An overview of WTO

One of the achievements of Uruguay Round Negotiation is the establishment of World Trade Organization (WTO) which entered into force on January 1, 1995. On that day GATT ceased to be a separate institution and became part of WTO. All WTO member countries are required to adopt national legislations and regulation to implement the rules prescribed by three Agreements---GATT, 1994 (as the GATT is now called), GATS and the Agreement on TRIPS---and other legal instruments. WTO is responsible for the surveillance of the implementation of these rules by its Members. Any Member that considers another Member to be flouting the discipline of the system or infringing any of the rules can bring a complaint to WTO and request a settlement of difference. WTO is also responsible for arranging continuing negotiations for the liberalization of trade among its member countries. The successful conclusion of the Uruguay Round and the coming into existence of the WTO are regarded as marking a new era in international trade and economic relation.

The WTO is the umbrella organization responsible for overseeing the implementation of all the multilateral and plurilateral agreements that have been negotiated in the Uruguay Round and those that will be negotiated in future. The objectives of WTO are similar to those of GATT. Those objectives have been expanded to give WTO a mandate to deal with Trade in Services. Furthermore, WTO has been asked to promote economic development through the expansion of trade while keeping adequate attention to protect environment. In its preamble, the Agreement establishing the WTO reiterates the objectives of GATT. These are: raising standards of living and income, ensuring full employment, expanding production and trade and optimal use of the world’s resources. The preamble further extends these onjectives to services and makes them more precise.. It recognizes that there is a need for positive efforts to ensure that developing countries especially the LDCs secure a better share of the growth in International Trade.

The Agreement establishing WTO provides a platform for performing the following four major functions:-

It shall facilitate implementation, administration and operation of Uruguay Round legal instruments and of any new agreements that may be negotiated in future.

It shall provide a forum for further negotiations among member countries on matters covered by the agreements as well as on new issues falling within its mandate.

It shall be responsible for the settlement of differences and disputes among its member countries.

It shall be responsible for carrying out periodic review of the Trade Policies of the member countries.

Structure of WTO:

We should keep in mind that there is a ‘consensus” clause in the WTO, which prevents the “ tyranny of the majority” that if any one member opposes a decision taken it cannot be passed through.

The Secretariat:-

The Secretariat of WTO is headed by a Director General. There are four Deputy Director General, who assist the DG in the operational work. The DG and his staff are expected not to “seek or accept any instruction from any Government or any authority external to the WTO and thereby maintain its international character and neutrality.

Special Voting Requirements:

The WTO Agreement lays down different voting requirements for decisions in the following cases:-

The interpretation of the provisions of any of the agreements requires a Three Fourth majority (WTO Agreement Article IX.2)

Amendments generally require Two Third majority. However, amendments to (WTO cision Article IX, 1.2)

*The provisions in the WTO agreement on amendments and decision making,

*MFN provisions in GATT 1994, GATS and TRIPS

* Request for a temporary waiver by any member country from WTO obligations require a Three Fourth majority. (WTO Article IX, 2)

The improved and strengthened rule-based system developed by the Uruguay Round is expected to promote smooth and orderly development of international trade. The basic aim of Uruguay Round is to ensure that industries and business enterprises can trade with other countries on a fair and equitable basis and that their sale in the foreign markets are not disrupted by sudden imposition of restrictions. Exporting industries have rights to defend their interests in export markets against imposition of measures affecting their trade. Almost all developing countries are now pursuing policies promoting export oriented growth making the countries dependent on foreign trade. It would not be an exaggeration to say that many developing countries whether big or small today depend on foreign trade either as an exporter or importer (Bangladesh is an example).

The ability of industries and business enterprises to benefit from rule-based system however, depends on their knowledge and understanding of the rules in details. Next few episodes will analyze the major agreements adopted from Uruguay Round negotiation for ordinary business people. Then only they will explain the role of WTO as a forum for negotiation and as an organization responsible for reducing trade friction among countries and for settling disputes between them. Therefore, coming episodes will hopefully be more interesting.

The writer is former DG of EPB He can be contacted [email protected]