Overview
of the WTO
The
World
Trade Organisation (WTO) is the legal
and institutional framework of the multilateral trading system.
History
In
1995, the WTO was established to succeed the General Agreement
on Tariffs and Trade (GATT), which had long been the mechanism
for international trade negotiations. The GATT was formed in
1948 as a ‘provisional’ instrument initially intended to pave
the way to an International Trade Organisation (ITO) which would
operate alongside the the World Bank and International Monetary
Fund. The ITO would have had an ambitious agenda covering trade
disciplines, employment, international investment, services,
competition, and commodity agreements.
The
GATT brought together 23 countries, including the UK, to lower
customs tariffs and give a boost to world-wide liberalisation.
They also agreed to accept some of the trade rules of the draft
ITO Charter ahead of its agreement, to protect the gains made
from the tariff reductions. However, the Havana Charter, which
would have established the ITO, was never ratified, meaning
the Organisation was never formed, and GATT remained the only
multilateral instrument governing international trade.
An
informal organisation was built around the GATT to discuss trade-related
issues and negotiate further liberalisation. Taking place in
‘rounds’, these negotiations at first concentrated on lowering
tariffs before moving on to additional issues such as subsidies.
The eighth trade round - the Uruguay Round - ran from 1986-94
and was the most extensive of all, covering trade in goods,
services, and intellectual property. It also established the
WTO, which is a permanent organisation with permanent, enforceable
rules.
Membership
The
WTO currently has 144 member countries, with 28 negotiating
to join. A list of WTO members is available from the WTO
website.
For
a country to accede
to the WTO, a working party is formed which examines all aspects
of the prospective member’s trade and economic policies that
have a bearing on WTO agreements to ensure their compatibility
with the obligations of membership. There are also detailed
negotiations over the market access guarantees the acceding
country can offer. Once the terms of accessions have been finalised,
they are 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 some cases, the country’s own parliament
or legislature has to ratify the agreement before membership
is complete.
WTO
members agreed to accept China and Taiwan to the WTO at the
4th Ministerial Conference in Doha in November 2001.
China and Taiwan’s accession to WTO provides welcome boost to
world economic confidence at a time of economic slowdown. Summaries
of the terms of their entry can be found here
Principles
The
World Trade Organisation exists to regulate international trade.
Its key principle is non discrimination, ensuring that similar
products from different countries must be treated the same way.
The
WTO is a member-driven organisation which nearly always works
on a consensus basis. As an international organisation it has
a sound and accountable legal basis because all WTO members
have ratified the WTO Agreements.
Rules
The
WTO’s rules are set out in a range of international trade agreements
covering trade in goods (the GATT), services, intellectual
property and agriculture. These are covered in more detail
in the relevant sections of this site.
Functions
The
WTO serves as a forum for trade negotiations. When all
members agree to the launch of a new Round of negotiations,
these will take place for the first time within the WTO’s structure.
The
WTO also provides an arbitration service for countries embroiled
in trade disputes. For details of the dispute settlement process,
see the WTO
Rules and Dispute Settlement page, or
the Dispute Settlement section of the WTO
website.
The
Trade Policy Review Mechanism within the WTO allows members
to discuss an individual country’s trade policy regime. This
is done in order to
- increase
the transparency and understanding of WTO members' trade policies
and practices through regular monitoring;
- improve
the quality of public and intergovernmental debate on the
issues; and
- enable
a multilateral assessment of the effects of policies on the
world trading system.
Following
each review, summaries of the policy statement from the members
and a report by the WTO Secretariat, together with the proceedings
of the review, are available from the
WTO
website.
UK
membership
Although
the UK is a member of the WTO in its own right, for all practical
purposes we work through our membership of the European Union
(EU), as required by the Common Commercial Policy of the European
Community (EC). Please see the UK
Trade Policy and the EU page for more
details of this process. The most recent comprehensive statement
of EU policy can be found at the Commission
website.
Ministerial
Meetings
The
bulk of the work of the WTO is done at official level. However,
there must take place at least every two years a Ministerial
meeting. The next is in Cancun, Mexico on 10-14 September 2003
Contact:
Worldtrade
Last revised
14
February 2003
