World Trade Organization (WTO): History, Structure of Governance, GATS

Introduction

The World Trade Organization (WTO) is the sole global organization dedicated to establishing trade rules among nations. At its core are World Trade Organization (WTO) agreements, negotiated and adopted by the majority of the world’s trading nations, and ratified by their respective parliaments.

• Membership: The World Trade Organization (WTO) comprises 164 member countries, including the European Union, and has 23 observer governments such as Iran, Iraq, Bhutan, and Libya.
• Principles: 
• • Non-discrimination: Members should not discriminate between their trading partners.
  • Reciprocity: Members agree to open their markets and grant concessions in exchange for similar actions by other members.
• Goals: Facilitate International Trade, Promote Non-Discrimination in trade practices, Promote reciprocal trade agreements, Establish a Rule-Based Trading System, Enhancing Economic Development, Resolving Trade Disputes etc.

Structure of Governance of World Trade Organization (WTO):

• Ministerial Conference: 
  • Topmost decision-making body of the WTO.
  • Meets every two years, consisting of all WTO members (countries or customs unions).
  • Has authority over all matters under multilateral trade agreements.
• General Council: 
  • The highest-level decision-making body is located in Geneva.
  • Consists of representatives (usually ambassadors) from all member governments.
  • Authorized to act on behalf of the Ministerial Conference.
  • Meets regularly and has additional functions under different bodies.
• Councils Reporting to General Council: Goods Council: Responsible for trade in goods agreements.
  • Services Council: Deals with trade-in services agreements.
  • TRIPS Council: Manages trade-related aspects of intellectual property rights.
  • All three councils consist of all WTO members.
• Trade Policy Review Body (TPRB): Part of the General Council.
  • Conducts trade policy reviews and considers the Director-General’s reports.
  • Open to all WTO members.
• Dispute Settlement Body (DSU): Part of the General Council.
  • Resolves Disputes between WTO members.
  • Deals with matters subject to the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
  • Has authority to establish panels, refer matters to arbitration, adopt reports, and authorize concessions suspension in case of non-compliance.
• Appellate Body: Established in 1995 under Article 17 of the DSU.
  • Consists of Seven members appointed by the DSB for a Four-year term.
  • Hears appeals from panel reports in disputes brought by WTO members.
  • Can uphold, modify, or reverse legal findings and conclusions.
  • Appellate Body Reports, once adopted by the DSB, must be accepted by the disputing parties.
• Based in Geneva, Switzerland.
• Ngozi Okonjo-Iweala’s Appointment: In February 2021, Ngozi Okonjo-Iweala became the Director-General of the WTO. 
  • First African official and first woman to hold the position.
• Council for Trade in Goods (Goods Council)
  • The General Agreement on Tariffs and Trade (GATT) governs international trade in goods, and its implementation falls under the purview of the Council for Trade in Goods (Goods Council) within the World Trade Organization (WTO). 
  • The Goods Council comprises representatives from all member countries of the WTO. 
• GATT Coverage: 
  • GATT addresses international trade in goods, overseeing rules and agreements.
• Goods Council Responsibility: 
  • The Goods Council, composed of representatives from all WTO member countries, manages the implementation of the GATT agreement.
• Committees Under Goods Council:
  • Several committees operate under the Goods Council, each dedicated to specific subjects.
  • Committees include Agriculture, Market Access, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Subsidies and Countervailing Measures, Rule of Origin, Anti-Dumping Measures, Import Licensing, Trade-Related Investment Measures, Safeguards, Trade Facilitation, and Customs Valuation.
• Council for Trade in Services (Services Council)
  • Under the auspices of the General Council, the Council for Trade in Services plays a crucial role in advancing the objectives of the General Agreement on Trade in Services (GATS). 
  • Currently, the Council oversees the following four subsidiary bodies:
• Committee on Trade in Financial Services: Conducts discussions concerning trade in financial services. 
  • Formulates proposals and recommendations for the consideration of the Council.
• Committee on Specific Commitments: Focuses on matters related to specific commitments in the trade of services.
• Working Party on Domestic Regulation: Examines and addresses issues surrounding domestic regulations affecting trade in services.
• Working Party on GATS Rules: Devoted to the development and review of rules governing trade in services under the GATS.
• Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council)
• • The monitoring and oversight of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) fall under the purview of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) within the World Trade Organization (WTO). 
• Monitoring Implementation: The TRIPS Council monitors the implementation of the TRIPS Agreement, ensuring adherence by WTO members.
• Consultative Forum: Provides a forum for WTO members to engage in consultations on intellectual property issues.
• Responsibilities under TRIPS Agreement: Undertakes specific responsibilities assigned by the TRIPS Agreement.
• Minimum Standards of Protection: The TRIPS Agreement establishes minimum standards for the protection of various intellectual property rights, including copyrights, trademarks, geographical indications, industrial designs, patents, integrated circuit layout designs, and undisclosed information.
• Enforcement Standards: Set minimum standards for the enforcement of intellectual property rights through civil actions, actions at the border, and, in the case of copyright piracy and trademark counterfeiting, criminal actions.

National Treatment in the World Trade Organization (WTO)

• National Treatment is a fundamental principle within the World Trade Organization (WTO) that ensures equal treatment for foreign and domestic products once they enter a member country’s market. 
• Principle Definition: Imported and domestically produced goods and services should be treated on an equal footing.
• Elimination of Discrimination: WTO members are obligated to avoid discrimination between foreign and domestic products, providing a level playing field.
• Market Access: Ensures that foreign products enjoy the same access to a member’s market as domestic products.
• Fair Competition: Aims to create fair competition by preventing discriminatory measures that could favor domestic producers over foreign competitors.
• Non-Discrimination Commitment: Integral to the Most-Favored-Nation (MFN) treatment, emphasizing that WTO members extend the best trade terms to all other members.

Most-Favored-Nation (MFN) Treatment in the World Trade Organization (WTO)

• Principle Definition: MFN treatment ensures that a country extends its best trade terms to one member, and these terms are applied to all other members.
• Non-Discrimination: Prevents discriminatory trade practices and fosters fair competition among WTO members.
• Automatic Extension: Trade advantages granted to one member are automatically extended to all other members.

World Trade Organization (WTO) Agreements Overview

• Total Agreements: The WTO oversees approximately 60 international legal texts, and member countries are required to sign and ratify all agreements during accession.
• Agreement on Agriculture (AoA):
  • Effective since the establishment of the WTO in 1995.
• Three Central Pillars: Domestic Support, Market Access, and Export Subsidies.
  • Domestic Support: Categorized into Green Box (least market-distorting), Blue Box (production-limiting subsidies), and Amber Box (trade-distorting subsidies).

General Agreement on Trade in Services (GATS):

• Came into force in January 1995.
• Extends the multilateral trading system to the service sector, akin to GATT for merchandise trade.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS):

• Sets minimum standards for various forms of intellectual property regulation.
• Negotiated at the end of the Uruguay Round in 1994.

Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement):

• Negotiated during the Uruguay Round and effective since 1995.
• Sets constraints on members’ policies related to food safety and animal/plant health.

Agreement on Technical Barriers to Trade:

• Negotiated during the Uruguay Round and entered into force in 1994.
• Aims to prevent technical regulations and standards from creating unnecessary trade obstacles.

Agreement on Customs Valuation: Also known as the Agreement on Implementation of Article VII of GATT. Prescribes customs valuation methods for Members to follow.

• Bali Package (2013): Largest agreement within the WTO in 2013. Provisions for reducing import tariffs and agricultural subsidies to facilitate easier trade between developed and developing countries in global markets.

The Generalized System of Preferences (GSP) 

• Stimulating Economic Development: GSP stands as the oldest and most extensive trade preference program in the United States, crafted to stimulate economic development. 
• Promoting Duty-Free Trade for Developing Nations: Its core objective is to facilitate duty-free entry for numerous products from specifically designated beneficiary countries. 
  • Serving as an overarching framework, the GSP encapsulates the majority of preferential arrangements provided by industrialized nations to their developing counterparts. 
• GSP Initiative: This initiative entails the reduction of Most Favored Nations (MFN) tariffs or, in certain cases, the complete elimination of duties on eligible products exported by beneficiary countries to the markets of donor nations.

UNCTAD, or the United Nations Conference on Trade and Development, 

• It is a lasting intergovernmental organization created by the United Nations General Assembly in 1964. 
• This entity is dedicated to aiding developing countries in achieving more equitable and efficient access to the advantages of a globalized economy. 
• With a membership that spans 195 nations, UNCTAD works collaboratively to address trade and development issues, fostering international cooperation to ensure that the benefits of economic globalization are distributed more inclusively and fairly among its member states.

Conclusion

• The World Trade Organization (WTO) plays a central role in regulating and facilitating international trade among its member nations. 
• The World Trade Organization (WTO) provides a platform for negotiations, dispute resolution, and the enforcement of trade agreements. Despite facing challenges and criticism, the WTO has contributed to the reduction of trade barriers, the promotion of fair competition, and the integration of economies worldwide. 
• Its principles of non-discrimination and transparency have helped foster a more predictable and rules-based trading system, benefiting both developed and developing countries.