP, played a growing role. When the bilateral talks conclude, the working party sends to the general council or ministerial conference an accession package, which includes a summary of all the working party meetings, the Protocol of Accession (a draft membership treaty), and lists ("schedules") of the member to be commitments. Once the general council or ministerial conference approves of the terms of accession, the applicant's parliament must ratify the Protocol of Accession before it can become a member. Some countries may have faced tougher and a much longer accession process due to challenges during negotiations with other WTO members, such as Vietnam, whose negotiations took more than 11 years before it became an official member in January 2007.


Members and observers

The WTO has 164 members and 25 observer governments. Liberia became the 163rd member on 14 July 2016, and Afghanistan became the 164th member on 29 July 2016. In addition to states, the European Union, and each EU country in its own right, is a member. WTO members do not have to be fully independent states; they need only be a customs territory with full autonomy in the conduct of their external commercial relations. Thus Hong Kong has been a member since 1995 (as "Hong Kong, China" since 1997) predating the People's Republic of China, which joined in 2001 after 15 years of negotiations.
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere, Eastern and N ...

Taiwan
acceded to the WTO in 2002 as the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu."Jackson, J.H. ''Sovereignty'', 109 The WTO Secretariat omits the official titles (such as Counsellor, First Secretary, Second Secretary and Third Secretary) of the members of
Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere, Eastern and N ...

Taiwan
's Permanent Mission to the WTO, except for the titles of the Permanent Representative and the Deputy Permanent Representative. As of 2007, WTO member states represented 96.4% of global trade and 96.7% of global GDP.
Iran Iran ( fa, ایران ), also called Persia, and officially the Islamic Republic of Iran, is a country in Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion A subregion is a part of a larger regio ...

Iran
, followed by
Algeria ) , image_map = Algeria (centered orthographic projection).svg , map_caption = , image_map2 = , capital = Algiers , coordinates = , largest_city = capital , religion = , official_languages = , languages_type = Oth ...

Algeria
, are the economies with the largest GDP and trade outside the WTO, using 2005 data. With the exception of the
Holy See The Holy See ( lat, Sancta Sedes, ; it, Santa Sede ), also called the See of Rome or Apostolic See, is the jurisdiction of the Bishop of Rome A bishop is an ordained, consecrated, or appointed member of the Clergy#Christianity, Christian ...
, observers must start accession negotiations within five years of becoming observers. A number of international intergovernmental organizations have also been granted observer status to WTO bodies. Ten UN members have no affiliation with the WTO.


Agreements

The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows. The
Agreement on AgricultureThe Agreement on Agriculture (AoA) is an international treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovereign states and international organizations, but can so ...
came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support,
market access In international trade International trade is the exchange of capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or ...
and export subsidies. The
General Agreement on Trade in Services The General Agreement on Trade in Services (GATS) is a treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovereign states and international organizations, but can s ...
was created to extend the multilateral trading system to
service sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sector Image:Economic sectors and income.JPG, 250px, This figure illustrates the percentages of a country's economy made up by differen ...
, in the same way as the General Agreement on Tariffs and Trade (GATT) provided such a system for merchandise trade. The agreement entered into force in January 1995. The
Agreement on Trade-Related Aspects of Intellectual Property Rights The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization The World Trade Organization (WTO) is an intergovernmental or ...
sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. The
Agreement on the Application of Sanitary and Phytosanitary Measures The Agreement on the Application of Sanitary and Phytosanitary Measures, also known as the SPS Agreement or just SPS, is an international treaty A treaty is a formal, legally binding written agreement between actors in international law Int ...
—also known as the SPS Agreement—was negotiated during the
Uruguay Round The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many count ...
of GATT, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection, and labeling) as well as animal and plant health (imported pests and diseases). The
Agreement on Technical Barriers to TradeThe Agreement on Technical Barriers to Trade, commonly referred to as the TBT Agreement, is an international treaty A treaty is a formal legally binding written agreement between actors in international law. It is usually entered into by sovere ...
is an international
treaty A treaty is a formal, legally binding written agreement between actors in international law International law, also known as public international law and law of nations, is the set of rules, norms, and standards generally accepted in relat ...

treaty
of the World Trade Organization. It was negotiated during the
Uruguay Round The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many count ...
of the
General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barrier Trade barriers are government-induced restrictio ...
and entered into force with the establishment of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade". The Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes methods of customs valuation that Members are to follow. Chiefly, it adopts the "transaction value" approach. In December 2013, the biggest agreement within the WTO was signed and known as the
Bali Package The Bali Package is a trade agreement A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them tra ...
.


Office of director-general

The procedures for the appointment of the WTO director-general were updated in January 2003, and include quadrennial terms. Additionally, there are four deputy directors-general. under director-general Roberto Azevêdo, the four deputy directors-general are: * Yi Xiaozhun of China (since 1 October 2017), * Karl Brauner of Germany (since 1 October 2013), * Yonov Frederick Agah of Nigeria (since 1 October 2013) and * Alan W. Wolff of the United States (since 1 October 2017).


List of directors-general

Source: Official website


2020 Director-General selection

In May 2020, Director-General Roberto Azevedo announced that he would step down on 31 August 2020. , a nomination and selection process is currently under way with eight candidates and the final selection is expected on 7 November 2020 with the consensus of 164 member countries. A strong consensus had formed around the candidacy of Ngozi Okonjo-Iweala but on 28 October it emerged that the US representative was opposed to her appointment. WTO members made history on 15 February 2021 when the General Council agreed by consensus to select Ngozi Okonjo-Iweala of Nigeria as the organization's seventh Director-General. Wage takes office on 1 March 2021. Dr Okonjo-Iweala will become the first woman and the first African to be chosen as Director-General. Her term, renewable, will expire on 31 August 2025. https://www.wto.org/english/news_e/news21_e/dgno_15feb21_e.htm


Budget

The WTO derives most of the income for its annual budget from contributions by its Members. These are established according to a formula based on their share of international trade.


Criticism

Although tariffs and other trade barriers have been significantly reduced thanks to GATT and WTO, the promise that free trade will accelerate economic growth, reduce poverty, and increase people's incomes has been questioned by many critics. Some prominent skeptics cite the example of El Salvador. In the early 1990s, they removed all quantitative barriers to imports and also cut tariffs. However, the country's economic growth remained weak. On the other hand, Vietnam which only began reforming its economy in the late 1980s, saw a great deal of success by deciding to follow the Chinese economic reform, China's economic model and liberalizing slowly along with implementing safeguards for domestic commerce. Vietnam has largely succeeded in accelerating economic growth and reducing poverty without immediately removing substantial trade barriers. Economist Ha-Joon Chang argues that there is a "paradox" in neo-liberal beliefs regarding free trade because the economic growth of developing countries was higher in the 1960–1980 period compared to the 1980–2000 period even though its trade policies are now far more liberal than before. Also, there are results of research that show that new countries actively reduce trade barriers only after becoming significantly rich. From the results of the study, WTO critics argue that trade liberalization does not guarantee economic growth and certainly not poverty alleviation. Critics also put forward the view that the benefits derived from WTO facilitated free trade are not shared equally. This criticism is usually supported by historical accounts of the outcomes of negotiations and/or data showing that the gap between the rich and the poor continues to widen, especially in China and India, where economic inequality is growing even though economic growth is very high. In addition, WTO approaches aiming to reduce trade barriers can harm developing countries. Trade liberalization that is too early without any prominent domestic barriers is feared to trap the developing economies in the primary sector, which often does not require skilled labor. And when these developing countries decide to advance their economy utilizing industrialization, the premature domestic industry cannot immediately skyrocket as expected, making it difficult to compete with other countries whose industries are more advanced.


Impact

Studies show that the WTO boosted trade. Research shows that in the absence of the WTO, the average country would face an increase in tariffs on their exports by 32 percentage points. The dispute settlement mechanism in the WTO is one way in which trade is increased. According to a 2017 study in the ''Journal of International Economic Law'', "nearly all recent preferential trade agreements (PTAs) reference the WTO explicitly, often dozens of times across multiple chapters. Likewise, in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement... the presence of the WTO in PTAs has increased over time."


See also

* Agreement on Trade Related Investment Measures * Aide-mémoire * Anti-globalization movement * China and the World Trade Organization * Criticism of the World Trade Organization * Foreign Affiliate Trade Statistics * Geographical indication * Geographical Indications of Goods (Registration and Protection) Act, 1999 * Global administrative law * Globality * Information Technology Agreement * International Trade Centre * Labour Standards in the World Trade Organisation * List of Geographical Indications in India * List of member states of the World Trade Organization * List of trade organisations * Non-tariff barriers to trade * North American Free Trade Agreement * Subsidy * Swiss Formula * Trade bloc * Washington Consensus * World Trade Organization Ministerial Conference of 1999 protest activity * ''World Trade Report''


Notes and references


External links

* * *
International Trade Centre
– joint UN/WTO agency {{Authority control World Trade Organization, International trade organizations Organisations based in Geneva Organizations established in 1995 World government Trade blocs International trade law Foreign direct investment Treaties entered into force in 1995 United Nations General Assembly observers International organisations based in Switzerland