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 channelled 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 with 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
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).
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