latest Important Update
• Nigeria's Ngozi Okonjo-Iweala was appointed as Director-General of the World Trade Organisation (WTO).
• Ngozi Okonjo-Iweala is the seventh Director-General of the WTO.
• She is the first woman chief of the WTO.
• She is also the first African to hold the office of WTO as its director-general.
• Her term of office will expire on 31 August 2025.
The World Trade Organization (WTO) is an intergovernmental organization which deals with the rules of trade between nations. The WTO is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947. The Uruguay Round (1986-94) of the GATT led to the WTO's creation.
The WTO officially commenced on 1 January 1995 under the "Marrakesh Agreement", or “Morocco Agreement”, signed in Marrakesh, Morocco and signed by 123 nations on 15 April 1994.
Main difference between GATT and WTO was that GATT mostly dealt with trade in goods, the WTO and its agreements could not only cover goods but also trade in services and other intellectual properties like trade creations, designs, and inventions.’
For detailed difference between GATT and WTO Click here
• Headquarters of World Trade Organisation is in Geneva, Switzerland.
• The WTO has 164 members (including European Union) and 23 observer governments (like Iran, Iraq, Bhutan, Libya etc).
• India is a founder member of the 1947 GATT and its successor, the WTO.
Structure of WTO
Ministerial Conference
The highest decision-making body of the WTO is the Ministerial Conference, which 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.
General Council
The General Council is the WTO’s highest-level decision-making body located in Geneva, meeting regularly to carry out the functions of the WTO.
It has representatives (usually ambassadors or equivalent) from all member governments and has the authority to act on behalf of the ministerial conference which only meets about every two years.
General Council convenes in two particular forms:
Dispute Settlement Body: To oversee the dispute settlement procedures.
Trade Policy Review Body: To conduct regular reviews of the trade policies of individual WTO members.
The Council for Trade in Goods (Goods Council)
The Goods Council has following committees dealing with specific subjects: (1) Agriculture, (2) Market access, (3) Sanitary and Phytosanitary (measures for the control of plant diseases especially in agricultural crops) Measures, (4) Technical barriers to trade, (5) Subsidies and countervailing measures, (6) Rule of origin, (7) Anti-dumping measures, (8) Importing licensing, (9)Trade related Investment Measures, (10) Safeguards, (11) Trade facilitation, (12) Customs valuation.
These committees consist of all member countries.
The Council for Trade in Services (Services Council)
It is open to all WTO members, and can create subsidiary bodies as required. Presently, the Council oversees the work of four such subsidiary bodies:
o the Committee on Trade in Financial Services:
o the Committee on Specific Commitments,
o the Working Party on Domestic Regulation,
o and the Working Party on GATS Rules
The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council)
It monitors implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (the TRIPS Agreement).
It provides a forum in which WTO Members can consult on intellectual property matters, and carries out the specific responsibilities assigned to the Council in the TRIPS Agreement.
Objectives of WTO:
• Set and enforce rules for international trade.
• Administering WTO trade agreements
• Conducting forum for trade negotiations
• Resolve trade disputes.
• Monitoring national trade policies
• Increase the transparency of decision-making processes.
• Providing technical assistance and training for developing countries
• Cooperate with other major international economic institutions involved in global economic management.
• Small countries would be weaker without the WTO. The WTO gives the weak a stronger voice.
• Support the environment and health.
• Contribute to peace and stability
Ministerial conferences
First Ministerial Conference (1996)
Place: Singapore.
Discussions Trade, foreign, finance and agriculture Ministers from more than 120 World Trade Organization Member governments participated.
The following four issues termed as the Singapore issues were first brought up
• Trade and investment
• Trade facilitation
• Transparency in government procurement
• Trade and competition
Second ministerial conference (1998)
Place: Geneva, Switzerland.
Discussions on the implementation of Singapore Issues. Further discussions for the next round related to Export subsidies, market access, etc.
Third conference (1999)
Place: Seattle, Washington
Discussions: ended in failure, with massive demonstrations and police and National Guard crowd-control efforts drawing worldwide attention.
Fourth ministerial conference (2001)
Place: Doha, Qatar.
Discussions The Doha Development Round was launched at the conference. The conference also approved the joining of China and Taiwan, which became the 143rd member to join.
To read about Doha Round Click here
Fifth ministerial conference (2003)
Place: Cancún, Mexico,
Discussions on the progress of the Doha Development Agenda and other negotiations from the last Ministerial. An alliance of 22 southern states, the G20 developing nations (led by India, China,[17] Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.
Sixth ministerial conference (2005)
Place: Hong Kong.
Discussions on aiming to conclude the Doha Round by 2006. Adoption of the ‘Swiss Formula’ to cut down tariffs on non-agricultural goods (NAMA) by both developed and developing countries with different coefficients. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty-free, tariff-free access for goods from the Least Developed Countries, following the Everything but Arms initiative of the European Union—but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010.
Seventh Ministerial Conference (2009)
Place: Geneva, Switzerland
Discussions: This meeting didn’t revolve around the Doha Round.
Ministers discussed various other ideas for further development.
The theme of seventh Ministerial Conference was ‘The WTO, the Multilateral Trading System and the Current Global Economic Environment’
Eighth ministerial conference (2011)
Place: Geneva, Switzerland
Discussions on multiple topics for least developed nations and trade policy reviews.
WTO approved Montenegro, Russian Federation, and Samoa accessions.
Doha Round was discussed to make the mandate more effective, operational, and precise.
Nineth ministerial conference (2013)
Place: Bali, Indonesia
Discussions: The ‘Bali Package’ was adopted by the WTO that aimed at the following points:
Boosting trade in the least developed countries (LDCs)
Higher food security provisions for developing countries
Streamlining trade
The Bali Package is a selection of issues from the broader Doha Round negotiations.
Yemen became a part of WTO.
Tenth ministerial conference (2015)
Place: Nairobi, Kenya
Discussion on agriculture, cotton, and issues of LDCs.
The Nairobi Package was adopted by WTO that delivered beneficial commitments to WTO’s poorest members.
Eleventh ministerial conference (2017)
Place: Buenos Aires, Argentina
Discussions on e-commerce duties, fisheries subsidies, and other commitments to negotiations in all sectors.
Twelfth ministerial conference (Proposed on 30 Nov. to 3 Dec, 2021)
Place: Geneva, Switzerland
It was proposed to take place at Nur Sultan, Kazakhstan in June 2021, but cancelled due to COVID -19.
Achievements of WTO:
· Global Facilitation of Trade: By building binding rules for global trade in goods and services, WTO has facilitated dramatic growth in cross-border business activity. The WTO has not only enhanced the value and quantity of trade but has also helped in eradicating trade and non-trade barriers.
· Improved Economic Growth: Since 1995, the value of world trade has nearly quadrupled, while the real volume of world trade has expanded by 2.7 times. Domestic reforms and market-opening commitments have resulted in the lasting boost to national income of nations.
· Increased Global Value Chains: The predictable market conditions fostered by the WTO, have combined with improved communications to enable the rise of global value chains, trade within these value chains today accounts for almost 70% of total merchandise trade.
· Upliftment of Poor Countries: The least-developed countries receive extra attention in the WTO. All the WTO agreements recognize that they must benefit from the greatest possible flexibility, and better-off members must make extra efforts to lower import barriers on least-developed countries’ exports.
Challenges:
Institutional Issues:
• The Appellate Body’s operations have effectively been suspended since December 2019, as the USA’s blocking of appointments has left the body without a quorum of adjudicators needed to hear appeals.
• The crisis with the dispute settlement function of the WTO is closely linked to the breakdown in its negotiation function.
Lack of Transparency:
• There is a problem in WTO negotiations as there is no agreed definition of what constitutes a developed or developing country at the WTO.
• Members can currently self-designate as developing countries to receive ‘special and differential treatment’ – a practice that is the subject of much contention.
E-commerce & Digital Trade:
• While the global trade landscape has changed significantly over the past 25 years, WTO rules have not kept pace.
• In 1998, realizing that e-commerce would play a growing role in the global economy, WTO members established a WTO e-commerce moratorium to examine all trade-related issues relating to global electronic commerce.
• Recently, however, the moratorium has been called into question by developing countries because of its implications for collecting revenue.
Agriculture and Development:
• Agreement on agriculture is facing issues due to food security and development requirements for developing countries like India.
China’s state-owned enterprises present a major challenge to the free-market global trading system and the rulebook of the WTO is inadequate for addressing these challenges.
It is due to this that USA-China are also engaged in Trade war.
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